Crowdfunding is a form of crowdsourcing and alternative finance that basically involves funding a project or venture by raising monetary contributions from a large number of people.
It allows entrepreneurs raise capital without giving up too much equity. It has over the years become an effective alternative for raising funds for business ideas. Jumia Travel, the leading online travel agency, shares 9 things entrepreneurs should know about crowdfunding to take full advantage of it.
It is difficult to plan a crowdfunding campaign because you don’t know what to expect and can hardly predict the kind of reaction your campaign might get. Your campaign may or may not go viral but either way, you should be prepared to handle possible press attention and to respond to your growing community. You should be able to manage things immediately as they come up.
Choose the Right Platform
Spend time researching on the different internet-mediated registries or online platforms for crowdfunding, and choose the one that is right for you. Choose a site that fits your project and the industry you are in.
Pay Attention to the Deal
You should pay attention to the details of the terms of the platform, the percentage the platform takes and when you get the money. This is to avoid nasty surprises down the road. Pay attention to the deal of your crowdfunding platform and find the one you are comfortable with.
Think About Your Messaging
It is easier to raise money for an idea that touches a lot of people whether or not the venture is for-profit or not-for-profit. Consider the message of your campaign and think of how you can make it relevant to as many people in your target group as possible.
Learn from Others
Check out and analyze other successful crowdfunding campaigns to see and understand what worked for them and how you can apply it to your campaign. However, you should be realistic about how much of what you learn from these campaigns you can apply to yours, considering your resources. Adapt ideas in a way that fit your budget, target group and brand.
Be Prepared to Tell Your Story (Be Transparent)
You need to be authentic with your campaign and be as transparent as possible. Without these, people are less likely to respond positively to your campaign, they’ll remain skeptical and unbelieving. Be as communicative, engaging and as open with your community as possible, let them know as much as they want to know and have as much evidence as they need to believe your campaign.
Get Early Adopters
Get friends, family and people you know to invest right away. This is because people are more likely to invest when they see others investing and people tend to trust a campaign when it seems to be doing well. Investors are also likely to develop an interest to invest when they see your campaign is something the public/community are interested in and responding positively to.
Have a Strategy for Marketing
You need a consistent and persistent marketing plan that will help you reach far beyond your circles – asking two or three friends to help you repost or share your campaign isn’t enough. Research and figure out where to find the people in your target community and create eye-grabbing, heart-grabbing and convincing social media posts and ads to grab their attention, generate interest and incite a positive response to your campaign.
You can also create genuine relationships with influencers and reach out to as many of them as you can to support your cause and help you get the word out.
Crowdfunding Can Fail Very Easily
You should be prepared for this reality. You need to know when to crowdfund and when to approach other resources. Not all businesses are suited for crowdfunding. However, once you have considered these and work towards the proper execution of your crowdfunding campaign, its chances of failure are reduced.