By Fernando Berrocal
Raising capital for startups is becoming increasingly difficult. So many entrepreneurs must ask themselves, what is the best way to raise funds and expand their business. Since the quantity and quality of investment can make or break your future, you should seriously consider pursuing traditional seed cash, asking for bank loans, or launching crowdfunding campaigns.
It's discouraging to be rejected by potential investors, especially in the early stages. So you may consider launching a crowdfunding campaign. But is that actually necessary for your startup?
What Is Crowdfunding and How Does It Work? Crowdfunding allows you to raise cash with the support of people interested in your concept who want to help you grow. It's a broad group of individuals who are prepared to spend small amounts of money on a startup concept. Many campaigns are reward-based, meaning that investors receive a gift or something in exchange for taking part. Crowdfunding appears to be a miracle for businesses, providing a simple way to raise funds. Unfortunately, not every business venture succeeds. Many crowdfunding initiatives are unsuccessful. In reality, 70% of campaigns fail to meet their objectives. Even if your campaign fails, there are still some advantages.
What Advantages Can a Crowdfunding Campaign Provide?
- It's a risk-free and secure option, you can lower your organization's financial risk while also generating revenue through pre-sales.
- You may improve brand visibility and exposure with a well-planned crowdfunding campaign.
- Build a following and get input from them to enhance your product.
- Possibilities for collaboration and new partners.
What Disadvantages Can a Crowdfunding Campaign Provide?
- The construction of a crowdfunding campaign might take a long time and demand funds.
- You can fail your campaign if you don't meet your goal, and you'll have to return invested money.
- Your startup's reputation may be damaged.
- If you don't have a patent or copyright, someone might steal your concept.
What Is the Best Way to Start a Crowdfunding Campaign? You must determine whether you want to participate in crowdfunding after examining the benefits and drawbacks. If you decide that your Startup needs a crowdfunding campaign, follow these steps:
- Define your objective: The accuracy with which you define your objective will determine the success of your campaign. You have a business or a concept that you want to grow, but you need money to do it. Make your concept a goal by outlining why it's essential, what makes it unique, who will benefit from it, and how much money you'll need to get started.
- Conduct Market Research to identify your Target Market: You must undertake market research and learn more about your target audience to set a feasible objective. This will assist you in determining the demand for your goods as well as the potential customers. Knowing your audience will make it easier for you to reach out to them and get their support.
- Choose a Crowdfunding Platform: You can launch your campaign on numerous crowdfunding platforms, such as Kickstarter. These platforms assist you in managing your campaign, sharing information, videos, and all other pertinent project information. They will charge up to 10-15% fees depending on the services performed and the outcome.
- Make a Flawless Video Pitch: This is a one-of-a-kind and informative video. According to Kickstarter, projects with videos received 50% more funding, compared to 30% for those without. So, how can you make a fantastic video for your crowdfunding campaign?
- Keep it to a maximum of 2 minutes.
- Begin by capturing the attention of your audience.
- To keep people interested, use visuals.
- Talk about yourself and include a call to action.
- Create a Landing Page to build your email list: With this, it'll be easier to contact and keep supporters updated if you have a list of interested people. To gather those emails, you'll need a simple landing page that includes all of the details about your project and what you offer.
Clear headlines and descriptions, high-quality photos, and a form should be included. You might include your video pitch and some customer reviews to make it more informative. Then, to generate visitors to your landing page, you must market it. People who fill up the form will be added to your email list, and you will be able to contact them directly. The first thing you should do when launching your campaign is send emails to individuals on your email list.
- Reach out to Journalists and Influencers: Gaining exposure through journalists and influencers is another efficient technique to reach your target audience. As a result, you'll need to compile a list of potential media contacts who could be interested in covering your initiative. Begin by compiling a list of media sites and blogs that are relevant to your industry. Then, identify the appropriate contacts to reach out to and make your request.
- Build a Social Media Audience and keep them Interested: After you've identified your target audience, you'll need to create material. Create pages on social media platforms and begin providing compelling material to your audience's preferences. Choose the channels where your target audience is most engaged and plan your social media strategy, as it takes a lot of work to establish an active fan following.
- Launch your campaign: After you've completed all of your preparations, it's time to launch your campaign and see what all of your hard work has produced. While you're waiting for the investments to come in, don't forget to keep your email list up to speed on what's going on. What motivates your audience to purchase on the first day? Simple. The sensation of something new and exciting. Create special deals or prizes to keep your audience interested. It's all up to you and your imagination.
Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.
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