When presented with the term crowdfunding, most people think about raising money for a social cause, a nonprofit, or maybe even unexpected medical bills. What many don’t know is how this tactic has been used by many to fund their startup. Yes, really! You can absolutely rely on crowdfunding to get your dream business started. Crowdfunding stats for 2021 show that only 20% of all crowdfunding campaigns focus on social issues, while 40% are focused on business and entrepreneurship.
Crowdfunding for startups might sound overwhelming and like a waste of time, but we’re here to break it down for you and explain how this business plan could be a
What Exactly is Crowdfunding?
Crowdfunding is simply the practice of raising money to finance a project, business, or goal while relying on the collective financial help of bakers or donors. It creates an opportunity for new entrepreneurs to share their stories across multiple online platforms and inspire others to donate and make their new business possible. Crowdfunding has undeniably been a key element in the creation and advancement of many of today’s top organizations, whether for profit or not.
Here are 3 examples of businesses you probably didn’t know got started by crowdfunding:
Oculus Rift
This popular VR system started as just another crowdfunding campaign and turned out to be one of the biggest crowdfunding success stories out there, raising $2.4+ million in funds.
Peloton
The Peloton bike, famously known for its home studio cycling experience, is another great example of a successful crowdfunding campaign. The company launched its Kickstarter campaign back in 2013 and was able to reach $307,332 in funds.
PopSocket
It’s very likely you’ve seen one or perhaps owned one yourself. A PopSocket is a small plastic contraption that attaches to your phone and works as a stand or grip for your mobile device. They are considered to this date one of the
How Do You Know If Crowdfunding is Right for You?
Crowdfunding for startups offers a unique and effective way to raise capital for a new business. It can be highly convenient as it requires smaller investments than traditional financing methods. However, you might be
Fortunately, one of the most appealing features of this unique funding method is that anyone and everyone can do it. Although there is no guarantee of success, as long as you have a good funding platform and understand how to appeal to your audience, you should be able to see some benefit from it.
Let’s take a closer look at this approach to fundraising and learn more about if this is the right choice for you.
Are you a good storyteller?
When it comes to crowdfunding for startups, users must have the ability to put together a strong and compelling story. For this, you must be convinced that your product or prototype has something to offer. When telling your story, you’ll need the ability to craft it in a way that implies to your audience how your product is an industry
Do you see a demand for your product?
This goes hand in hand with having a compelling product story. Before you even put together a story for your campaign, you’ll need to make sure that your product is actually appealing to the public. Do you see many who’d benefit from your business idea? Is there currently a demand for what you have to offer? If you think you have a great product but it lacks popularity, meaning very few people are waiting for something like it, perhaps you might find it difficult to find people willing to invest in your project.
Do you have reasonable financial goals?
Although it is possible to raise millions with the use of crowdfunding, the reality is most campaigns stay within the thousands. This is why you might want to consider a plan B to support your campaign, or perhaps evaluate if your product idea requires a much bigger financial foundation other than crowdfunding.
Can you offer compelling rewards?
Last but not least, what’s in it for your bakers? The reality is, most backers are going to expect something in return; this can vary from something as simple as a discount once your product is launched, to monetary compensation once your business is running and thriving. Being able to come up with a valuable reward for your bakers is a huge determining factor of whether or not you can put together a successful crowdfunding campaign.
After taking a close and detailed look at what it takes to create a successful crowdfunding campaign, do you see your business idea relating to all of these? If you think the answer is yes, then you should be ready to choose your crowdfunding platform and get started on raising funds to turn your idea into a viable business.
Picking a Crowdfunding Platform
You’ll notice a whole menu of crowdfunding websites once you decide to get your campaign started. Choosing one can be overwhelming as they all have something unique to offer. In the end, you’ll want to go with the one most relatable to your audience and the industry you wish to tap into. Let’s take a quick look at some of your options.
Kickstarter
This is the most popular and recognized crowdfunding platform. It is designed to support projects that fall within the creative category, like Design & Tech Arts, Games, Music, etc. With Kickstarter, every project creator sets a deadline and funding goal to then be charged a fee if the goal is met. Thanks to the platform’s popularity it gets millions of visitors a year, making it a great choice for many. The downside is that project creators lose all of the collected funds if they don’t reach the set goal. Just one dollar short could lead to a complete loss. This can be of motivation for many but can also be a reason of concern for others.
IndieGoGo
The platform has expanded its focus and currently supports project categories like Education, Health & Fitness, Film, and many other popular business projects out there. Its
Patreon
With a platform like Patreon, you have the opportunity to receive unlimited baker support and donations, unlike the
As you can see, there are many options when it comes to crowdfunding your startup. These are just some of the most popular ones out there. You can always look more into other platforms like Celery, StartEngine, and the popular GoFundMe platform, and decide which one works best for you and your goals.
Planning for Your Crowdfunding Campaign
Preparing your crowdfunding campaign is probably the most important step of the process and will be a huge indicator of your overall success. Failure to properly put together a reliable plan could result in a waste of your time. When planning for your campaign you’d want to make sure to consider factors like:
The length of your campaign
The length of your campaign will mainly depend on your specific financial goals. Most experts recommend a campaign length of 30 to 60 days. This is just a rule thumb and simply designates what typically works best before bakers or campaign creators begin to feel worn out. If you think you can easily take on a campaign of more than two months and feel confident with your promises, then you can surely do so. Just make sure you plan your length accordingly.
Campaign key messages and goals
You’d want to determine your specific campaign goals so you can align them with your key messages; these are what will make your campaign stand out. Identifying your key messages should also help you come up with a great title for your campaign, making it more appealing to your audience. You can always consider taking a look at similar campaigns done in the past to understand more about how they earned bakers’ attention and trust.
What Happens After You’ve Launched Your Campaign and How Can Ecwid Help?
Once your campaign is running, most of the hard work is pretty much over and is just a matter of waiting. All you’ll basically need to do is to keep the momentum going. To do this you’d want to make sure to post every day about your story and campaign on social media, continue pitching people and paying close attention to any questions from your bakers. You’ll also want to try to provide updates on a regular basis to let your audience know you are still counting on their support.
You can also use this time to develop a strong promotion plan to reach a wider audience. You can put together something like an email campaign, focus on paid advertising, start a blog, or reach your local press regarding your project idea. In the end, the success of your campaign will be determined by how good of a storyteller you are and how much effort you put into letting others know about it.
Tell Us How It Goes!
We encourage you to give crowdfunding a try and share in the comments below how it went and if this article was helpful. We are eager to hear about how successful your campaign was and are here to provide a home for your products once you are ready to start selling them. Even if your campaign is not over yet, we offer a free plan that can help you put together your store and have it ready for the time you open for business. With no fees in the way, there is nothing for you to lose. Sing up with Ecwid and tell us how it goes!
