Guest Post by Derek Whitney
Crowdfunding has exploded onto the scene to fund many new start-up ventures. You can use crowdfunding to help kick-start your dream.
Coming up with capital has always been one of the biggest challenges of starting a new business. While it’s still difficult, a new solution has grown in popularity in the last few months. Crowdfunding is a method of coming up with money for a business that involves getting capital from many different individuals. It’s kind of like venture capital except that you’re not necessarily working with one wealthy investor. You might work with hundreds of smaller investors who like the idea of your business.
How it Works
With crowdsourced investing, you use the help of a crowdfunding website like Kickstarter. You create a campaign and then it is available for others to look at on the site. Once they review your campaign and like it, they can choose to invest in it. Most of these websites do not charge the investor anything unless the fundraising goal is met. Once the goal is met, then everyone is charged for what they pledged.
Creating Your Campaign
If you have a legitimate business or product idea, using crowdfunding can be a fantastic way to come up with the money you need. To get started, you’ll have to create a campaign. Not every campaign is successful at raising money, so you have to make sure to do it the right way.
Making a Value Proposition
When you are creating your campaign, it is important to make sure that you have some kind of a value proposition. This is basically like selling a product to people before it is created. It’s very similar to selling pre-orders of your product. Because of this, you need to make something that shows value to your investors. Most of the time, they’ll expect one of your products in exchange for investing above a certain threshold. This means that you need to make them feel like they are getting something for the money that they are investing.
During the process of making your campaign, you need to focus on quality. Create an attention-grabbing headline for the page. Make a high-quality video or use high-definition pictures to show your product. Write a rich description of the product or service so that people can easily see what you’re offering. Without all of this, most people will glance at your campaign and keep on moving to the next one that really grabs their attention.
Create Great Perks
Most of these crowdfunding sites make it possible for you to offer your investors perks, based on how much they invest. If you really want to attract people to your project, you need to offer the best perks that you can. For example, if you’re writing a book, offer them an autographed copy at one level, and acknowledgment in the book at another.
Regardless of how you decide to approach it, crowdfunding definitely has a lot of potential for your business or project idea.
Derek is currently blogging for Startup Valley, an crowdsourced investing platform that helps connect technology startups with investors. Derek enjoys blogging about marketing tips, finance, and other business related topics.