Thanks to the web, raising money from individuals has become so much easier as compared to the old way of physically going door to door or organizing fundraising events. Crowd-funding platforms such as Kickstarter, IndieGoGo, StartSomeGood have made it possible for entrepreneurs to showcase their projects and accept funds on the web while social media has made it easier to get the word out. A number of social startups are now turning to crowd-funding and many have fundraised successfully.
Does Crowd-funding Makes Sense for Your Social Good Startup? Before you follow the crowds into crowd-funding, here are few things to consider
Crowd-funding works best for small projects of reasonable (attainable) amounts ranging from anywhere between 1-8k. Through there have been exceptions such as a few projects that raised over 1 million dollars but thats not the norm. Consider crowd funding for things like having a prototype funded, a pilot, a video, travel expense or other small, bite-sized funding requirements of your startup. Do not expect to raise funds for your entire startup operations.
It requires resources. You need to invest in making a good video or presentation site that tells your story. Furthermore, you need to keep at it, aggressively, to get the word out on your project. You need a dedicated resource – yourself or another team member to find creative ways to get the word out every single day till you reach your goal.
You still have to focus on your friends, family and your community before strangers start investing in your project. Strangers will only start discovering and begin trusting your project once you’ve reached a certain level of funding, which will then qualify your project for the popular or featured sections of the platform. To reach that stage you need to get your friends, family and connections to invest in your project first. Having a good follower base on social networks such as Twitter and Facebook helps.
You usually have two choices, go to the crowd to raise small amounts of money for parts of your startup or raise big money from few investors to have your startup completely funded.
The direction you take really depends on the nature of your project, stage at which you are (conceptual, launched, growth stage) and the resources you have available, you’ll need to weigh in as to where to put your maximum fundraising efforts. For instance, If you are just starting off and your project does not fit into the established criteria of institutional funders or major donors, then going to the crowd will be a good bet to at least have the project off the ground before you could go to mainstream investors for second round of funding. If you have volunteers/interns or more people available at hand you can do both as part of your fundraising strategy.
5 Tips for Successful Crowd-funding If you’ve decided to go to the crowd, here are 5 tips that will help you.
1. Create a good video
2. Go wild in promoting your campaign – through your social networks, bloggers, press. We spoke to two organizations who were over funded on Kickstarter, Project Repat and JeepNeed – they both mentioned that getting the project out in the press greatly helped in achieving their targets.
3. Offer attractive rewards – Project Repat attributes offering tangible products to the backers as key part of their success.
4. Keep at it every single day of the campaign period. If you’ve maxed out on your networks think of other creative ways to draw attention like how Will Baxter of I AM. got on a treadmill, vowing not to get off until the Kickstarter campaign for his social venture I AM. was funded. Will ended up raising close to $50,000 way more than his initial target of $ 45,000.
5. Once you’ve met your target, keep your backers updated. If you do a great job with keeping your backers engaged they’ll be your first advocates when you need to raise funds the next time.
Have you tried crowd-funding? If yes, what was your experience like?