You have the best business idea ever. The problem is that you don’t have the money to fund it.
It’s not as much of a problem as you may believe though. You could possibly persuade people to give you money – also known as crowdfunding.
No, it’s not too good to be true. Stockholders, investors, entrepreneurs, and many other people seek to support startups. What do they want out of it? Well, that depends on what you offer them in exchange for their money. They could end up receiving anything from as little as a t-shirt to all the way up to 25% of the profits earned in the first five years.
Of course the sweeter the reward for funding a business startup, the more people will want to participate, but that’s not the only way to get a crowd to donate money. There are many other effective ways to get people excited about your business idea enough to want to have some hand in its development.
To crowdfund a business idea, you need to have a central location where you can post details about your ideas, and the progress you’ve made in the development of the startup. The Internet has many sites that enable people to seek crowds interested in supporting new businesses.
The most popular crowdfunding sites are:
Kickstarter: This website has raised $220 million for 61,000 projects. This is the go-to source for people wanting someone to fund their dream, and those wanting to fund a dream.
RocketHub: This is another well-known website, but it works a bit differently. You can list your project under the FuelPad section, which is where investors go to looking to make dreams come true. Once the startup has the money it needs for launch, it can move on to the LaunchPad.
GoFundMe: While this site doesn’t only target startups, it does have a good reputation in raising money for good causes and hopeful business owners. It relies mostly on donations, rather than having an exchange for funding.
Read more: Top 10 Crowdfunding Sites for Entrepreneurs
Different Types of Crowdfunding Platforms
To entice people to fund your dream, it’s important to determine the type of exchange you’d like to offer. While there are many options, these three are the most effective in getting crowds excited.
Profit & Shares Crowdfunding
Investor crowds are most interested in this opportunity. When they fund a startup, they receive a share of the business. Based on the success of the business, the investor receives a part of the profit. EarlyShares, StartupValley, and SeedInvest are just some of the many equity-based platforms available online.
Creative artists, writers, investors, and other independent entities benefit from donator crowds. These crowds seek minimal exchange for their donations such as recognition credits, t-shirt, free product, or something as simple as thank you card. IndieGoGo, Quirky, and Givezooks are known for their easy to use interface and success in raising donations for nonprofit and for-profit startups.
Peer to Peer Lending
Peer to peer lending is an alternative investment that many entrepreneurs participate in to make money. They lend money to business owners, other entrepreneurs, and inventors with the intent in paying the money back plus interest later on. This is how many people with a dream seek money to fund their startup when they can’t get a bank loan, or one with a reasonable interest rate. Prosper and Lending Club are two of the most popular sites for this type of funding.
How to Maximize a Crowdingfunding Project Campaign
Investors, stockholders, shareholders, donators, and others interested in crowdfunding startups often want these three things from a project:
- Connect with the message of the project
- A unique project campaign
- A good exchange for the funding
Read More: How to Raise More Money Crowdfunding
So that crowds identify with your project enough to want to fund it, research the funding market for your project’s industry, and know what they want from a project such as yours. Once you know that, give them everything they seek to entice them to sponsor your dream. Be creative in your ideas such as making a video pitch, using social media, and holding events online or offline. The more you do to market your project, the more you’ll impress investors because they’ll be able to see how proactive you are in making your dream a reality.