The exponential rise in start-ups India’s exponential rise in start-ups and small businesses has seen creative problem-solving, and a flat work hierarchy takes precedence over a strict corporate culture. As a result, investors are willing to take a chance on your business idea if it appears to be backed with sufficient data and ambitious but achievable targets. As long as there is an influx of funds, it can produce profitable results, maintain employee satisfaction and expand its reach further.
But what happens when you are struck by unexpected financial hurdles such as investor rejections, investors pulling out or a global pandemic leading to a recession? That’s when the concept of Crowdfunding can help you out.
Crowdfunding is a way to finance your projects and the organisation as a whole. It is a popular means to secure alternative funds and attract investors apart from your circle of family, friends and venture capitalists.
Here’s where you might think now, ‘How does Crowdfunding work?’
Crowdfunding is the practice of funding a project or venture by raising money from a large number of people, typically via the internet. Investors get rewarded with equity in the company. To bag Crowdfunding from the public, companies run campaigns. Here are two of the most successful Crowdfunding campaigns that you can gather insights from:
- Chess Up: One of the most well-funded chess campaigns, Chess Up, broke records with creatively designed campaign page. With a detailed description of their products, with usability highlighted strategically, it is not surprising that the campaign caught everyone’s eye.
- Sentien Audio: Sentien Audio won us over with their beautifully structured campaign video. The video did a good job of explaining the product features in layman’s terms and introduced the team behind Sentien to the audience. The key takeaway of this campaign is that adding a human touch to your campaign is a good way to attract the crowd.
Read this blog further to learn how to plan a successful Crowdfunding campaign to boost your entrepreneurial career.
Best Ways to Plan a Crowdfunding Campaign as Entrepreneurs in India
As an entrepreneur, you will have to be creative to attract the kind of funding you require. Here’s everything you need to kickstart your Crowdfunding campaign:
1. Choose the Right Crowdfunding Website for You
Not all Crowdfunding platforms can tend to the requirements of your campaign. For example, while Kickstarter is one of the most popular Crowdfunding platforms for small businesses in the world, it is mainly known for funding projects of tech or creative entrepreneurs. It is a good idea to go through various Crowdfunding platforms, check for features, working, fees and know the platform before committing to one. This will help you avoid any setbacks in terms of policy clashes between your business and the Crowdfunding start-up. Here are some of the crowdfunding platforms you can consider for your enterprise:
- Kickstarter
- WeFunder
- GoFundMe
- CircleUp
- Indiegogo
- Patreon
2. Create a Good Business Plan
Before you sit with an idea for a Crowdfunding campaign, it is imperative that you first draw up a clear financial plan and set achievable business goals. It is an underrated approach that could be very helpful in anticipating the future needs of your small enterprise. Clearly highlight the problems your organisation will tackle, the value it will provide to its customers and how your solutions will be unique from the likes of your direct and indirect competitors. The key to hosting a successful campaign is – fulfilling the requirements for your business while staying within the bandwidth of the finances that you will keep aside for the same.
3. Immerse Your Audience in Your Story
For a Crowdfunding campaign to produce the desired results, you must make an effort to connect with your audience. You can do it through a story, wherein you carefully explain everything related to your journey, product, brand and the innovative solutions you can provide. If you can define your goals correctly, the audience will be more willing to invest in your product and even stick with it.
4. Make a Strong Pitch
Your product is as good as your pitch. Financial aids and potential investors require strong proof that your product and business are well-defined and your targets are achievable. For this, it is necessary to back your pitch with facts and data that support each point you bring up in the meeting. It also helps to show an estimated timeline of your project either as a written copy or presented in a graphical format.
5. Use Social Media Platforms to Connect with Your Audience
Studies show that Crowdfunding campaigns have at least 20% higher visibility per 100 connections when shared across social media sites such as Facebook, Twitter, Instagram and LinkedIn. Here are a few steps to keep in mind when using social media for Crowdfunding for a business start-up:
Share regular updates with your audience
This can include any product updates, new launches, fun behind-the-scenes sneak-peaks, etc.
Be consistent with your brand
Ensure you post across all social media platforms for better reach. Tailor your content to target the audience best suited for your product and business ideals.
Interact with your supporters
This is an important practice to ensure you are in the loop with the needs of your audience. Addressing public grievances is a great way to build trust between your customers and the business.
Crowdfunding can help you keep your business relevant in the market, sustain good employees and enhance your credibility among the customers. Craft realistic business goals and connect with the audience’s sentiments to ensure success.
Did any of the above tips help you fund your entrepreneurial career? Please write to us with your thoughts!
Frequently Asked Questions
Q1) Is Crowdfunding a good idea?
Ans) Crowdfunding is a really good way to raise money for your financial projects, businesses or even a best-seller idea. However, it is essential to first research the available Crowdfunding platforms that suit your campaign requirements the best, understand their fee structure and the services they provide and have a clear business goal in mind.
Q2) Is Crowdfunding income taxable?
Ans) Yes, money received through Crowdfunding is taxable. Only in the cases where it is a donation from Crowdfunding raised by a charitable organisation, tax is not charged.
Q3) Do you pay Crowdfunding back?
Ans) This depends on the type of Crowdfunding. If you avail loan-based Crowdfunding, you will have to pay the investors back, usually with interest. When it is investment-based Crowdfunding, people usually look for a share of your business when they invest.
