Is Crowdfunding Right For Me?
Crowdfunding as a way to raise business revenue has dramatically increased in popularity over the last several years. Many entrepreneurs wonder if it might work for their business. And if it will, how can they run an effective campaign?
Crowdfunding might be a good option for you if:
You have a new product idea.
Crowdfunding is a great way to see if there is market interest in your product before you invest in production. If your campaign is a success, you know that you have found a solution to a legitimate problem.
You haven't built a reputation yet.
If you are pre-revenue and need to build your social capital, a successful crowdfunding campaign will make you look more attractive to bigger investors. An investor likes to see that the market supports your company.
You want to keep your financial risk low.
Unlike a bank loan, you do not pay back what you raise. You also do not have to give up equity unless you choose to. And if you don’t meet your goal, you can go back to the drawing board without a warehouse full of inventory that won’t sell.
You want to build your "tribe."
Crowdfunding gives you a great platform to tell your story. You can connect with people in a personal way that isn’t as simple in a brick-and-mortar or ecommerce store. Once you build a community of early-adopters, they will be your champions and spread the word about your business.
You need that extra push of accountability.
It’s easy to come up with an idea that never leaves the drawing board. But once your campaign is live, you have a whole host of supporters that will keep you accountable to deadlines and give valuable feedback.
- Crowdfundinghacks.com is a great resource with in-depth information on crowdfunding. This article is particularly good for determining whether or not your business is suited to crowdfunding.
- Introduction to Crowdfunding for Entrepreneurs is a 30-minute webinar published by the SBA outlining the basics of getting started in crowdfunding.
- Each crowdfunding platform offers extensive guides with a wealth of information on how to make your campaign successful. Here are just a few: