“Crowdfunding” when you look at the term, is basically about raising funds. But, then, it is more than raising money. A great crowdfunding project aligns everything that you need as an entrepreneur to be successful. It brings into a circle all the elements that matter.
Back, in 2015 alone, over $34 billion dollars were raised via crowdfunding. It was recorded that Kickstarter assisted over 113,800 projects get funded, delivering $2.7 billion dollars from more than 12 million backers. This makes me wonder – what is the real power of crowdfunding? In fact, here’s taking a look at why crowdfunding is the complete tool for entrepreneurs.
Why Crowdfunding?
Crowdfunding provides a forum to anyone with an idea, which can be formally pitched to investors. We all know that investors can select from hundreds of projects and invest. Crowdfunding sites generate revenue from a percentage of the funds raised.
As an entrepreneur, you need a few key elements in order to be successful in business. You start with an idea, but in order to move that idea to reality, you need to get some factors in place. You need to research to check market need and the customer-base; you need to look for funds and also work out the business plan starting from launch.
What’s significant is that crowdfunding provides incredible support around each of these elements, thereby delivering everything you need to take your idea to reality.
Start-ups are ‘ín’
Today is the age for start-ups. Start-ups are very ‘in’. We keep reading about people quitting jobs to start out on their own. Equity-based crowdfunding is growing in popularity because it allows startup companies to raise money without giving up control to venture capital investors; it also opens up opportunities for investors to earn an equity position in the new venture.
Looking for funding
This is the most important part. If your project funds, then you have a legitimate hit on your hands. If not, then it’s back to square one. You may have pulled out all stops and invested time to articulate your vision; but if you didn’t get the financial backing, then the positive side could be that at least you didn’t lose money launching an idea that didn’t click with your target audience.
Attracting the “crowd” or customers is important
“If your focus is on people, not on money, you will be significantly more successful – crowd proceeds funding in crowdfunding,” says Jamey Stegmaier the designer behind Scythe.
To be successful in business, you need the base, which is customers. The more customers you manage to reach out to, the better your chances of success. And, most importantly, you may also need customers to become your advocates – for advocates actually provide you with word-of-mouth marketing that every brand desires. The crux of a great crowdfunding project isn’t about getting financial backing for your vision, it is also important that they also to become advocates of your idea. The more passionate they are about your idea, the more invested they become – not just in terms of finance, but in terms of support, feedback and advocacy. While platforms like Kickstarter and Indigogo provide much of the technology that one may need to launch a crowdfunding project, you must initially work to build and attract your own audience.
Another distinct advantage of crowdsourcing is that your audience will provide you with feedback – as to what they like and what they are concerned about. That feedback is invaluable.
Research to tap the demand and market need
For businesses to work, the background work must be done. The homework – that is, research is very important, at this stage. Crowdfunding is the ultimate in market research. It was noticed that marketers launched surveys and focus groups. With crowdfunding, it is straight. There’s no better way to gauge demand than real-life market conditions.
Building your plan
Crowdfunding further forces you to move from an idea to build out your complete launch plan. You also need to work out the complete details of your go-to-market strategy; after which, you need to share this with your investors, so that they get to know exactly how their money will be utilized, to deliver the product or business that you’ve envisioned. This process forces you to articulate your launch plan and share it.
There is no doubt that crowdfunding is rapidly being looked upon as a serious way of raising funds for startups and new businesses.
Avtar Madan
Himanshu
Shree Lahiri
