Crowdfunding: You may have seen it being used to help launch an album, or to raise money for a family that’s fallen on hard times, or to fund a mission trip…but have you considered what it could mean for a start-up? As an alternative to acquiring traditional investors or a business loan?

If you’ve had difficulty obtaining investment funds to support your start-up, you may have trouble believing that there are people out there with money to invest…and who want very badly to invest it.

The problem is that many of them don’t have the £500,000 you need. They do, however, have £50 or £100. They aren’t looking for a big payoff, but rather the privilege to say they’ve been part of “the next big thing.” They’re also willing to take a risk, because that risk is minimal.

crowdfundingAnd so, they’re on the look-out for that new, brilliant business idea with the type of cutting-edge ingenuity that speaks to their sensibilities and their values.

Could your start-up be that business?

How to Leverage the Power of Crowdfunding for Your Brand

Whenever you ask anyone to get involved with your brand—investor, affiliate or customer—you must offer value. That doesn’t always have to be monetary value; however, the potential participant must be able to do a quick calculation (conscious or subconscious) and genuinely believe that he or she will receive more [joy, entertainment, information, access, notoriety, etc.] than they’ll give.

This is imperative as you build your crowdfunding campaign. Here’s how you can create one that not only provides the necessary funds for starting up, but that builds brand awareness and a stellar reputation, too:

  • Target the right kind of investor. Finding the right investors can be even more challenging than finding the right customers. This is going to take some research, so that you can find the people whose values align with your own and who will see the importance of what you’re planning to do.
  • Build your crowdfunding campaign so it doubles as a brand marketing campaign. You’re not just asking for money; you’re getting the word out about your brand. Potential investors will take a look, and so will potential customers. And what’s more, investors also have terrific potential to become loyal clients. Always keep this in mind. Use branded language, branded visuals and your mastered message.
  • Make the long-term value proposition evident. There should be no question in the potential investor’s mind about what he or she will get in return for their contribution. It should be something you know they’ll value and that they’ll be happy to share with their associates…who are also potential contributors. It’s important to convey that you will not forget the generosity and faith that your contributors showed to you in your time of need; and to follow through with promised equity shares when your business begins to turn a profit.
  • Invite feedback through your crowdfunding campaign. The people who are interested in what you’re offering are likely well-versed, and even highly experienced, in your industry. Offer the details of your start-up, and always invite and receive feedback graciously. Expert advice, even though sometimes hard to hear, can save your business from having to start over later. And there’s more: When you accept and implement advice from a potential investor, that person is highly likely to invest in your brand—because you have, without any monetary investment from them, made them part of your company. This is very flattering, and will probably be repaid with an investment at least as large as their initial intent. CAVEAT: Do not accept every piece of advice you receive. Always check in with your business consultant first.
  • Have a short-term rewards strategy in-place, too. What will contributors receive immediately following their payments? Will it be a free sample? Or a tour of your facility? Or a luncheon (on you) where you’ll discuss the plan, going forward? This is a good faith offering of all the good things to come, and it will go a long way in proving that you’re a man or woman of your word.
  • Shop around. There are lots of crowdfunding companies out there, and each one offers a different package. Look into their surcharges, any marketing help they offer and social causes they’re partial to. Kickstarter, Indiegogo, Peerbackers, and RocketHub are a few options.
  • Hire a lawyer who is well-versed in investment crowdfunding. Most countries have regulations in-place for crowdfunding. In addition, there’s plenty of red tape involved with paying out equity shares…and covering yourself in case of an audit.

Sceptical?  Of course you are—this is a largely unconventional way of gathering funds to support a start-up. However, I would ask you to consider all options before deciding on a method for raising funds.

Big-money investors will want lots of control in return for their sizeable investments, and banks will, of course, want lots of interest.

Keep an open mind as you consider all the angles of crowdfunding, and then decide if it’s right for your business.

Would you like to talk about the possibility of crowdfunding for your start-up? Always feel free to contact me. You may also find the How to Build a Brand Facebook group to be very helpful. There, you’ll find other motivated [and successful] entrepreneurs who have tried lots of unconventional methods with loads of success. See you there!

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