Credit: Crowdfunding Image via Shutterstock
Jason Graf, CEO and Co-Founder of CrowdIt, contributed this article to BusinessNewsDaily's Expert Voices: Op-Ed & Insights.
Starting a new business isn't easy, as many successful people will tell you. There are several reasons as to why, but the truth is one of the main reasons new businesses fail is because of a lack of funding. This is a problem that I have faced as an entrepreneur and I certainly won't be the last.
So what resources are available to overcome this challenge?
Crowdfunding is an innovative way to gain funding for a new venture, especially in a time where people are feeling disenfranchised from the more traditional ways of attaining funding (via a financial institution or from a venture capitalist, for example). So what can you do to help improve your crowdfunding project to raise the capital you need for startup success?
Especially passionate and enthusiastic videos —showing your product and service, if possible — have been shown to increase pledges by 115 percent. It demonstrates you are "real." It also provides a higher probability that it will go viral.
Always include some type of call to action in your video. Be creative — not just a traditional talking head. But, keep it simple and not too elaborate. Even consider creating multiple videos and updates. You could have one main video but in body of your pitch, you could have links to videos on YouTube.
People can just click and play it easily right there on your site. It's always good to put up fresh content — it entices your Believers to come back. Always thank your audience for their help with contributions and in spreading the word.
Even securing just one pledge increases your chances of reaching your goal by nine percent.
If you secure 20-30 percent of your desired funding, it has been shown that you are 90 percent more likely to reach your goal.
Setting the goal amount is extremely important. Be realistic about what you can obtain and what you request. Don't set it too high. It's better to start small and first succeed. Everyone wants to be a part of a winning team. You can ask for more later if you need it — especially with a history of proven fundraising success.
In trying to determine your goal amount, have an idea of how much your project costs and how many people you have in your network. That will help you determine how much you need to raise. Four thousand people in a network X a $20 average donation per person = $40,000 you can request. A typical donation average is $75.
Creating the pitch
Speak to the community you are targeting. Speak to the people in this crowd. By telling them how they can help versus what you need, you will receive a better and greater response. It is important to frame the pitch in the right way.
Creating the page
When creating your "Dreamer" page, think of it just like a business plan. It needs to be compelling, interesting and exciting. But, you need to keep it to no more than three to five paragraphs. You need to get to the point and make it compelling.
Reflect who you are
Make your Dreamer page reflect YOU and your personality. Give people a little background on who you are, your life and dreams. But, let your personality shine through. It humanizes your Dream and why it's important to you.
Details, details, details
It is essential to provide high level details on where the money is going and what you are trying to accomplish. People want to know what they are investing in and what will be done with the money they contribute to your cause.
Show it off
Showcase the unique goods, rewards and incentives you are offering. Use video if you can to visually show what they are and look like to help entice pledges.
Incentives are extremely important. Incentives will be different based on what industry you are targeting. Find your like-minded community. Offer a wide range of price points — from $5 to $1000+.
Lower levels should be easy to distribute, like digitally. Thank yous or acknowledgements on websites also go a long way toward showing your appreciation and helping engage others. Medium incentives are typically physical giveaways, such as copies of your project (books, albums, films, product, etc.). Larger ones should be services, specialized, limited editions and such.
Be sure to create a good menu of a variety of items to attract small and larger pledges. Offer different types of incentives and rewards; tickets to a show; a VIP launch party; a version of the finished product; experiences, live rolls in a film production; internships at your company; character naming for books, films, etc.; special keepsakes; providing lessons in a hobby you know; ultimately offering direct interaction.
Make it personal
It's good to get personal. For instance, if you are a bike rack company, invite a contributor out for a private mountain bike ride or come out and hang with the CEO to swap ideas. Believers want to feel important, like they are receivingspecial attention and getting VIP access to you and your project.
Live events, social media, emails, phone calls, personal outreach, PR. Try to break through to your targets through different levels of reach.
Frequency is important for communication. You need to be on whatever platforms your Believers are utilizing and need to be sharing and updating them every day — maybe up to three times a day — especially on Twitter. Link directly to their social sphere.
Communication is very important. You need to be diligent in responding to questions and comments. Don't be afraid to address constructive criticism. Use it to show you can take care of your customers and clients and know what is important to them and your industry.
Be tenacious and don't give up
The lifecycle of your project is going to ebb and flow, but, for the most part, there is quite a bit of activity in beginning — then it oftentimes dies off. Push through that. You'll usually see a nice spike at the end. Add new incentives, host a live event.
Eat, sleep and breathe your campaign every minute. Share and keep your Believers posted on milestones you are reaching. Set little goals throughout the way to keep motivated and encourage others to see your progress and momentum; invite them to go on the journey with you as it unfolds. Make them part of the process.
Remember the finish
Make sure you keep your promises and commitments. Post and share your rewards, ask for feedback and follow-up.
Finally, and most important, there is no such thing as "internet angels." You have to involve your friends and family and hope they are going to engage with their network of friends and family. Don't rely on the portal to make your dream a reality on its own. It's how you use and what you make of it that matters.
The views expressed are those of the author and do not necessarily reflect the views of the publisher.