Crowdfunding – Do’s and Don’ts
With the crowdfunding market growth currently sitting at £4.4bn in 2015 alone, according to research by innovation charity Nesta – Now is a good time to know the do’s and don’ts.
Some of the general myths about crowdfunding are along the lines of: “Someone is going to steal my idea” or “All I have to do is list my business and the money will start flowing in.”
Crowd2Fund CEO, Chris Hancock, advises that: “The reality is that the earlier stage the business is at, the harder work it is to fund.
The investor’s main worry is always regarding the risk, and although investing is always high risk, crowdlending tends to be lower risk.”
We’ve pooled together words of wisdom to help you before you jump on the money wagon.
Don’t be shy to ask for support!
You need to actively push your campaign and don’t just passively rely on the crowd coming to you.
Head of Risk at Crowd2Fund, Craig Snider, points out that: “The ones that succeed are those who are willing to do things like seeking press opportunities by handing out flyers and mentioning it in the footer of their email signature.”
Match funds to the project value
Depending on the funding site that you use, investors are switched on.
They know business and its valuations so it’s important to not over value your business.
Interaction with potential funders (pre-launch)
Involve them throughout the development of the campaign.
For example, get their opinion on your campaign page, before going live, and your video pitch.
The result will see your funders wanting to see you succeed and will be more likely to bankroll and even promote you to their networks.
Promotions and Publicity
CrowdShed advises anyone looking for funding to plan their social strategy early to avoid spamming people.
“Dedicate at least 30 minutes a day to sending out personalised emails to individual rather than blanket newsletter type emails and same goes for social media.
If you have any press or media contacts, speak to them about the project and see if they would be interested in doing a feature on it.
Organise an event to show you are passionate about what you are doing and you know what you are talking about – funders will see how clearly you are organised.”
Never give up
Remember that not everyone succeeds the first time round because it’s a number game.
You have to keep going and always re-evaluate.
The CEO of Business Agent Ltd, Sacha Bright, was turned down by Seedrs and Crowdcube but later went on to hit his target of £150k via Angels Den.
He described that: “I must have approached a 1000 people. I emailed my database, called them, went speed funding and visited angel groups, convinced the local newspaper to do an article about me and overdosed my friends via social media with the business.
Getting investment is like door to door sales so don’t rely on crowdfunding sites to do it for you.”
P.S. Remember to protect your idea before deciding to crowdfund. Nothing can stop someone else from taking your concept and revamping it.