Is crowdfunding right for my business?
Crowdfunding, not unlike co-working spaces, was once seen as being exclusively in the realm of startups. But just as larger, more established businesses have come to appreciate the advantages of modern co-working spaces, they have also realised that there are many ancillary benefits to be gained from crowdfunding.
Equity crowdfunding, which allows a multitude of investors, large and small, to own shares in a business, has evolved since it burst onto the UK scene about 8 years ago. Equity crowdfunding platforms have matured and now attract professional and institutional investors as well as the non-professional investors often referred to as “the crowd”. It is not unusual these days to see companies raise larger sums with the backing from angels or venture capitalists, with the crowd providing a top up. Meanwhile, the platforms and the crowd remain a good source of funding for smaller ventures seeking seed investment.
So why are both small and larger businesses seeking the support from the crowd?
We believe there are two main reasons to consider crowdfunding for your business.
1. Crowdfunding gives your audience or community an integral role in the business
Crowdfunding gives your community of customers, suppliers, stakeholders, friends and family a chance to get actively involved with your business. It can help you gauge market readiness, general product appeal and branding concept. Crowdfunding campaigns are also usually accompanied by a fair amount of questions, concerns and complaints which you can use to further develop and improve your product or service.
2. Crowdfunding is a powerful marketing tool
Crowdfunding campaigns are one big marketing exercise and usually come with a good amount of PR which will promote your project and increase visibility of your business online and offline. And of course, giving your customers a stake in your business builds strong brand loyalty, something most companies aspire to nowadays.
So can anyone crowdfund? In theory, yes, but some companies will undoubtedly be better suited to crowdfunding than others. If you are thinking of crowdfunding, you should ask yourself the following questions:
Is our offering easy to understand?
Can you explain what you do simply? If you can’t, you’ll struggle to get the backing of the crowd.
What differentiates us from competitors?
How does your brand stand out? Do you have the relevant IP or patents? You need to convey what makes you, you if you want the crowd to take notice.
Who is our target audience?
How well do you know your target audience? Do you actually know who you are targeting? What are their biggest challenges and how are you solving those? Being able to pitch at the right level is crucial when trying to convince the crowd.
Is this the right time to crowdfund?
Crowdfunding success is not down to luck. It is the fruit of hard work. Make sure that you understand the personal and professional demands of this process before launching your campaign.
If you have a strong brand and product or service proposition, you know your audience and you have the time and resources to put into a campaign, then crowdfunding is a good option for your business, be it small or big.
If you’d like to chat to us more about your crowdfunding ambitions, please come to our crowdfunding clinic at Desklodge House on Wednesday 24th April. It’s free, all you need to do is book a slot and turn up on the day armed with your questions.
If you can’t make the 24th, fret not, you can also book a call for a chat.
Or check out https://www.ideasquares.co.uk/