NEWS / INSIGHT

Is crowdfunding right for your business?

Is crowdfunding right for your business?

So - crowdfunding. You upload your pitch to a website. And then ask the public to back it. Either so you can become a startup. Or grow an existing business.

If successful, you get the cash. And you don’t even have to repay it. The people who funded you get to see an idea they love come to fruition. Everyone wins.

But it’s not just about the money.  In the words of our good friends at Crowdfunder: ‘Crowdfunding is a way to raise money. But, perhaps even more importantly, it also raises awareness and longer-term support for a business.”

The awareness comes from the fact that you have to get out there and campaign for the cash. If no one knows you exist, they can’t pledge to your project. So you have to work hard to get the word out.

 
 

The longer-term support comes from the fact that dozens, perhaps hundreds, of people feel they’re ‘vested’ in your business. They’ve backed you. And they want you to succeed. So they’re more likely to support you along your way.

But people have seen campaigns come and go, and they’re savvy to the projects that are worth getting behind. If you want to win the internet over, you’ll need to treat your crowdfunding campaign every bit as seriously as if you were approaching someone big and intimidating for a loan.

Here are a few tips for your planning.

1. Tell your story

Every pitch needs a narrative. It’s the key way you’ll deliver a compelling message and motivate action. People respond better when there’s a beginning, a middle and an end.

But there are key things you need to weave into that story. Potential backers need to understand your idea, why it means so much to you, and why they should support it. What will your idea achieve and why should anyone care? People will also want to know what the money is for, so they can understand the thinking behind your target. 

Use your video, description and images carefully – be compelling and concise. Make sure your videos are sub-two minutes in length and break any text down using lots of subheadings. It’s challenging. But achievable.

2. Set the right target

How much many is enough? Strike a balance between how much you’d like to raise in an ideal world, what you need to make your idea fly - and what’s realistic from your audience. Go for an amount of money that won’t make your campaign a painful slog, but will be enough for whatever it is you’re hoping to do.

 

These Crowdfunder statistics might help you do the maths:

 

  • The average pledge on Crowdfunder is for £50.
  • The average conversion rate (the percentage of people who view your page and then go on to pledge) is 5%

So, based on this, if you were hoping to hit a £10,000 target, you’d need 200 backers. That means you’d need 4,000 visitors to your page – do you think that – between you and your team – you could easily garner that much interest? This, of course, is a massive rule of thumb. Maybe your idea will strike a chord – or perhaps you can count on a single backer donating £5,000 and blow these assumptions out of the water? Or perhaps it’ll perform less well than average?


Have a good think before setting a target.

3. Be creative with rewards

These are the benefits, products or services you offer to the people who pledge. You need creative rewards that suit every budget. Maybe they’d get a tweet for a tenner, a book for £30, an invitation to an event for £50, a one-off memento from your campaign for £100. 

 

Here’s a page full of great rewards - that are live currently:

http://www.crowdfunder.co.uk/gifts-a

http://www.crowdfunder.co.uk/what-a-melon-watermelon-water

 

Here’s a couple more projects with great rewards:

http://www.crowdfunder.co.uk/thewavebristol

http://www.crowdfunder.co.uk/otter-farm

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