By Liz Kulik
Crowdfunding has grown in importance as a funding method for entrepreneurs, businesses and new products. But what elements of crowdfunding are at the foundation of a successful fundraising campaign? In this second of a three-part series (read Part 1), Liz Kulik shares the steps to success.
Step 1: Make an informed decision to crowdfund. Crowdfunding can be a powerful source of capital and customers. Understanding how it all works will help you determine if a crowdfunding strategy is right for your enterprise and prepare you for the commitment necessary to create and run a successful campaign. Business, legal, accounting, marketing, production, cost and future capital requirements are just a few of the considerations for any business, social impact or community enterprise. As the industry builds, so have qualified resources and experts who can help you create a crowdfunding strategy and execute a crowdfunding campaign.
Step 2: Choose a platform that is transparent and aligns with your goals. In the U.S., donation/reward platforms are proliferating, while equity and lending crowdfunding platforms must wait for the SEC to promulgate rules. Platforms vary in their focus, from niche to anything goes, raising funds for projects that vary from film, healthcare, real estate, 501(c)(3)s, technology, sports music to consumer products and more. Look for platforms that are transparent about fees and that provide guidance and expertise. Look for platforms that have strong management teams with capital markets and business advisory experience, and who surround crowdfunding activities with business and social broadcasting advisory services and expertise. For example, ProHatch helps guide business, social impact and community entrepreneurs and investors from start to finish, actively working one-on-one in customized engagements, and reaching the crowd with a monthly program of free online education for entrepreneurs and backers.
Step 3: Evaluate your project’s story for its appeal to the crowd. Is your idea/business model new and/or innovative? Is there something special about your project that makes it disruptive, improves on an existing service, or is otherwise different? For example, perhaps your company is selling a new dog toy, and for every toy you sell, you donate a percentage to a rescue group or animal shelter. Your potential backers, probable dog-lovers, will be more likely to donate. To amplify this effect, you could share a story on an animal that was rescued or adopted from this group and include photos.
In the final post in this series, I’ll examine the remaining steps in making crowdfunding work for you.
Liz Kulik, founder and CEO of crowdfunding platform ProHatch, has been a leader in the financial services, real estate and business advisory industries. She has created and executed development, acquisitions, dispositions, repositioning and growth strategies for over $75B of institutional operating company and real estate investments.