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An Aspiring Entrepreneur’s Guide to Crowdfunding

The internet is abuzz with a story about a guy who successfully funded a potato-salad-making business simply by asking friends, family members, and complete strangers to buy into the concept and pitch in. So, what gives? How does a guy like that become successful at crowdfunding overnight and with virtually no effort? It’s hard to say but if you’re looking to start your own business and want to get your idea off the ground, there is a formula that you can follow that can help you with your own crowdfunding campaign.

What is Crowdfunding?

Crowdfunding is an alternative financing vehicle which has grown in popularity through North America and Europe. It involves financial contributions from a crowd aka “backers” to raise funds for different needs. A popular form of charitable fundraising, crowdfunding has helped provide funeral costs and monies for surgeries for ill men, women, and children. As for businesses, it has helped launch new products and start-ups, much like yours.

Best Crowdfunding Sites Available for Small Businesses

There are a number of different crowdfunding sites to choose from. Each has its own guidelines regarding terms of use. Acquaint yourself with the rules before launching your campaign. You don’t want to lose out on financing because you worded something wrong or failed to follow instructions.

Some options that exist that can benefit you include:

There are many crowdfunding websites to look into. Do your research. Select the one that you feel will gain your business the most exposure. After all, part of successful crowdfunding is due in part to your ability to market and promote your campaign. Keep this in mind as you choose the crowdfunding site you want to use.

Tips for a Successful Crowdfunding Campaign

When it comes to running a successful crowdfunding campaign, there are a number of different things you’ll want to keep in mind. Here are some of the things you should consider pre-launch:

  • Talk about what makes you unique.  Don’t be afraid to tell your story. This is how you get people to respond to you. They want to know what led you down the path to small business ownership. They want to be able to feel your passion in everything that you do.
  • Create enticing rewards for backers.  Add a sense of exclusivity by offering different tiers of rewards based on dollars donated. Limit the number of rewards you give for each level of support. This will get people to donate to your campaign quickly.
  • The proof is in the pudding.  Publicly mention who is supporting your project. If it’s a heavy hitter, ask permission to name drop. Do whatever it takes to stand out to strangers. Your friends and family members are a given. The rest of the world is not.
  • Be legitimate.  Let the public know just how serious you are by making your company visible online. Give regular updates about the status of your project. Answer questions as they are asked.
  • Interact with your supporters.  Don’t be afraid to have conversations with the people interested in your campaign. Thank them for their support. Provide them with information. Be engaging. Explain the process so they can better understand what you’re trying to achieve.

Crowdfunding is not for everyone but it is an option that many people who don’t qualify for a small business loan try and launch successful fundraising campaigns. Check out the aforementioned websites for additional information and see what transpires. You run out of options the minute you stop looking for them, so happy hunting.

Jared Hecht

Jared Hecht

Co-Founder & CEO at Fundera
Jared is the co-founder and CEO of Fundera, an online marketplace connecting small business owners to the best loans for their business. He writes frequently on small business lending and management.
Jared Hecht