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Speed-track you fundraising exercises with time tested strategies
With startup culture on the rise everywhere, it would seem that everyone is an entrepreneur these days. However, not all startups are fortunate enough to raise enormous amounts of funding by venture capitalists like SoftBank and Alibaba. It’s not enough to have a viable startup idea; the real task is to attract the investments necessary for your project to grow. So what should be the modus operandi? Well, here are a few areas you can look into if you want to attract the funds that’ll let your company stay afloat for a long time.
Go for Crowdfunding
Crowdfunding has made great strides ever since the U.S. passed the JOBS Bill in 2012. The Act makes provisions for smaller amounts of equity funding from a large investor base. Taking the cue, a number of crowdfunding sites have sprung up; at the top of the list are Kickstarter, Indiegogo and Crowdfunder. Businesses that go for crowdfunding are usually smaller in scale, or just starting out, or are catering to a niche audience. However, getting your new idea on to a crowdfunding platform does not necessarily mean that it’ll get funding. According the latest report, 56.13% of startup projects do not acquire their targeted funding on Kickstarter and the result is the same across platforms.
Create a good campaign
Marketing your idea on crowdfunding sites is a key area of concern. Don’t bloat your capital requirements and don’t promise the investors too much in return. Making clear and engaging videos showing a step-by-step building of your product are also a great idea. Above all, don’t offer investors some half-baked idea that is on the realm of speculation, no one is going to invest in that. Crowd funders are usually not looking for high monetary gains. Most of the time, they either want the physical product or are just interested in the project. You have to create a loyal consumer base and a niche audience around your product who will cater to your requirements every step of the way.
Use social media
Social Media can be an excellent means to reach out to potential donors and consumers, but you need to get your footprint way beyond just Facebook or Twitter. Make a blog about your product on WordPress and create a website to generate buzz around your product. Find and advertise your product on specific networks and forums that subscribe to what you’re building. Don’t rule out making YouTube videos either. Above all, you must engage with potential customers, answer queries and keep them updated about every step of the process. So keep all channels of communication, like Chatbox, Instant Messaging etc. open.
Secrets to Raising Capital for Your Business
Don’t be afraid if your idea is implausible
Crowd funders aren’t afraid of so called “weird” or unmarketable ideas. If you’re sourcing from people, it generally means that your product is niche and exclusive enough to cater to a select group of people, like off-the-mainstream video games or electronic art products. Last year, Studio Banana Things came up with their weirdest creation ever, called the Ostrich Pillow, which is basically a giant pillow that you can wrap around your head in any position if you want to take a snooze while on the go. You would think that the prospect of a giant-sized polystyrene filling wrapped around your head in public would turn most investors off, but they got their funding on Kickstarter and are actually selling it now! That’s because the idea was marketed well (and everybody loves to snooze, right?) Outlandish ideas are no problem for crowd funders, get creative, they’ll love it!
As already mentioned, crowdfunding investors aren’t really in it for the money. They contribute only a small amount, so they don’t really stand to lose much if the project fails. (Most of them aren’t even accredited, by the way). So don’t worry if you can’t offer cash returns on equity investments, offer rewards instead. Rewards can come in several guises, from offering pre-ordered products to delivering exclusive services to giving people special recognition for what they have contributed. For example, if you’re building a video game, include the biggest donors as side characters in it. Entrepreneurs have gone all out innovative in promising rewards; from sending home-baked cookies to investors to offering sleepovers with band members for an up-and-coming musical group. If you’re project has an eco-centric purpose, don’t forget to highlight the cause. Even a beautifully crafted thank you card can be a huge incentive to fund your project.
Listen to consumer criticism
Feedback is important to determine what your customers want, so don’t forget to have a feedback page on your digital platform. People asking for your products will usually know exactly what they need, which is a great source to streamline your project. Crowd funders aren’t just disinterested backers, they’re also a community of like-minded enthusiasts who are eager to be a part of your creative process. If you take their ideas moving forward, it’ll only better your product. It’ll also help creating a firm supporter base. For example, the Ostrich Pillows talked of earlier are coming up with their new version Ostrich Pillow Light, based on consumer demand and feedback, which is again being crowdfunded on Kickstarter.
How To Raise Money For Your Business or Company?
Proper paying channels
You must streamline the financial end of the project before you even begin to ask for donations. Usually platforms like Kickstarter and GoFundMe have pretty secure paying channels. However, with money pouring in from hundreds of small time investors, keeping track of donations can be a problem. Make sure you don’t fall foul of SEC guidelines, which keeps a record of the amount raised from each individual donor.
Angel Investors are typically people who can offer a higher amount than the money sourced from crowds. They are usually retired CEOs and the top brass from the industry, who have their own funds to contribute to a specific project. They take interest for the sole nature of the project and more than financial returns, are looking to be on board as an advisor or promoter. Having an angel invest in your project is a great idea, as they will up the quanta of money, as well as offer valuable guidance. However, unless you have a super-rich family member with unlimited amounts at his disposal, you will need to reach out to angel investors through your digital platform. Have a read of Brian Cohen’s What Every Angel Investor Wants You to Know, it can come in handy for your next big idea.