Three Steps to Set Up the Best Crowdfunding!
11 de November de 2021
11 de November de 2021
In the year 2007, three young men from San Francisco were struggling to pay their rent so they decided to put three mattresses in the living room and rent them for 240$. From that moment on, they started looking at it as a business and, two years later, they got the needed funding to make it happen. Today, those young men make millions of dollars annually and their idea is known across the globe as Airbnb.
Truth is, having good ideas is a very valuable gift — that is, as long as we make the most of them and not sentence them to the captivity of our memory. But, good dreams don’t come cheap and most of our business ideas require money in order to see them through. Crowdfunding may be the solution: it’s a funding method that’s based on small contributions from many people that are not part of the project. Companies like Kickstarter, Indiegogo, Lanzanos or Verkami allow users to share their projects so that anyone can fund them. Let’s take a look at the key steps to set up a successful crowdfunding and make your business dreams a reality:
This is the first question we should ask ourselves before taking any step. We must first calculate how much money we need, for what do we need it and how we can get it. Bootstrapping —or using your own funds to start your company— gives you the independence that you lack when counting on the capital of external investors, but it’s going to slow down the growth rate of your project.
We must understand that there are other types of crowdfunding besides donation:
Reward Crowdfunding: A product or service is offered in exchange for the funds invested in the project. Recommended for the initial stages of the project in which public engagement can validate our business idea.
Equity Crowdfunding:Once you have validation, you can go for this type of funding. In return, investors receive equity shares of the company or commitments on benefits.
Debt Crowdfunding: This model offers investors repayments plus interests on a fixed schedule.
In order to make sure that crowdfunding will move the project forwards, we must focus on at least 3 key aspects:
Having the support of the community: Beyond the three Fs —family, friends and fools—, the success of the campaign will depend on your ability to make it known in a community of people who are interested. The most successful crowdfunding campaigns have a very well defined marketing plan: creating on-line content, selecting the media outlets, contacting influencers, email marketing, social network presence and, of course, having a landing page.
If you can’t create your own community, you can always address an already existing one, which is the most common option. However, controlling it and motivating it to participate will be much harder.
Mind the design: Copying is wrong, but watching the best can give us some hints on which is the safest path to take. Going through the presentation of campaigns that were a success will help us come up with creative and attractive storytelling, prepare the target channels, calendarise and establish milestones.Crowdfunding depends on the users — taking care of every detail and making your project attractive will make more people notice it.
Draw attention to your project:Once the campaign is on its way, you have to work 24/7. You want to have the highest visibility, so you must work hard and continuously on social networks. Contacting specialised media, having conversations with the public, being transparent and clearing any doubts immediately.
Careful though! You must pay special attention to the first week. First week is key. Campaigns that raise 30% of the intended funds in the first 7 days, have a 90% probability of reaching the final goal.
A crowdfunding campaign is considered to be successful once it has raised 100% of the funds it intended to raise. But crowdfunding campaigns have a pre, a during and and after. That’s why it’s important to follow up on the campaign, in order to deliver the promised rewards and address the new shareholders of the company. Success awaits far beyond the funding goals.
An example of success that you must pay attention to is Dougall's and Fellow Funders. In just 6 hours and 15 minutes, Dougall’s Beer had reached 125% of their goal through the Spanish platform Equity Crowdfunding Fellow Funders — the maximum allowed by the Stock Market National Commission. The Cantabric company raised 1,250,000 euros from 396 investors and became the largest equity crowdfunding round to take place on a Spanish platform.
Article written in collaboration with: Fernando Ovilo Villar, CEO at Smartmee Soluciones Ágiles, Professor at EAE for the Master in Emprendimiento e Innovación, an Executive MBA booster and an MBA strategy designer..