 "Want to crowdfund your start-up project? Here's how to go about it")
Crowdfunding has emerged as a strong alternate option for startups that don’t want to go the conventional way of going to banks or investors when it comes to early-stage fund raising. Firm supporters of crowdfunding say that it negates the complicated process one has to go through to raise money from institutional investors. That it gives them an opportunity to test the idea and engage clients while the startup is in the process of growing.
Before initiating a crowdfunding drive, you must be ready with a prototype of your product. Many projects fail because their product prototype isn’t impressive and hence is unable to attract backers.
Marketing your project through appropriate channels such as social media is also very important. Here are a few points that you should consider before launching your crowdfunding drive.
Choose a platform
There are many crowdfunding platforms catering to different types of businesses. It is important therefore that you choose carefully. Creative businesses can try Kickstarter or Indiegogo, whereas app developers might prefer AppBackr.
You might also want to check on the commission each of these platforms charge and factor that into your costs. Also check the various legal clauses before finalizing a platform.
Get your content ready
After choosing a platform, you should be ready with the content that you are going to use to tell people about your project and why they should back it. This is your chance to sell your idea to people. So be creative and clear at the same time.
Give a detailed explanation of how the pledged money will be used and be transparent about it to raise trust in your project. Include pictures and videos in your content.
When co-founders explain the project, it increases the chances of people believing it and getting further engaged with it.
A simple digital video is also fine if your budget doesn’t allow the hiring of sophisticated recording equipments. The video should not be more than three to four minutes long and should encapsulate every detail a potential backer wants to know about. Remember, you are not only competing for your potential backers’ attention, but also other projects on the platform you are on.
Perk it
You should come up with interesting and exciting perks for your backers to get them interested in your project.
Offering to give your product (if it’s a product/device) free of cost is an attractive way to lure people. But sometimes, something as simple as just giving them a sneak peek to your studio or workshop may get people more invested in your project.
Keep multiple pledging amounts so that people who do not wish to put in bigger amounts can contribute in a smaller way. Each pledging amount should have a suitable perk attached to it so that there is something for everyone.
Get payments right
Before going live with the project on any one of the crowdfunding platforms, you should work on how you plan to receive the money from people. There are different payment options for different platforms. So make sure you have everything you need to start getting the money into your bank account. All this should be done almost a couple of weeks before putting up the project online as many of these processes take around 10 days to complete.
Go to family and friends
To get strangers interested in your project, you need to show them that there are buyers for your idea. Family and friends are your best bet as they can give you that initial push by backing your project early on. Ask them to popularize the idea as much they can to others as word-of-mouth is the biggest propeller of crowdfunding projects.
If you can find a celebrity entrepreneur to get interested in your project, it can be a game changer for you.
Use social media to reach out to more people and also to keep them up-to-date on the progress of your project.
It is also important that you keep the project alive with the same enthusiasm as it started throughout the fundraising process. Keep a list of FAQs for people who wish to know more about the company and its product.
It is also a good idea to write a personal email to each contributor thanking them and keeping them in the know on the progress of the project.
This article first appeared in the Entrepreneur magazine in March 2014
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