Since it can be very difficult for small businesses, start-ups and entrepreneurs to get any kind of financial backing from traditional investment channels nowadays, many businesses and individuals are turning to crowdfunding as a means to help raise the capital that they desperately need. And it’s not just small businesses; even high profile celebrities have made headlines for using crowdfunding to raise capital for their projects, like actress Kristin Bell, who helped raise $5.7 million through crowdfunding for the Veronica Mars Movie.
But unless you are a big celebrity or big corporation with an even bigger following, it can be extremely difficult to get substantial funding for your own business through crowdfunding. Many people make the mistake of thinking that by simply posting their project on a crowdfunding site like Kickstarter that they will automatically get the funds that they seek. But, assuming that you are not Kristin Bell, here are a few tips to help amp up your crowdfunding success:
(1) Plan Ahead
If you are at all familiar with me, you know that one of my favorite sayings is “If you fail to prepare, prepare to fail.” This definitely rings true for crowdfunding. Take the time before you launch your campaign to plan it all out- figure out your ultimate goals for your project, determine what exactly what you want to achieve and then, plot out the smaller steps that it will take to get you there. The devil is in the details, so the more time that you take to prepare and plan for your crowdfunding project, the more likely that you are to reach or even exceed your goals.
(2) Get the Word Out
Inherent in the word crowdfunding is the word crowd, so if you don’t have an active audience, you can’t expect that anyone will find out about or invest in your project. If you think that merely listing it on a site like Kickstarter, where over 100,000 other projects have launched will garner enough interest for you, think again! You have to get the word out about your business and project early, as success begets more success (as the saying goes, nothing attracts a crowd like a crowd!). Use media appearances on the web, radio and TV, write blog posts, comments and articles and conduct interviews wherever you can before you launch your project to build up excitement, awareness and credibility for your endeavors. And build up your network through social media sites like Facebook, Twitter, etc. as far in advance of launching your crowdingfunding project as possible. Actively engage with your network, as people are more likely to invest and back those that they know, like and trust. And be genuinely helpful whenever you can to those in your network. Reciprocity is key, as people are more likely to help someone that has previously helped them.
(3) Utilize the 3 Cs: Be Concise, Compelling and Creative
When presenting your crowdfunding pitch as to why people should invest in you, your business and your project, it is imperative to employ the 3 Cs: be concise, compelling and creative. People tend to overcomplicate things, wanting to explain every last detail about their incredible business, project or idea, from their first foray into business with a lemonade stand to Aunt Sally’s $100 investment. But the truth is that attention spans are getting shorter and shorter, while competition for that short attention span is growing larger and larger. So, do something to grab attention right away in a clear, direct manner. Present information in a way that will resonate with your network, whether that involves connecting on a personal level, an emotional level, appealing to their egos or even, in a way that gives them something in return. The great thing about crowdfunding is that it allows for you to give investors something in return for various levels of financial contributions. So, be creative when crafting these incentives; think about your crowd and the kinds of things that will compel them to invest in you. Those incentives could be the make it or break it difference for having a successful crowdfunding campaign.
What other tips do you have for a successful crowding project? Please share them below.
Carol Roth is a national media personality, ‘recovering’ investment banker, investor, speaker and author of the New York Times bestselling book, The Entrepreneur Equation. She is currently an on-air contributor for the national cable television station CNBC, the pre-eminent name in business news, and the host and co-producer of The Noon Show, a current events talk show on WGN Radio, one of the top stations in the country. Carol multimedia commentary covers business and the economy, current events, politics and pop culture topics.
Carol has helped her clients complete more than $2 billion in capital raising and M&A transactions. She is a Top 100 Small Business Influencer (2011 &2012) and has her own action figure.