Whether you want to take out a loan, find an investor, use your own money, or try crowdfunding, there are several ways that you can fund your startup. Each option has its pros and cons, but in the end, each will get you the funding that you need to get your business going and growing. While each funding option has its benefits, you may find that one is better than the other for your business, and if you haven’t considered it already, crowdfunding is one option that you need to seriously look into—here’s why:
The Benefits of Crowdfunding
There is reduced risk – Starting a company comes with inherent risks including the risk of failure. When you crowdfund, though, you can determine the market size for your products and can avoid obligating yourself to serious debts early on. Since you can opt not to take any of the money unless you reach your goal, you don’t have to pay anything back. If you do earn all the money you need, you will likely be able to produce and fulfill your promises.
It validates your idea – After you come up with a business idea, you have to get validation to prove that it will do well when the product or service goes to market. This can sometimes be difficult to do since it takes a lot of effort and can sometimes take a lot of time to get back all of the information you need. When you crowdfund, people won’t invest unless it’s a product or service they’re interested in and would pay for which can give you a lot of valuable information and validate your idea without going to lengthy efforts.
It helps with your market research – When you crowdfund, not only do you get validation for your business idea, but it can help you with a lot of your market research. Although you’ll still have to do some preliminary market research on your own, you can ask for and accept feedback from your investors to help you improve and perfect the product before it even goes to market—making your customers as happy as possible as soon as possible.
It builds your brand and attracts loyal customers – One of the hardest parts of starting a business is building a brand, but it’s extremely important. When you crowdfund, you have the opportunity to start building your brand before your company even launches, giving your business a reputation that precedes it and sets expectations for customers. It also helps you gain loyal customers in the process, giving you a customer base right off the bat.
It doubles as marketing – When you crowdfund, you have to create certain materials to market your ideas to potential investors. As you do that and start to get the word out, your crowdfunding campaign works as information for investors and as marketing materials both now and later, after the company has finally launched. You can use hashtags during the crowdfunding and official operating stages, and you can use your promotion video as an advertisement for your products later on, too.
You’re likely familiar with many popular crowdfunding platforms like GoFundMe and Kickstarter which are good sites if you’re working on a general crowdfunding campaign, but there are others you may not be as familiar with—some of which are geared specifically toward helping startups. If you’re considering crowdfunding your startup, here are the top sites to choose from:
Fundable – Fundable was specifically made for business crowdfunding. Unlike some other crowdfunding sites, it does require that you put up some of your own money, but it’s full of investors looking to help you get your business going.
RocketHub – RocketHub is another crowdfunding site specifically designed for entrepreneurs. The platform enables you to do everything from building your network to advertising and funding your company and projects.
Crowdcube – Crowdcube is a site that lets entrepreneurs and business owners mitigate the risk of starting up and raise the funding that they need to grow. At the same time, it allows investors the opportunity to leisurely browse different projects and choose the ones they want to invest in instead of making them search for something specific.
Peerbackers – Peerbackers is a crowdfunding site that not only helps entrepreneurs raise capital, but it also offers them consulting, marketing, and production services to help them make the most of their campaigns and achieve their goals.
If you haven’t already, you need to consider crowdfunding your startup. Although getting a loan or bringing on one specific investor may be a more traditional way to raise capital, crowdfunding is fast, effective, and offers a lot of other benefits in addition to raising the money that you need. Would you crowdfund your company?