Crowdfunding can be a great way to raise finances for a young company. By taking little from the many, crowdfunding’s popularity comes from the additional benefits it provides, not just the funding itself.
Firstly, is profoundly more efficient than traditional financing. You get full autonomy and the freedom to put your message across in the exact way you want it to. The platform (and picking the right one is important!) will serve as a place in which you can build social traction and generate more substance and proof – proof in the form of social backing. People want to jump on board of what’s going to be popular – and what better way to show its gaining popularity.
On top of this, you’re not claiming that it’s the finished product. With more isolated funding paths, you’re alone in your design. Crowdfunding, however, can give more opportunity for feedback, perhaps in the form of sending backers some prototypes. The loyalty of early advocates can be rather profound and can stick with you for the long-term.
How do you prepare for the fundraising?
Seeing as this is just as much a marketing opportunity as it is a funding one, you want to ensure you succeed at both.
Research, research, and more research
At the stage of preparing for a crowdfund, your product and idea research should already be finished. This is your opportunity to fully understand the scale and benefits of crowdfunding, along with strategies and what makes a successful campaign.
Picking the correct platform
Choosing the right platform is crucial. There are many factors to consider here, not just the benefits and disadvantages of each but which ones perform best in certain niches and which ones are focused on certain industries.
Understanding the wants and needs of the target audience is important. You’re going to not only figure out exactly the target audience (you should already know this) but perform comprehensive research on understanding them.
Make sure you don’t aimless begin a campaign without having SMART goals in mind. This means the amount you want raised, timelines, quantity of backers and so on.
Prepare the content
Ahead of launch, you want to prepare all of the marketing content so it’s ready to go. This includes planning what tools you’re going to use (perhaps a promotional video over a presentation?) and then get to work. it may also be a good idea to outsource the parts that could be better done by a specialist, as this can really enhance the effectiveness of the crowdfunding campaign. This of course isn’t a necessity if you’re at college and on a budget, as this may be your chance to show and prove your own creativity.
Not only should you communicate in a personal way (a good strategy to enhance relationships and feelings towards your idea or product) but also keep the communication on-going. This means being transparent and letting them know all the details. Hiding any information will likely soon be discovered and the word will spread. Honesty is key to gaining sustained social traction. This also means taking feedback on board and recognizing it.
Top 5 crowdfunding sites to help you fund your college project
Kickstarter is by far the largest crowdfunding site. Its size means that there is instant credibility there to some degree, as well as it having a huge potential traffic and audience reach. The downside to using Kickstarter however is that the money is not kept if the goal isn’t reached – so it’s kind of an all-or-nothing scenario. Kickstarter takes 5% of the total funds raised in fees, as well as payment processing fees.
Patreon is another huge platform, but it operates very differently to Kickstarter. The key difference is that it’s a subscription-based model, meaning you’re drip-fed funding each month. No one will take the money away from you if a goal isn’t reached, and monthly funding is great for cash flow. This has less viral opportunity, and instead is more of a network of charitable on-going support (there are opportunities to give Patreon supporters exclusive goods, services and content though). Patreon take 5%–12% of processed payments. This is the preferred method by the Youtube creators.
GoFundMe is another big hitter which is great for quick funding. GoFundMe crowdfunds tend to be more focused on short-term projects. There is a very standard 2.9% processing fee as well as $0.30c for every donation. This is cheaper than Kickstarter’s 5% processing fee. GoFundMe has seen many successful campaigns that have ran into the millions. However, 0% of funding fees is charged on personal campaigns, unlike Kickstarter and Indiegogo.
CircleUp is perhaps your best choice if you’re a startup trying to establish a brand. It offers equity capital and credit financing, so this is more professional-centric as opposed to individualized. This is a great choice to scale up, but you have to hit at least $1 million in revenue to list on their site, though this may not be as far away as you think for your project if other crowdfunding campaigns are successful beforehand.
If your project is a non-profit, then Causes may be your best option. With a focus on social and cultural issues, Causes provides a platform for those who want to make a difference. With almost 200 million users, its global reach is massive and could really help pick up your non-profit and create a movement.