The priority for startup owners around the world is to raise adequate funds to develop their innovative ideas. There are a lot of available methods of financing them, e.g. corporate venturing, taking out loans or getting money from angel investors. Unfortunately, the strategies listed above have several drawbacks and they are highly debatable. Therefore, crowdfunding for startups is becoming increasingly popular. Read on.
Crowdfunding for startups – table of contents
What is a startup?
A startup can be defined as a company in the first stages of operations. Businesses that are starting up must face many types of risks and a lack of client acceptance. It is also hard to predict whether a startup which is currently operating will turn into a success or a failure.
Crowdfunding for startups – 5 tips for launching a campaign
Choose a crowdfunding platform
For starters, choose a category for your business profile. This will make it easier for you to select the right crowdfunding site. If you try to raise funds for a tech startup on a platform for charities, you are bound to fail completely.
Find potential investors
Does your project require a lot of funding? Aim at sponsors who are willing to spend large sums of money to support the idea and are aware of the involved risks. If you create games, music or video, then Kickstarter could be a perfect place for you . In 2020 alone, these categories received the most funding on the site. On the other hand, personal or charity campaigns are more likely to succeed on GoFundMe and Funraise.
Describe in detail each element of the campaign, the project’s history and your vision for the future of the venture in case it is successful. Don’t withhold any information so that a potential investor can easily assess the chances of the project and make a quicker decision to invest in it.
A welcome and useful practice in crowdfunding for startups is creating a transparent schedule to allocate funds appropriately. Indicate what the exact purpose of the campaign is, what stages of the project specific amounts are needed for, and what ROI donors can expect. After all, you are accountable to a large audience of investors who want to know where their money is going. Be firm and decisive in this respect.
Stay in touch with donors
Keep in touch with the people who have decided to support your campaign.This will pay off in the future and result in greater customer engagement, wider public interest and building a loyal community around your startup. If you have your own website, social media profile or fanpage, post information on its progress from time to time. This will not only have a positive impact on your image as an honest creator, but also increase the transparency of actions taken during the campaign. In this way you will earn respect of the sponsors.
Learn about rewards-based crowdfunding
Just like any other campaign, a crowdfunding campaign for startups needs to have its guiding idea that will intrigue potential investors and encourage them to participate in the venture. The groundwork is a good story that tells about the product/service or business in an attractive way, and makes it stand out from the crowd.
Therefore, it’s worth using a rewards-based crowdfunding. Rewards-based, or seed, crowdfunding is a type of small-business financing in which entrepreneurs get financial donations from individuals in return for a product or service. In such a way, numerous startups have raised hundreds and sometimes millions of dollars on crowdfunding sites.
Crowdfunding for startups – summary
There is no doubt that over the years crowdfunding has become an attractive way to raise funds and finance startups, and thus significantly contributed to their development. Crowdfunding for startups is a profitable method of financing which allows businesses to survive numerous ups and downs on the market.