It is a fact that crowdfunding has already proven itself to be a successful alternative in acquiring money and it looks like this will not change any time soon. Of course a crowdfunding campaign is a lot of work but we’d like you to remember why it’s worth to think about starting your business with crowdfunding. So here are 10 advantages which might motivate you to do a crowdfunding campaign too.
Crowdfunding is a relatively inexpensive source of funding
Yes, you need to invest time in creating a crowdfunding campaign and sometimes you also need to invest money to create the materials you need for the campaign. But looking for an investment you have to do this anyway, so your investment of time or little money is not particular required for crowdfunding. You run your campaign by yourself and your team so you are able to control the costs of the campaign.
You keep 100% ownership of your project
Maybe you have already considered different ways to acquire money for the start of your business and every one has it’s own advantages and risks. We won’t talk you out of any way to find an investor but if you are willing to keep 100% of your business in your hands than crowdfundíng could be your choice ;).
A campaign failure is not a dead end
Alright let’s be honest: nobody is perfect and yes it happens that crowdfunding campaigns fail. So what?! It is not the end of everything and from a positive perspective a failure gives you the chance to get better. Learn from your mistakes, talk to other entrepreneurs and start over again. Maybe again with crowdfunding, maybe with another way to get your business financed. Just do it!
You get the chance of minimizing your risk because you can test the market
A crowdfunding campaign gives you valuable insights into the market and how your product/service will fit into it. You get the direct feedback from backers and you’ll get insights of the first round of preorders. This helps you to classify or adjust your business according to the market.
If you run a good campaign this will give you potentially huge promotional effect
Crowdfunding sounds like an easy way to get your business started but don’t forget: you are not the only one funding money this way. So get your stuff done and run a good campaign, which means to take your time and prepare the campaign properly. Therefore you need a communication strategy and an idea of the presentation flow on the platform. Think about how to pitch your business (video pitch, pictures, future plans, team, why crowdfunding, rewards, FAQs, how supporters can help) and you take another step to your success and also very important: you will get publicity
Use the chance to win backers as promoters
If you have convinced the crowd from the beauty of your idea and won their trust, they will help to spread the word because they also want to see your business on the market. But be careful: their trust is very precious. Don’t disappoint your backers!
The campaign is a first test of your marketing strategy
We talked already about the opportunity of failure and even if we assume that you will succeed with your campaign, crowdfunding also helps you to evaluate your marketing strategy. As written before you’ll get direct feedback from the crowd and this helps you to refine your strategy if needed.
Full independence of product development
With a campaign run by yourself and your team you are independent in terms of product development. As you read before you will get a lot of helpful insights with which you are able to improve your business.
Get Feedback from your backers
You read a lot of direct feedback so far and it seems this is one of the key advantages of a crowdfunding campaign. We think so too, because when and where do you have the chance to get feedback before your start your business from your potential clients? Besides the part where you just get feedback you can also work with it. Getting the “feed-backers” on board and figuring out how you can work together sounds like a win-win situation, don’t you think?
Crowdfunding can help to access the second round of funding easier
So your campaign succeeded. Congratulations! If you need a second round of funding money you already learned a lot and you are in the position to profit from your skills. So take a breathe because you fund your base from which you can build up your business and take the next steps.
It seems that crowdfunding is in fact worth trying but for the sake of completeness we’d like to mention that there are risks too. Not every product is suitable for crowdfunding, it can be a demanding and complex project because you need to know how to manage the project & people involved with, you need active personal involvement because crowdfunding is build on trust, it is a difficult task to convince a mass of potential backers as opposed to a single investor, you will have a responsibility to the backer community and last but not least you will expose your idea to the public. Nevertheless crowdfunding is one way to acquire money for your business. So take your time and choose the way which fits best to get your startup financed and be kind to share your learnings with other entrepreneurs.
Author: Claudia Riegler