Crowdfunding is an increasingly popular way to raise capital for a new startup, or to find investors for product development. With so many websites out there offering crowdfunding, it’s a great way for entrepreneurs to access capital that may not be available to them through traditional routes such as bank loans.
Why Should You Crowdfund Your Startup?
A business can launch a crowdfunding campaign at any stage, but you’ll most commonly see new startups using this as an investment route. This is because crowdfunding allows the business to raise venture capital without being tied into traditional financing contracts, such as high interest business loans. A crowdfunding campaign could request money in exchange for an early release of the new product, or invitations to a special event.
There are crowdfunding rules, however. For example, you need to set your intended target you wish to raise and do so within a time limit. If you don’t raise your minimum target by the deadline, no money is released to you, and you’ll need to start all over again – which could cause serious delays to your business launch or product development timescale.
If you’re successful in reaching your crowdfunding target, remember you’re also obligated to keep investors informed, and deliver your product or services to the timescale you promised in your crowdfunding campaign. If you fail to deliver, you need to give all of the money back to your investors.
Crowdfunding does something else that traditional business investment doesn’t: it gives investors a feeling of ownership and involvement in your business. This means that you have a ready-made audience of willing customers – but, more importantly, these people are also your biggest champions. They’re going to be powerful in spreading the word of your services and products, because they directly invested in the creation of them.
Finally, a huge advantage of crowdfunding is that you can attract the attention of investors from across the globe: you can spread the word of your new business venture far beyond your local community, helping to secure new customers and clients as well as attracting investment.
How To Crowdfund Your Startup
There are so many different crowdfunding sites out there, you’re bound to find one that suits you! The three predominant platforms in the UK are Crowdfunder, CrowdCube, and Seedrs (which also now offers a secondary market involving shares trading for investors, open during set times of the year).
Some of these sites require you to offer a series of offerings in return for investor money – such as a tiered range of packages for your services and/or products. For example, a new product development may offer the product itself for the investment (at usually half the price of the projected retail cost), or a number of the products plus accessories for larger investments.
Other companies are solely financial: you’re effectively offering shares in your business for investors. This is a more traditional route, but is much more technical and harder for new startups – businesses are usually more successful with this type of crowdfunding when they’re more established and required a second or third venture capital fundraising round.
To crowdfund your business, you need to stand out. With so many crowdfunding opportunities for investors out there these days, the competition for investor cash is fierce.
A classic route to promote a crowdfunding campaign is to focus on just digital promotions: shouting about it on social media, sending emails to new and potential investors or customers, and paid digital advertising. All of these tactics will work to an extent – but you need to do more if you want to stand out!
Use Print To Promote Your Crowdfunding Campaign
Many businesses – especially new startups – take a digital approach as they believe it’s more cost-effective.
However, a combined print and digital marketing strategy will always be stronger than just digital alone. More than that, a print marketing campaign will stand out when you’re on the crowdfunding trail, as investors will pay attention to your literature. People aren’t used to handling physical printed products in relation to crowdfunding – a digital activity – so using print in your campaign will help you to stand out.
You can use print marketing for crowdfunding in a range of ways, including:
- Sending personalised direct mail letters and/or flyers to potential customers, your local community, and other contacts;
- Creating a brochure to provide a showcase for your new product or for the campaign, to hand out to potential investors;
- Create branded presentation packs to pitch potential investors;
- Offering print options as part of your crowdfunding rewards (such as including the logo for your biggest investor as a ‘partner’ on your brochures).
Sending or handing out printed materials to promote your crowdfunding campaign is a great way to make sure you’re noticed – especially in your local community, where investors already have a connection with your business.
Remember: always include full online details for your crowdfunding campaign, including the URL, on any printed materials!