You’ve seen crowdfunding splashed over social media and business sites. In this week’s Bartercard blog, we list the basics and what you should know to successfully raise the finance you need to get your concept to the market.
What is crowdfunding?
It’s funding a venture or project by raising monetary contributions online before the concept launches. It’s also a way test your idea based off its capital-raising success. If it sinks at crowdfunding stage, it might be a flash in the pan or won’t take off in the market at all.
It’s a popular space
In 2015, the crowdfunding market raised approximately $34 billion (crowdexpert.com).
The most successful crowdfunding campaign ever is the ‘Pebble E-Paper Watch’ which raised over $10.2 million in 37 days.
There are many different types of crowdfunding. A few of them are:
- Rewards crowdfunding: is where a product is pre-sold to launch a concept, without incurring debt or sacrificing equity.
- Equity crowdfunding: is where the backer receives shares in a company in exchange for the money pledged.
- Syndicate crowdfunding: adds value by putting three key elements together: a start-up, a lead investor and backers (the latter is an investor who doesn’t have extensive experience or wants someone else manage the investment).
- Donation crowdfunding: raises contributions towards a charitable cause.
- Lending crowdfunding: is where investors are repaid their investment over time.
What does it take to launch a successful crowdfunding campaign?
It does take a marketable concept but it’s not as simple as chalking up an idea, creating graphics and copy, and throwing it all up on a crowdfunding site.
What it does take is a well-mapped marketing campaign, assets like brand, website and a database, telling a unique story, building up anticipation and your following on social media leading up to the launch, investing in advertising and PR to secure placement and exposure, preparing all marketing assets like video, press releases and imagery, and engaging audience and potential investors whilst the campaign is live.
It’s imperative you have everything lined up before the launch. Translating video and editing it in accents for countries where you think it’ll have the most impact could maximize reach and pledges.
The first 48 hours are critical
During launch you will need to constantly show, engage and explain why your product is invaluable, and post frequent updates which will create buzz and give existing fans and advocates more reason to talk.
Crowdfunding is a smart way to tackle capital at start-up. Bartercard’s Interest Free Line of Credit is another. Talk to your Trade Broker about how you can use Bartercard to makeover your business without spending cash.
Adapted from an article that appeared on bartercard.com.au.