Need to get over that financing hurdle? Facebook, Twitter, and just about everything online, is reshaping the way we interact with each other. Micro-lending and peer-to-peer lending were the earliest examples of “social financing”– now, crowdfunding presents an exciting new platform for aspiring artists, philanthropists, and startups to finance their projects. The ever-growing social media landscape is the driving force behind crowdfunding’s ability to generate finances to start and grow your business.
What is Crowdfunding?
Crowdfunding is a platform which allows regular people to display their ideas by using the power of social media and video outlets, such as YouTube, to pitch their projects to a large pool of micro-investors. Whereas a substantial investor would have been needed in the past, crowdfunding makes it possible for individuals to leverage the masses to reach their investment goals. Whether you garner enough support or not depends on your approach.
The real power of crowdfunding lies in the ability to expose large groups of investors to new creative projects, ventures and/or business opportunities. Writers, independent filmmakers and entrepreneurs looking for seed money can take advantage of crowdfunding to get their business off the ground and/or to revive an existing business. Crowdfunding is also becoming an effective way to finance non-profit enterprises.
Tip 1: Understand Your Options
Check out as many sites as possible to find one best suited for your project. As listed below, certain sites are geared towards a particular niche or type of campaign. Would you like to raise as much money as possible by a certain date? Or would it be an “all-or-nothing” campaign, meaning your investors wouldn’t be charged if the entire campaign goal wasn’t met? Check out your options and decide what is best. Here are some good examples:
Kickstarter – Crowdfunding for creative projects
Crowdtilt – Crowdfunding for ANYTHING
AngelList – A funding site for reputable investors and serious startups
Indiegogo – Similar to Kickstarter, for creative projects
Appbackr – Crowdfunding for apps
Tip 2: Create a Campaign that Attracts Press
Whether it’s your product or an engaging video that goes viral, get creative and outline ways you can attract some press. Once you’ve outlined your campaign, leverage the power of social media to garner support for your project. See our post on “Going Viral.”
Tip 3: Engage with the Community
Be sure to provide regular updates, answer any questions, and ask questions. Engaging and showing progress will ensure them that they made the right choice by supporting your cause, and may prompt them to give positive “word-of-mouth” marketing.
Tip 4: Promote like No Tomorrow
People like stories, so tell a great one. Media outlets are hungry for news, and your press release can add more fans and drive people to your campaign site. Tweet about it, write blog posts about it, and add a signature line to all your emails with a link to your project. This not only gets you seen by people, but also builds backlinks for search engine results.
Tip 5: Don’t Ask for Charity – What’s in It for Them?
Realize the difference between a well thought-out and engaging campaign, versus just flat out asking for help. Although people could probably sympathize with your struggling band, remember to offer enticing rewards for investing their hard-earned money. Get creative with your gifts and offers; make your potential investors feel like they’re supporting a movement, rather than just forking over money.
In addition to aggregating funds to finance your project and ideas, by using crowdfunding you’re able to engage directly with your target market, tweak your strategies, and learn from your mistakes. Kickstarter was reported to have collected over $40 million and funded over 20,000 projects just 2 years after launching in April of 2009.