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March 25, 2014 | 4-minute read (666 words)
Previously published in Upstart Business Journal.
The UpTake: Crowdfunding is a great way to collect money for your startup. While there are risks involved, these strategies will help steer your business in the right direction—and hit your financial goal to deliver a new product.
What's your #1 tip for raising your target funding amount using crowdsourcing?
Reward the Media
"With a compelling offer to your backers, anticipation is built, and a great story is created. You'll attract more backers and give the media something interesting to cover."
Eric Corl | President + Co-Founder, Fundable.com
Provide Crowd Value
"Kickstarter and Indiegogo have provided a huge platform for companies looking for pre-sales because they provide huge value for the person funding the project. If you can produce something that others want, then promise your funders early access to your product, and they'll be thrilled to give as long as they get something of value in return."
Matt Wilson | Adventurer in Residence , Under30Experiences
High Quality Video
"Every time I hear of a successful crowdfunding project, it's being promoted via a very detailed informational video. First and foremost, the video must introduce the entrepreneur, tell his/her story, and summarize the problem they are solving. The better the quality of the video, the more it will look like you care about your initiative—and that's what people want to get behind."
Logan Lenz | Founder / President, Endagon
Don't Bank on It!
"While crowdsourcing is an interesting idea that definitely works, the number of companies that are able to rely solely on crowdsourcing to obtain significant funds is still incredibly small. So, companies should not count on crowdsourcing as a primary source of funds, or spend too much time on it to the detriment of other funding strategies."
David Ehrenberg | Founder and CEO, Early Growth Financial Services
Stick With Social Media
"To effectively raise funds and reach your target goal, utilize social media for crowdfunding. There’s just no other way to reach such a massive audience of potential investors without a huge time or financial investment."
Andrew Schrage | Co-Owner, Money Crashers Personal Finance
Tell a Compelling Story
"You can't just show up and ask for money. Let potential investors get to know your business by telling your story, why you are raising this funding and what benefits will come from it."
Kelly Azevedo | Founder, She's Got Systems
Be Transparent
"Lay it all out on the table and show your cards. Using video is a great way to show the face and brain behind the company they should be investing in. They should invest in you first then your idea."
Raul Pla | CEO and Founder, SimpleWifi and UseABoat
Build Momentum Beforehand
"With the proliferation of companies raising money with crowdsourcing, it's becoming tougher to make a case that you have the product that folks should back. At a baseline you need a compelling story, but beyond that, people always want to back a winner. Build momentum by soliciting backers before you launch your campaign and have them donate early on, as an indication of quality!"
Aaron Schwartz | Founder and CEO, Modify Watches
Approach Existing Customers
"If you have an existing customer or membership base, it's best to approach them first. They already have a vested interest in your company and should be well versed in your products/services, which eliminates a number of initial hurdles."
Nicolas Gremion | CEO, Free-eBooks.net
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of hundreds of America’s most successful young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.
How has your business tapped into crowdfunding? Tell us about it in comments below or contact Early Growth Financial Services for funding advice.
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