The internet is a goldmine for entrepreneurs; especially when it comes to funding startups and raising capital. However, for every success story, there are hundreds of failures. The difference lies in the approach. You can’t simply post a fundraiser and expect it to succeed. You have to develop a strategy and market your way to the top.
The Rise of Crowdfunding
As any billion dollar industry does, crowdfunding started with very humble origins. In fact, you could probably trace the first roots back to 1885 and one of America’s most nationally recognized icons, the Statue of Liberty.
As the story goes, when New York received the Statue of Liberty from Europe – as a gift from France – it came in pieces. The only problem was that the state lacked the necessary funds to assemble and install the statue. While the problem was certainly embarrassing, Joseph Pulitzer stepped in and raised more than $100,000 from some 125,000-plus supporters. With those funds, America’s iconic statue was erected and the concept of crowdfunding was introduced to the public.
Now fast forward nearly a century and a half later and crowdfunding has become one of the most popular and exciting forms of raising capital in the startup world. While the concept is the same as Pulitzer’s, entrepreneurs are now using the capabilities of the internet to connect with investors all around the world. In fact, the three biggest crowdfunding platforms are collectively growing at an annual rate of around 75 percent over the past five years. And as a whole, the entire industry is valued at around $5 billion.
6 Tips You Need to be Successful
So, with such a large opportunity, how do you get in on the action? How do you tap into crowdfunding and amass capital for your startup? You must strategically approach the situation to maximize your potential. Here are six helpful tips:
- Use social media to your advantage. Social media is something that should be taken into consideration long before a campaign is launched. What platforms will help you best reach your goal? Probably Facebook, Twitter, and Instagram, but consider all your options. You can share your campaign on your personal profiles, but that will only get you so far. Make sure to create campaign-specific pages or groups that funders can follow, and post often to keep people in the loop. Furthermore, make your posts quick and concise, and find alternative ways to request funding. Instead of asking for money (which nobody likes), try saying “help me spread the word,” and include your link. If you create a campaign and nobody hears about it, how much money will it raise? Use social media to do what it does best, and spread the word.
- Pre-raise a portion of your goal. According to crowdfunding experts in the industry, the pre-raise is the single most important financial component of a campaign. That’s because it’s most difficult to attract your first few investors and gain traction. By bypassing this major hurdle and showing potential backers that you already have support, you’re more likely to attract additional funding faster. Ideally, you want to pre-raise between 5 and 35 percent. Not only does this prove you’re serious, but it almost always gives your campaign a boost in the rankings – depending on the crowdfunding platform you use and how the algorithm works.
- Create a killer campaign. Half the battle is creating a sleek, compelling campaign. In order to do this, you have to think about things from a funder’s point of view. What would make someone invest in your campaign? If you simply list a few bullet points, throw in a basic image, and ask for some capital, you’re not going to be very successful. You need to engage with users and appeal to their emotions. According to Nikolay Piryankov, an entrepreneur who successfully used crowdfunding to raise around $300,000 for his online jewelry business, you have to clearly convey your identity. He advises people to “Create a great video that really helps people to understand who you are, what you are doing and why you’re going to do it better than anyone else.”
- Actively market and advertise. While your onsite campaign can be wonderfully optimized, unique, and compelling, it’ll only succeed if you’re able to drive traffic to the page. That’s why it’s extremely important that you market and advertise your campaign continuously. According to GoGetFunding, a leading crowdfunding website, it’s the users who take action who see the best results.
- Study and learn from past successes. Piryankov believes that one of the other keys to successful crowdfunding is observing others and learning from their successes and failures. You can save a lot of time and frustration by knowing what not to do. It’s also possible to learn from success stories and adapt your campaign accordingly.
- Provide tangible rewards. Again, it’s important to think about your campaign from a different point of view. If you were an outside individual viewing your campaign, what would encourage you to make a financial contribution? Many times a tangible reward does the trick. Offer supporters a token of appreciation based on the amount they contribute. For example, you may send a bumper sticker to someone who gives $20, a product sample to someone who gives $100, and a personalized gift for someone who gives $500 or more. Not only do rewards encourage funding, but by incorporating tiers – such as in this example – you can persuade people to give more.
Successfully Fund Your Startup Today
Using these six tips, you can increase your chances of successfully funding your startup through the power of online crowdfunding. Good luck and happy crowdfunding!
from Darlene Milligan http://ift.tt/1HXl1CR via local marketing
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