With the economic climate as tough as it is right now, financial backing and investments are harder than ever to secure for small businesses. But a great new way for businesses to raise capital is through crowdfunding and websites like KickStarter. A few of the CarolRoth.com contributor network of entrepreneurs, advisors and experts have shared some of their best tips for ensuring a successful crowdfunding project. Their tips are presented below in no particular order.
You may notice some of the same ideas listed, but I kept them separate, as something in the way one is framed may resonate differently with you.
1. Sell the Media First
If you can sell your business' idea to the media, even before it launches, you'll often find yourself overwhelmed with people who want to fund the project. The media helps give your business tons of credibility and you'll find plenty of people excited about supporting your new venture.
For crowdfunding success, you need two ingredients: a really good idea and an existing social net you can tap. Take away one or the other, and your project will likely be among the 95% that get a few backers, but fail to meet your funding goals. True, in a few cases the "big idea" is enough to catch fire (e.g. TikTok or Diaspora), but the reality is that crowdfunding platforms are really just marketing platforms. Understand this and your project will have a better chance of success.
A short video post under 3 minutes is imperative. Be sure to focus on the WHY. 90% of decisions take place on an emotional level. Check out Simon Sinek's concept on the Golden Circle to learn more. Use statements like "I believe," and share your vision. Features and functionality (the What & the How) can be illustrated in the video, but keep them to a minimum and state the *Why* with each feature you show.
The most effective way to get a crowdsourced project off of the ground is to connect on an emotional level with the audience.
Think about the last time you gave willingly to any call for funding. Didn't you "feel" something about the cause and/or requestor?
We support those things that engage us emotionally. We spend money with people we like and we give to causes we feel good about. And, we share the story with others, a necessity for effective crowdsourcing, when we're emotionally engaged.
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.