With the increasing popularity of crowdfunding, more and more entrepreneurs and startup founders are finding it a useful way to get greater access to capital. While the term “crowdfunding” has been circulating all over the Internet, it can do more for your business than fundraising alone.
Although more than 60,000 crowdfunding projects failed to meet their fundraising goals according to Wazgo, there are important lessons every business owner can take away from their crowdfunding campaign. Aside from learning how to develop an effective pitch and how to create rewards that people want, getting initial backers can be crucial to success in crowdfunding.
As with any startup, securing the funding you need to get started can pose a legitimate threat to the successful launch of a new business. Financial risk can often make or break a company, so it can be crucial to plan financial projections and establish a working budget. This way, you will have a better idea of what is required to support the launch and operation of your new business.
Perform Market Analysis First
You should also consider assessing the market risk for your startup by performing a market analysis. By gauging the market potential for your product or service, you might be better able to define what areas you should market to, as well as potentially uncover any possible customer needs you may have overlooked.
While the main goal of a crowdfunding campaign is raising funds, it can also be great exposure for your business. Some additional benefits can include, but are not limited to the following:
- Generate traction – Having initial backers can not only help jump start your campaign, but it can also help attract more backers and pre-orders of your product or service.
- Gaining social influence – As people show interest in your product or service and pledge funds, it can generate social buzz. In the age of the social web, social platforms are one of the best ways for people to learn about your products or services.
- Expanding your marketing reach – During a crowdfunding campaign, you not only benefit from getting attention from your own supporters and their networks, but you also start to expand your reach to others on the crowdfunding site itself.
- Attract outside investors – Gaining social influence and expanding marketing reach can be great ways to capture investor interest. Investors are sometimes on the lookout for new products and ideas that have gained traction and social influence.
In order to get the most from a crowdfunding campaign, be sure to consider creating a compelling pitch, and consider starting with your own network to get pre-pledges, prior to launching. Crowdfunding can be not only a powerful way to raise funding, but also a great way to gain visibility and grow your business.
Photo Credit: Espen Sundve, Flickr