What to Consider When Considering Crowd Funding
Crowd funding has blazed a trail for entrepreneurs to make their dreams a reality. But how do you convince strangers to willingly donate thousands of dollars to the promise of a product or service? And with new platforms popping up everyday how do you know which is right for you?
Firstly, make sure you do your due diligence with researching your platform. Know what market you need to be tapping into – look at the most successful campaigns; do you fit in with them? Also, you want to make sure that the money being raised is secured and understand any fees that will be collected.
My top three picks for crowd funding platforms are Kickstarter, IndieGoGo and CircleUp. They each have unique attributes and attract a variety of funders. Kickstarter is all or nothing; if you do not meet your goal, your investors will not be charged and you will not receive any money. IndieGoGo gives you the option to keep raised money even if your goal is not met- they also accept all campaigns.
I recently caught up with Ryan Caldbeck, CEO and founder of CircleUp. His advice is to, “use a platform that has investors with relevant background in your space and that will help your company thrive.” CircleUp provides a unique opportunity for companies which already have tangible results. Only 2% of those who apply are accepted onto the platform, giving your business a seal of approval to investors. And speaking of which, these investors are not the general public, they are pre screened and serious about taking companies to the next level.
Crowd funding is exciting, grass roots and highlights everything I love about working with start-ups. Nurturing a company from a tiny seed and watching it grow is one of the most rewarding aspects of my job- and something I have done passionately for many years.
I sat down with my favorite crowd funded business owners to get their input on what made them successful.
Find your Crowd
It is easy to overlook the “crowd” part of crowd funding and focus solely on the “funding.” However, to truly be successful, you need to find your niche- find your people. “No one wants to give a handout; people want to be part of something wonderful. It isn’t just about starting a business; it is about building your community,” says Alice Feiring, founder of The Feiring Line Natural Wine Newsletter.
“Bringing people in on your dream is a big part of crowd funding, you have to have a vision and be sure that vision is clear to those giving you money.” Feiring met her goal on Kickstarter in 22 hours. Most of her backers were people she did not know- she gave a discount to investors, everyone loves a bargain.
Tell Your Story
Ryan Beltran, founder of Original Grain, attests that one of the most important pieces of successful crowd funding is that you tell a genuine story and communicate often with your investors through email. Beltran, who was able to raise $390,000 in 30 days, says “getting funding without having to give away equity helps you gauge the demand of your product.”
In agreement with Beltran is Christy Prunier, founder of Willa Skincare. With the help of Circle Up investors, Prunier was able to develop her brand. Seeing a hole in the skincare market, she decided to be the one to fill it; her products are marketed to tweens and young teens. “What made us successful was that we had an authentic story. At the end of the day it is your product, you want smart money, investors who share your vision and mission.”
“Pitch your story as if it were a Hollywood blockbuster. Give people something to take away with them,” adds Feiring.
Start-up companies require a broad range of strategies, often quite different than those of already established brands. Personally, I find the spark of new products exciting- and in my own business, I help them to ignite.
Work Hard, Work Smart
One thing all of the founders agreed on was the importance of hard work. “Crowd funding is a full time job,” said Sandro Gerbini, founder of Gatherer’s Granola. For his product, an all-natural granola, he considered several platforms to crowd fund through. His final choice was based on which platform had the most similar products, in order to gauge interest. Gerbini relied heavily on social media to spread awareness about his campaign.
Put in the Hours
In addition to working hard, to be successful you will also have to work often. The internet never sleeps- your project will be available 24/7 to investors around the world, and according to Robin Kay Levine of Eco-Me you should be too. Investors want to see that you are willing to do the work, nothing comes easy.
“Send updates via email – keep building buzz,” says Beltran.
Another Kind Of Sunrise founder Gregory Rogove suggests doing something for your campaign every 2 to 3 days. Along with hard work, Rogove says, “Use your resources; crowd funding is successful if you have help from friends to get your started.” For his business, a cereal-centric organic café, crowd funding helped garner large press spots, such as the Huffington Post and Fox.
The Benefit of Being Online
In most cases, nothing beats face to face communication, except perhaps in the world of crowd funding. There are several advantages to funding that is conducted mostly over the internet. “Being online is more efficient because you do not have to haggle over investments,” says Caroline Freedman, owner and co-founder of NurturMe, organic baby food. Although crowd funding can be “nail-biting,” Friedman felt validated watching her company succeed and draw in investors.
As I have already discussed the importance of telling a compelling story, I think it is important to note that there are many ways to accomplish this. Photos, writing and video often meld together to bring a company’s message to life. “I strongly believe in the power and importance of a quality film clip,” says Deb Kreutzer of SnowXu. The collapsible snow shoe engineer also mentioned that paying close attention to your give-away items is important. You want to provide your investors with a gift of thanks, but shipping costs can add up.
“Make a professional quality video and make sure to spruce up your social media sites,” suggests Gerbini.
Crowd funding can help you turn your ideas into a reality if you are willing to do the work. People want amazing products and they are willing to help fund things they believe in. Tell your story, tell it well, and anything can happen.
Top 10 Tips
- Know your vision
- Tell your story
- Get the word out! – don’t be shy
- Be prepared to work for it
- Find a mentor
- Engage with investors
- Update and communicate regularly
- Understand your budget needs
- Get the right publicity
- Have a plan before you launch your campaign
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Nancy Trent is a writer and speaker, a lifelong health advocate, a globe-trotting trend watcher and the founder and president of Trent & Company, a New York-based marketing communications firm. Trent & Company grew out of Nancy’s personal commitment to helping people live longer and healthier lives. A former journalist for New York magazine, Nancy has written seven books on healthy lifestyles, serves on the editorial boards of several magazines and travels around the world speaking at conferences and trade shows on trends in the marketplace. She is a recognized expert in PR with more than 30 years of experience creating and managing highly successful campaigns. Nancy can be reached at (212) 966-0024 or through e-mail at email@example.com. You may also visit www.trentandcompany.com.
Published in WholeFoods Magazine, May 2014, online 4/1/14