The method of business funding that involves getting lots of small donations from individual investors, has become more and more popular over recent years. Not all businesses are appealing to big investors, and crowdfunding can be a way to get a project off the ground that otherwise might not see the light of day.
These are just a few of the ways to tell if crowdfunding might be the right choice for your business.
Traditionally Marginalized Entrepreneur
Women, people of color, those who are disabled, and those who have multiple marginalizations – women of color, for example – have historically had a more difficult time getting bank loans or big funding acquisitions. Even venture capital teams who think they are approaching pitches without bias are more likely to accept the exact same pitch when it is given by a man.
With more women and people of color making their ways into venture capital circles, this inherent bias may slowly shift, but in the meantime, these entrepreneurs may struggle to get their crowdfunding projects funded. Crowdfunding, however, removes many of the biases from the process. Creators are less important than the project itself. Women may actually have an advantage in crowdfunding, as women are socially conditioned to tell stories that are more emotionally engaging.
Great Story for Social Media
Does your project have the kind of story that makes people go aww and click the share button on social media? A key to getting your campaign funded is to be able to reach more than just your personal social network. People are more likely to share your project if it has a story that makes them laugh, or makes them feel virtuous by sharing it.
Nearly every project can have a compelling story; if you’re not sure how to craft it yourself, it’s time to enlist a copywriter who specializes in marketing.
Tech-Friendly Target Audience
In other counties, startups are lacking early-stage investments, so many entrepreneurs are moving their businesses to regional US cities due to the attraction of financial and technological benefits. With so many businesses relocating their corporate headquarters to the US, venture capital is more difficult to acquire than ever.
By definition, crowdfunding happens online. If your project targets people who are never online, you’re going to have a hard time getting funded. Now, it’s worth noting that some projects might initially seem to be a bad fit for crowdfunding, but the process of considering crowdfunding can cause some important reconsiderations in your project.
For example, if you were creating a service that would help the elderly with a basic daily task, you might assume that the target audience is senior citizens. Although some seniors absolutely are comfortable with technology and spend a great deal of their time online, others struggle to understand how to use the Internet. Seniors also tend to have more limited incomes. If you think of seniors as your target audience, you aren’t likely to pursue crowdfunding.
But what happens when you shift your perspective? Instead of targeting seniors, target their caregivers and loved ones. Suddenly your service is a lot more appealing, but your value statement is very different. It also now has appeal to a crowd that is more likely to be fluent online.
Project Not Appealing to VC Crowd
Crowdfunding is not only about money, venture capitalists are generally looking for a very specific type of project. VC tends to be most active in tech heavy areas like Silicon Valley, Austin, and Richmond. Outside of startup friendly metro centers, it can be very difficult to get the attention of the venture capitalist circle.
VC tends to look for tech unicorns, companies that will be valued over a billion dollars. Smaller services and companies that want to scale more slowly are less interesting to people who are primarily interested in getting their investment back.
Great Rewards and Milestones Opportunities
Something that really sells crowdfunding programs is the various rewards and milestones that customers can receive. If you can’t think through what rewards your project might offer, or what milestones you might want to reach, crowdfunding might not be ideal for your business.
The fact that you aren’t sure what to offer, however, doesn’t mean that it’s impossible. As more and more companies consider crowdfunding, those who have run previously successful campaigns are mentoring those who are new at the process. With more and more companies moving first to the US and then to the rest of the world, global business is at a new and exciting crossroads. Crowdfunding allows your project or concept to reach interested parties around the world, creating new opportunities for companies. Businesses are rewarded for a global presence and interest.
If your company is ready for crowdfunding, this can be a new and exciting way to get your project off the ground and into development.
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