No investor? No problem.
Getting funded can be an uphill task for a startup, particularly for those with physical products that require an investment in materials and manufacturing. Crowdfunding is a simple solution to that problem.
Crowdfunding is a method of raising funds from the public in the form of money, equity, debt, or even resources (so you can get that glass meeting table for fancier meetings). Platforms like Kickstarter and Indiegogo allow startups or individuals to campaign for backing from everyday people, who often become the first to receive the product once manufactured.
Crowdfunding campaigns doubled between 2017 and 2020, and now number over 10,000. China alone raised US$7 billion in crowdfunded campaigns so far. Although not growing at the accelerated pace of many other tech sectors, the graphs are moving upwards, and so is the outlook on crowdfunding. Crowdfund your startup with just five simple (but crucial) steps.
Have A Plan
Knowing how much you want to raise and what platform you will use to raise that amount is not enough. Start by sectioning out the total amount you want to raise into smaller, easier-to-achieve milestones. Set a timeline for each of them, and chart out the key responsibilities of each member in the team in advance of reaching these milestones.
Also, figure out who your target audience groups are by demographically categorizing them. Map target figures to each of those groups, decide how you will communicate with them, and create a mechanism to track incoming funds.
Tell Your Story
Think and talk like a brand with an aspirational story, or a cause that you believe in. People are more likely to give to you if they see that your crowdfunding campaign wants to achieve something more than raking in a large sum of money.
One of the ways to do this is to start a hashtag trend on social media. This is an effective branding tool to communicate who you are and why your mission is important with potential backers. Modify your branding tools according to your target demographic groups to make your messaging relatable. Back your campaigns with data, so your audience knows that you mean business, and that your startup is tackling an actual need or opportunity.
The first week of your crowdfunding campaign is most crucial. It sets the pace of the campaign, and if not started right, can disrupt your entire crowdfunding plan. One trick is to start the campaign around the time salaries are paid, so that people are more willing to spend.
Aim to accumulate at least 30-40% of your total target amount within the first week, and a good chunk of it within the first few hours of the campaign going live. Use the funding tracker you developed during the planning stage to keep an eye on how your funds are shaping up. If you see that a target group is not as engaged or responsive as you estimated, work out a strategy to get them involved.
This step can easily slip from your mind; the money has come in, so you think your job is done and dusted. It’s not. People like being acknowledged for contributing, and it’s the courteous thing to do in any case. They are also more likely to talk about your campaign in their circles if you reinstate your identity positively.
Invest some time and capital into thanking your funders. Apart from sending notes, make it special for funders who have given large amounts by giving them a custom gift (a t-shirt or a coffee mug). Tag your larger donors on your social media accounts with a thank-you. The idea is to humanize your brand, be seen as accountable and responsive to backers, and to make sure that the conversation surrounding your campaign doesn’t stop.
Network, network, network
Whether they are raising funds or not, startups need to do a lot of networking. You need to give people a reason to talk about you, so pull up your socks and start building essential connections.
Not only does this give you access to potential funders and funding advice, it also gets more people to believe in your mission. After you have successfully completed your fundraising campaign and kickstarted your company, these connections are sure to come in handy as you run your business.
The most important thing is not give up. Slumps in your campaign are inevitable, but approach it with ninja-like focus and clarity, and you’ll get to your magic number.