There is a huge public appetite for change in banking. The banks we see now are the same ones we saw a decade ago before the financial crisis and similar to the banks of a hundred years ago. That’s why crowdfunding and alternative ways of raising capital are so popular. They are accepting of non-traditional organizations, happy to work with new ventures and startups and are often cheaper too.
If you’re considering crowdfunding, these tips can help secure those funds.
Price your product or service right
Crowdfunding has no limitations but works best for low cost items or services. If your core offering costs $5,000, not many people are going to trust you enough to make that kind of commitment on Kickstarter or IndieGoGo. These platforms work best for lower cost items of between $50 to $250. This is the golden price that sees the most investment.
Offer value in your reward
Ventures on crowdfunding websites used to offer a branded t-shirt, free product or a free invite to the launch party. Now donors expect a little more, a free product or service and perhaps even a slice of equity. You have to think a lot harder about what you’re going to offer as an incentive for investment.
This leads back to point one, pricing your product or service. If you’re going to be offering a $50 dongle or $100 service, it is easier to offer freebies to donors. It is much more difficult to offer a free big ticket item without making a loss.
Use crowdfunding to assess demand
If your venture will be producing products that will need manufacturing, you can use crowdfunding to assess demand. Rather than having to go to manufacturers and negotiate limited runs with the option of extending, use Kickstarter or IndieGoGo as pre-sales outlets for your first batch.
You will have a much better idea of how many of each product you need and with definite orders, be in a much better negotiating position with the manufacturer.
Crowdfunding is a very effective way to raise money for a new business. Don’t waste the opportunity!