Crowdfunding can help get you over that initial hurdle by letting you source funds from hundreds or thousands of individuals rather than relying on an investor or bank to give you seed capital. Sync NI's Brendan Drain and Tina Lauro Pollock have together run three successful crowdfunding campaigns over the years and helped consult on many others, and we've picked up a few pieces of general advice over the years that should help anyone considering taking the plunge:
#5: Build your audience first
We've seen many campaigns launch with reasonable goals and fail to gather even the smallest bit of support, and it's usually down to a lack of preparation. Keep in mind that the crowdfunding platform won't do any of the heavy lifting for you, it's just a tool you can use to get support from your existing audience. Build at least a social media following for your business idea before launching the campaign and they will act as your seed funding to get the ball rolling.
The type of customer base you need to build will also depend on what type of crowdfunding platform you will be using. A platform that allows you to offer equity in your company will appeal more to those in industry, for example, while the Back Her Business platform uses a Kickstarter style reward system aimed at the consumer market. That model is more focused on your product or service and rewards should include the product as many customers will use crowdfunding as effectively a pre-order system.
#4: Have the right type of project
Not every business idea or project is well-suited to crowdfunding, and learning this early can save a lot of time running a campaign that has a very low chance of success or help you position your business to be more crowdfunding-friendly. In general, the things that do best on crowdfunding are exciting ideas that wouldn't otherwise be possible. People are also far less likely to get behind a project if the owner could self fund it but chose not to shoulder the risk.
If you can make the case that your product or service wouldn't exist without crowd support, you're on to a potential winner. Is this a niche product that all the big companies have abandoned because the market is too small for them? Are you way ahead of your peers but VCs won't take the risk? Is it a charitable cause that you know won't be very profitable but that people can get behind? If so then crowdfunding may be right for you.
#3: Be honest and up front about money and risk
Though you're asking for funds from the general public or fans of your particular business, approach your crowdfunding campaign as if you were pitching to investors. Thousands of investors. They will need to see the rough budget breakdown, projected timelines, and previous experience of your team to build confidence that you know what you're doing. They need to believe that the project is achievable and your team can be the ones to do it. Detail any risks and how you will approach them, and don't shy away from tough questions you get asked by potential backers.
#2: Be flexible and attentive throughout your campaign
Crowdfunding is often your first real market test of genuine interest in a product, so pay close attention to the types of questions you're being asked. Your backers will be the greatest advocates for your business going forward, and can help identify reward tiers they might shell out more money for or ideas to extend your goals that you hadn't considered. Every backer deserves your attention, even if it's just a quick thank you message to start the conversation. That conversation will often lead somewhere positive, sometimes sparking questions and leading a supporter to increase their pledge amount or tell others about the campaign.
#1: Build a cause people can get behind
Traditional marketing is all about getting your product in front of people's eyes, but you can't buy the kind of attention that a crowdfunding project needs to succeed. People need to not only see and like your product but also believe in it strongly enough to spend their money to make it happen and shoulder the risk. Organic word of mouth marketing and social media are the tools of choice here on the small scale, with larger projects benefitting from endorsements from trusted websites and newspapers.
About the author
Brendan is a Sync NI writer with a special interest in the gaming sector, programming, emerging technology, and physics. To connect with Brendan, feel free to send him an email or follow him on Twitter.
Got a news-related tip you’d like to see covered on Sync NI? Email the editorial team for our consideration.
Sign up now for a FREE weekly newsletter showcasing the latest news, jobs and events in NI’s tech sector.
