Crowdfunding allows business owners for culture, artistic, and for-profit ventures to fund their efforts by receiving contributions from a variety of individuals either found on the internet or local communities. For crowdfunding to work for a company, it’s vital to implement positive crowdfunding that correlates to the type of project. If a lot of work gets put into the project and the community is receptive, it should lead to successful fundraising. One of the most critical factors is the advantage of getting funds through the community.
Crowdfunding allows founders of a variety of ventures to fund their efforts by drawing on relatively small contributions from a relatively large number of individuals using the internet, without standard financial intermediaries. It suggests that a company’s community and the quality of a project gets associated with the success of crowdfunding efforts and that geography is related to both the type of projects proposed and successful fundraising.
Harvard Business Review believes that crowdfunding is all about community, and by connecting with an audience that supports you, growth can happen. Connect the project creator and funder, and you’ll likely get products from your cause and additional support.
My surveys of successful crowdfunders show that crowdfunding serves to validate demand and build communities of support. In the case of Oculus, crowdfunding acted as a platform that allowed Luckey’s enthusiastic community of VR hobbyists to directly support one of their own, making Oculus a reality without needing to go through traditional gatekeepers. In a variety of research projects, I and my co-authors have tried to understand what this more democratic world of fundraising looks like, and what it means to use the power of platforms to transform the early-stage funding of ideas.
One result of raising money over a platform is that it establishes a direct connection between the project creator and the funder. The community owning the project often comes to feel a sense of ownership for the projects that they support. This ownership is often quite positive, as it can lead to communities creating complimentary products (such as apps that use a new crowdfunded technology) and promotional support.
Forbes adds to the thoughts above by mentioning that crowdfunding is a fantastic way for people to support your company and put funds towards its success. They’re also more likely to spread the word, which can do wonderful things for business growth.
When someone invests, they have “skin in the game” beyond consumerism. Investment makes someone a brand ambassador and changes their perspective on the relationship they share with that brand. If they believe in a company enough to put funds towards its success, they’ll be the first to talk about it with others.
Letting customers into your company through investment gives them ownership and makes them a part of your success. In return, they help you do your job of spreading the word and providing feedback.
So, providing opportunities to invest not only benefits you through funding and engagement but also creates a sense of honesty and responsibility among your investors.
Journal of Business Venturing did a study on crowdfunding, and the study revealed quite a bit. One revelation was that they discovered that successful crowdfunding might be related to signals of quality of the proposed project. Check out what else they found out from the study:
Crowdfunding allows founders of for-profit, artistic, and cultural ventures to fund their efforts by drawing on relatively small contributions from a relatively large number of individuals using the internet, without standard financial intermediaries. Drawing on a dataset of over 48,500 projects with combined funding over $237 M, this paper offers a description of the underlying dynamics of success and failure among crowdfunded ventures. It suggests that personal networks and underlying project quality are associated with the success of crowdfunding efforts, and that geography is related to both the type of projects proposed and successful fundraising. Finally, I find that the vast majority of founders seem to fulfill their obligations to funders, but that over 75% deliver products later than expected, with the degree of delay predicted by the level and amount of funding a project receives. These results offer insight into the emerging phenomenon of crowdfunding, and also shed light more generally on the ways that the actions of founders may affect their ability to receive entrepreneurial financing.
A Conference Paper on ResearchGate from 2014 urges companies to understand how important it is to build an online community to help raise money. Do this and business will grow and develop positively.
Crowdfunding provides a new opportunity for entrepreneurs to launch ventures without having to rely on traditional funding mechanisms, such as banks and angel investing. Despite its rapid growth, we understand little about how crowdfunding users build ad-hoc online communities to undertake this new way of performing entrepreneurial work. To better understand this phenomenon, we performed a qualitative study of 47 entrepreneurs who use crowdfunding platforms to raise funds for their projects. We identify community efforts to support crowdfunding work, such as providing mentorship to novices, giving feedback on campaign presentation, and building a repository of example projects to serve as models. We also identify where community efforts and technologies succeed and fail at supporting the work in order to inform the design of crowdfunding support tools and systems.
One powerful example of a successful crowd-funding platform is ioby, a business that helps improve neighborhoods while supporting its residences. According to the Project for Public Spaces, their community-led projects have not only developed the city but are a prime example for businesses everywhere on how to correctly implement crowdfunding.Founded in 2009, ioby (“in our backyards”) is a crowd-resourcing platform that helps neighborhood advocates turn ideas for their community into a reality. Their groundbreaking web-based tool combines crowd-funding and resource organizing to support resident-led projects that help turn our shared public spaces into places that are safer, greener, and simply more fun.
With a particular focus on low-income neighborhoods and communities of color, ioby has supported projects in over 100 cities, and they refer to these small-scale, hyper-local, low-to-no-budget, and relatively informal efforts as the “Deep Roots.” “We’re interested in cities that are searching for new ways to support community-led and place-based projects that build leadership capacity, improve street safety, fight public healthy epidemics like obesity and asthma, strengthen sharing economies, and promote social and environmental justice.”
If you’re wondering how to form a community who will support your business venture, email marketing may be something you want to consider. EasyShip blog discusses this further.
Email outreach holds the reputation of being one of the most proficient tools in convincing the crowd; eventually bringing loads of conversions.
Therefore, include everyone on your email list which is even remotely interested in your project. Besides, a soft launch is one of the best times to collect email addresses of potential supporters.
Other important ways of gathering email addresses are through your website, newsletter signups, blog following, Facebook ads, contests and surveys, etc. You can reach out to the interested audience through email telling them about the development of your project, seeking opinions, educating them about various uses of your product and complementing products.
Also, you can send them seasonal and festive wishes. You can sign up with Mailchimp for the purpose. It is one of the most efficient email sending services available in the market. The tool is very cost effective and fully-automated with hundreds of ready templates inside to ease out on your burden.
As well as developing an effective email marketing campaign, you can also reach out to the community you already have and promote your campaign everywhere. Here’s an example from FireSpring:
Start with your own network and community.
You can’t do this alone—crowdfunding is one time when you’ll really need to engage your core group of supporters and brand evangelists, or your “street team” as I like to call it. They’ll be instrumental in helping you spread the word and raise awareness. Tell everyone you know about your campaign and ask them to share it with their networks—that’s one of the best ways to expand your reach. You won’t get many donations from new donors on a crowdfunding site until you have a good amount of traction from your own network showing others that you have a worthy cause.
Promote your campaign everywhere.Put it on the homepage of your website. Post it on Facebook. Tweet about it. Blog about it. Send out an email blast. Take every opportunity you can to spread the word and get people talking about your project. Remember, this is not an “if you build it, they will come” type of initiative. Crowdfunding is only as successful as your promotional efforts—you have to make people aware that your campaign exists and that the opportunity to give is for a limited time only.
Social Media Examiner mentions that sometimes a crowdfunding community is formed from complete strangers, and that’s okay. Strangers become connections, and soon they will be supporting your business all the way, as long as you stay loyal to your customers and follow through on what you promise. Here are a few ways to reach out to potential supporters:
Create compelling rewards
It’s important to realize that most of your audience may not be familiar with crowdfunding. Chances are you’ll need to use social media, email marketing, and other communication tools to drive your community to your project at a crowdfunding site.
Unger says:
[Crowdfunding sites aren’t] “much different from any other launch in a lot of ways—so to get attention, I used the same tools as usual: email to the list, Twitter, Facebook, etc.”
Yet again, the importance of list-building and networking can’t be overstated.Tell a great story… and ask for the sale
As Jeanie Finlay says in her post, Adventures in Crowd Funding:
“when I launched the first campaign, I simply put up the trailer and we raised about 10 pence… I made a new trailer with me pitching the film… it made a world of difference. I now believe that people invest in the filmmakers as much as the project.”
Sources: Forbes, Harvard Business Review, Conference Paper/Research Gate, Project for Public Spaces, Journal of Business Venturing/Science Direct, EasyShip Blog, FireSpring, Social Media Examiner
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