Quite a new addition to the world of start-up funding, crowdfunding is a method which can be used by anyone with a new project or venture. It is the idea of the general public or investors pledging money to fund your venture in return for a benefit; this could be a limited edition product or equity of the business. Crowdfunding generally happens over the internet with lots of different crowdfunding websites such as Kickstarter, Crowdcube and Crowdfunder.
Crowdfunding is great when trying to launch a new business or a new product. The only downside is that it is all or nothing! If you don’t reach your funding target by the end of the campaign then you won’t receive a penny and your pledgers won’t be charged.
We’re going to provide you with some key steps in setting up a crowdfunding campaign!
Choose the right platform
Browse the internet and check out the different platforms for crowdfunding, there are plenty out there for you to choose from, it just depends what each one can offer and which one is going to work best for you and your venture. Give consideration to fees, social media integration and how much of the page you can brand and personalise.
Decide on your target and time frame
Work out how much the project is going to cost and use this figure to set the target amount you want to raise and choose a realistic time frame to raise the money in.
Set-up your rewards structure
Consider what benefits you will offer in return for funding pledges for your project. Make sure your benefits are something people will want, low in cost to deliver and seek engagement. Think about the structure of the rewards and what the minimum and maximum pledges will be. For example, if your project was a new book your rewards structure may look something like this:
|£5||A digital version of the book|
|£10||A real + digital copy of the book|
|£20||A real + digital copy of the book + a thank you in the book|
|£30||A signed copy of the book + digital copy + a thank you in the book|
|£40||A limited edition signed copy of the book + digital copy + a thank you|
Promote, promote, promote!
Once your campaign is live, it’s time for the hard work to start! You need to make sure you reach your target by promoting your campaign out to potential future customers, friends and family. Start building a network of pledgers by asking people who have already pledged to share your campaign amongst their network of friends and family too!
DMU graduate, Illustrator and former Business Venture Competition winner Rachael Smith created a Kickstarter campaign in March 2014 to help her launch a new comic ‘House Party’. She smashed her original target and had to set up a number of stretch goals to keep encouraging people to pledge money. The campaign was really successful and you can see her Kickstarter page here.
If you need further advice about funding your business idea, book into our start-up surgery every Tuesday and Thursday between 2-4pm.