Focus on funding: Tips for crowdfunding

When you’re getting your new business off the ground and looking for funding, crowdfunding is probably one of the options that people will recommend. It might be a fairly new concept but it’s one that has truly taken off.

There are now plenty of crowdfunding platforms for you to choose from – each with their own nuances. The concept works on the premise that you take small amounts of funding from many different investors in return for a reward such as equity or your goods and services. At a time when lending is at such low levels it certainly beats going to the banks.

But how can you ensure your crowdfunding pitch is a success?

In this article we will:

1. Give you a step by step guide on how to make your crowdfunding project a winner.

What are out eight steps to success?

1.    Choose the right platform

The are tons of different sites out there at the moment and while many of them overlap in who they cater for, they all have subtle differences so it’s wise to choose carefully.

You need to look at what kind of businesses the platform is aimed at but importantly you also need to know what kind of returns the platform offers investors. Many of the platforms are equity-based others are rewards-based – both will have very different outcomes for your business.

2.    Have a sturdy business plan

You can’t leap into creating a crowdfunding pitch with just an idea. You need to have a business plan which backs that idea up.

“You must have an investable business, with a well written plan and financial forecasts detailing why an investor should invest in your business,” says Luke Lang, co-founder of Crowdcube.

“Without this information you simply will not get past the first vetting stage and therefore your crowdfunding journey will stop before it’s even started.”

3.    Have a clear target audience

When you create your campaign you want it to be as poignant as possible and having a clear target audience in mind will help you to do this. What kind of investor is going to want to get behind your business? When you’ve got this straight in your mind you will be able to plan the marketing of your campaign better.

4.    Have a reasonable investment target

Think hard about what level of investment you are looking for. Don’t get greedy and go for too much or you could get yourself into trouble. You also need to think about what your investors will get in return.

“You need to set an investment target that is achievable and represents good value for an investor’s money,” says Lang. “For example, if you’re an entrepreneur seeking to raise equity finance be realistic; if you’re a pre-revenue start-up don’t value your business at £10 million!”

5.    Be able to prove that the model works

One of the easiest ways for you to do this is to show support from would-be customers. You could get family and friends all to show their support and get as many recommendations as possible so it looks like your business is already a sparkling success.

6.    Create a passionate pitch

Investors like to see passion in people’s pitches. You need to find a good way to tell you story as well as your business plan that will make people believe in you. You can use a whole manner of tools to tell your story – include lots of images and text and even video if you can. You really need to convince people of your determination.

7.    Share the story with the right people

“Once you have created a good quality pitch that tells your story in a compelling manor you will need to promote it,” says Lang.

“Be passionate about your pitch and take every opportunity to tell people about what you are doing and what you want to achieve. Start promoting it to friends and family and encourage them to spread the word on your behalf.

“Use social networking websites to extend your reach further and encourage people to retweet or share comments and updates to their network of friends.”

8.    Offer as many rewards as possible

You can add to the value investors are getting by offering little rewards in addition to your agreed terms. For example why not give them a life-time discount on a certain product or even simply mention them in the About US section. Little things can make the biggest difference when someone is putting their cash on the line.