2023
3/30

Forget the Banks: Why Crowdfunding is Now a Top Source of Business Funding [Part II]

Created BY: AbdelRahman El-Mwawi



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Crowdfunding is the practice of raising small amounts of money from many people to fund a project or venture. Startups, entrepreneurs, and creators leverage crowdfunding to finance their ideas and gain support from backers around the world. While traditional funding options may not be available, crowdfunding offers an alternative path to raising capital and validating ideas.

The basic idea behind crowdfunding is 'the crowd', a pool of regular people, not wealthy investors or institutions, coming together to finance projects and businesses that inspire them. In return for their pledge of money, backers usually receive rewards or early access to products. As the number of people contributing aggregates into large amounts, this "crowd-sourced" financing allows projects that would not otherwise be possible. In the age of social media and global connectivity, the reach of crowdfunding campaigns can spread farther and wider than ever before.

Check Part I to see the first 4 steps as this articles tackles steps 4 and 5 to get the best out of crowdfunding.

Step 1: Research & Planning
Step 2: Set A Funding Goal
              Crafting the perfect funding goal for your crowdfunding campaign: Expert advice
Step 3: Create a Compelling Story
              Crafting a Narrative That Connects: Pro Guidance on Writing a Winning Crowdfunding Campaign Story
Step 4: Gather and Leverage a Support Network
              Building Your Tribe: How to Cultivate and Harness a Strong Support Network for Your Startup
Step 5: Choose the Right Crowdfunding Platform
              A Comprehensive Guide to Selecting the Perfect Platform for Your Startup's Success                            
              Exploring Equity Crowdfunding Platforms for Your Next Big Idea
Step 6: Launch & Promote
              From Launch to Lift-Off: Proven Strategies for a Successful Crowdfunding Campaign
Conclusion: Launch with Confidence
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In part 1 of our crowdfunding campaigning article, we discussed the first 3 steps of how to get the best out of the crowdfunding process. Here we are getting to know the last 2 steps of choosing the right platform as well as launching and promotion.

Step 5: Choose the Right Crowdfunding Platform

Crowdfunding platforms allow entrepreneurs to raise money for their businesses through online funding campaigns. Tapping into the collective power of the internet, these crowdfunding websites allow entrepreneurs to solicit modest amounts from many people. In return, backers typically receive rewards, such as early access to the product or a discounted sale on future purchases.

The big three social media platforms are Facebook, LinkedIn and Instagram. However, if you’re running a crowdfunding campaign, it’s beneficial to advertise your fundraiser on LinkedIn as well, since LinkedIn is commonly for by business owners like yourself.



There are a wide range of crowdfunding websites available for use, each with the pros and cons of its own. When choosing a platform for your company, it’s critical to consider its goals and needs. Take a look at five of the top crowdfunding platforms for startups:

1. Kickstarter is among the most widespread crowdfunding platforms, especially intended for those in the entertainment industries. Over 150,000 projects use it to date. An inherent benefit of Kickstarter is that a significant portion of the site’s users are potential backers. It’s also very adaptable, offering startup entrepreneurs a high level of control.

2. Indiegogo is an easy-to-use crowdfunding website that helps businesses ranging from startups to established corporations gather the funding they need. One of our top advantages is that businesses can maintain all the money earned with their funding even if it doesn’t meet their targets.

3. Seed&Spark is a crowdfunding site designed specifically for creative artists in the entertainment industry. To date, the platform has helped to raise more than $1,000,000 in crowdfunding for projects, including feature films and web series. One advantage associated with the Seed & Spark platform is that it permits filmmakers to set their own sales and completion dates for their productions. The platform also provides several advertising and promotional tools to assist filmmakers reach a broader audience.

4. GoFundMe helps companies raise money on a variety of platforms. One of the main reasons GoFundMe is a popular choice is that it focuses on flexible funding options, even for companies that don’t meet their goals. Cons: It has some downsides. One is that it has a smaller audience than Kickstarter and Indiegogo. This small audience base makes it more challenging to attract donors. The platform requires businesses to pay a $0.30 cost per every single donation received.

A Comprehensive Guide to Selecting the Perfect Platform for Your Startup's Success

  • Fees. Compare the fees charged by different platforms, including percentage fees taken from your funds raised and other service fees. Lower fees mean more of the funds go towards your startup.
  • Audience. Consider the audience and user base of different platforms and how well it matches your startup and project. For example, some platforms attract more tech/creative startups, while others may have more entrepreneurs and business-focused users. Go where your target backers are.
  • Location. If you want to reach local backers or need to accept local payment methods, choose a platform that has more traction in your local area or region. Some platforms are global while others focus on specific countries or regions.
  • Campaign type. The major types are rewards-based, equity-based, and lending-based. Choose a platform that supports the type of campaign you want to run, whether offering rewards, equity shares, or debt-based funding.
  • Ease of use. Compare how easy it is to create a campaign, add content, manage the process, and communicate with backers. A platform that makes the crowdfunding process simple and seamless will save you time and hassle.
  • Trust and security. For financial transactions and raising funds, choose a platform that is trusted, secure, and has measures in place to protect both creators and backers. More established platforms with a solid reputation tend to be a safer choice.


Exploring Equity Crowdfunding Platforms for Your Next Big Idea
Equity crowdfunding platforms permit small businesses to raise money by advertising equity stakes in their businesses to the populace at large. These platforms are usually open to business owners in a wide range of industries, enabling startups to solicit the small investments they’ve accumulated from many people. Some investors received incentives, such as an early product release or a discount on future orders.

Crowdfunding platforms normally offer different benefits, relying upon your particular goals and requirements. Determining the platform for your startup can be essential, particularly when you’re thinking about if it will profit your business objectives.

Some popular equity crowdfunding platforms include:

  • SeedInvest - Allows startups to raise capital by selling equity stakes to accredited investors. Targets early-stage startups in a variety of industries.
  • Crowdfunder - Equity crowdfunding platform that helps startups raise funds from both accredited and non-accredited investors. Present in the US, UK, and Australia.
  • Seedrs - A leading equity crowdfunding platform in Europe that allows startups to raise capital by selling equity, equity-based or convertible securities.
  • Republic - An equity crowdfunding platform for investing in startups, video games, real estate, and other private companies. Open to both accredited and non-accredited investors.
  • MicroVentures - An online venture capital firm and equity crowdfunding platform, allowing both companies and investors to buy and sell equity stakes. Targets later-stage startups.
  • Wefunder - An equity crowdfunding platform allowing startups to raise capital by selling securities to both accredited and non-accredited investors.
  • Those are some of the most popular and well-known equity crowdfunding platforms. There are also many smaller, more niche platforms out there that may be options for different types of startups. The key is to do research to find the best platform for your business and fundraising needs.

Key Factors to Consider When Selecting Your Ideal Equity Crowdfunding Platform

  • Target market. Consider the typical investors on the platform and ensure they are the right target market for your startup. Some platforms attract more accredited investors while others allow non-accredited investors. Also consider the types of startups and industries that have successful campaigns on the platform.
  • Fees. Compare the fees charged by the platform, including the percentage of funds raised they take as well as any other service fees. Lower fees mean more of the investment goes to your startup rather than the platform.
  • Reputation and success rate. Look at the reputation and success rate of the platform. More established platforms with a higher success rate of startups achieving their funding goals can be more attractive to investors and increase your chances of success. However, newer or more niche platforms may have less competition for investor attention.
  • Ease of use. Compare how straightforward the process is to create and manage your campaign page, accept and verify investors, handle legal and financial details, and other aspects of the crowdfunding process. An easy-to-use platform will save you time and effort.
  • Support. Evaluate the level of support the platform provides to campaign owners. Look for platforms that offer assistance with marketing your campaign to investors, tackling legal and accounting issues, and other advice and support to help your campaign succeed.
  • Investment options. Ensure the platform allows the type of investment you want to offer, whether equity shares, debt/revenue sharing, or other investment options. The platform must support the appropriate investment vehicles and terms you want to provide to investors.

Considering these key factors will help you choose an equity crowdfunding platform that matches your needs and gives your startup campaign the best chances of success.


Step 6: Launch & Promote
Expand your channels of communication to include Instagram posts, sponsored posts (paid ads on Instagram), and email messages. Highlight the work of your campaign before it starts, so people get interested and are ready to support your launch. You may also send regular updates to smooth the path all the way to a strong finish.

Inform your customers about your event through an email and include all the information they will need to donate. Letting everyone have a general, cost-free email list will make it easy to bring them along to your fundraiser.

From Launch to Lift-Off: Proven Strategies for a Successful Crowdfunding Campaign

  • Build hype before launch. Start promoting your campaign before it launches to build hype and anticipation. Share details about your project and startup and get people excited about the upcoming campaign. This can help you gain momentum fast out of the gate.
  • Launch strong. Have a strong launch with attention-grabbing campaign page copy, eye-catching graphics and videos, and clear information about your project and funding goals. The launch is your chance to make a great first impression, so put time into creating an impactful campaign page.
  • Reach out to family and friends first. Get your close network to pledge and share your campaign first. This initial show of support can boost confidence for other potential backers and help you raise funds and gain social proof early on.
  • Share on social media. Promote your campaign through social media by sharing updates, posting about milestones, engaging with commenters, and running social ads to boost reach. The more people who know about your campaign, the more likely you'll gain backers and meet your goal.
  • Do cross-promotions. See if other businesses, brands, or influencers in your space would be willing to cross-promote to each other's audiences. This collaboration helps enlarge your total reach and exposures your campaign to new potential backers.
  • Stay engaged throughout. Continue updating, sharing, and engaging with backers throughout the duration of your campaign. Keep momentum going and continue attracting new supporters until the end of your campaign. Consistent engagement and promotion is key to success.
  • Launching strong and persistent ongoing promotion will help increase the visibility and success of your crowdfunding campaign. With hard work and the right strategies, you can attract attention, build support, and achieve your funding goals.

 

Conclusion: Launch with Confidence

Crowdfunding may need a lot of work. But it provides both financial and marketing rewards. Depending on your abilities and business goals, it may be wiser to select a distinct form of financing through a financial institution or private lender.

In conclusion, crowdfunding for startups is an effective way to raise capital, build a community of supporters, and gain exposure. For entrepreneurs looking to launch their product or service, crowdfunding campaigns are an invaluable resource that should not be overlooked. When done correctly, these campaigns can open up doors to new opportunities and help emerging businesses reach their goals. It’s important to remember that crowdfunding is not just about the money; it’s also about creating relationships with your backers and engaging them with your mission.