4 steps to successful crowdfunding
Crowdsourced funding offers special benefits for women-led startups, allowing women to bypass entire layers of male funders, who are slow to back women startups. Instead, women entrepreneurs can make their pitch directly to social networks of friends, family, colleagues, and like-minded individuals everywhere.
There are two main types of crowdfunding. Women-led firms do well on rewards-based campaigns (or “product pre-sell”); a recent survey showed that women who started projects were more likely to succeed than men. Securities-based (or “equities-based”) campaigns require greater investments of risk and money.
Here’s how to shape a persuasive pitch:
- Do Your Research
Select the funding communities sympathetic to your idea. Many crowdfunding platforms specialise, whether in industries, services, for-profit, non-profit, social entrepreneurship, the arts, or even women-only ones. To experience the process, fund a project yourself with a small amount of money and see if you think it’s well executed and a good fit.
- Select the Right Type of Crowdfunding
Next, choose which kind of crowdfunding you want, whether rewards-based (easier), equity-based, or another alternative. Do the homework to identify the type that will work best for your business.
- Shape Your Pitch
Crowdfunding reverses the traditional process of designing and building a product or project before seeking financing. Now, if successful, the crowd can validate your product and identify target buyers before market release. You still need a convincing business plan but the key is to engage customers.
- Formulate Your Plan
• Set the goal by figuring out how much funding you need to raise;
• Build your social networking platform alongside your business plan before you launch your campaign. Most crowdfunding will come from fans and followers on social media;
• Develop a simple and engaging story; make your video clear and authentic and no more than 3 mins. Share your passion for the social or business value;
• Read the fine-print of the funding platform rules. Is it an all-or-nothing model? What’s the time-frame? What percentage of the funds does the platform keep?
• Choose your rewards if your campaign is donation-based. Be specific about timing, shipping options and delivery. If your campaign is investment-based, remember you are creating shareholders and will have to answer to them;
• Communicate with the backers, answer every question, and expand your social network;
• Stay tuned to developments. Crowdfunding rules, such as accounting issues, are still in flux.
Have you considered crowdfunding for your business expansion?
Adapted from an article by Joanna L. Krotz, an expert on business strategies for women.