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How effective is crowdfunding for raising start-up costs?

Ultrafast

How effective is crowdfunding for raising start-up costs?

Virgin Media Pioneers invited Head of Crowdfunding at CrowdPatch, Christopher Norris, to share his knowledge on how you can use crowdfunding as a tool for raising start-up costs.

 

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Crowdfunding is coming of age

 

Starting a business is hard work, not least communicating your ideas to potential investors who have no prior knowledge or understanding of your plans. There are always costs involved in getting to the starting line - but that money can be hard to find.

 

According to NESTA, in 2015 the crowdfunding and peer-to-peer lending market in the UK was worth £3.2 billion. But it’s about so much more than raising cash.

Think of crowdfunding as a combination of three equally important components:

 

1. Contributions

 

Think about what people get out of contributing to your campaign. I recommend setting your campaign with a ‘contributions for rewards’ business model. It’s a win/win scenario - project owners receive money towards their target figures and contributors can receive perks that are useful for their own enterprises.

 

2. Networking

 

People love projects. Showing how you will make things happen by telling your start-up story and end goals are surefire ways of engaging interest. Exciting crowdfunding projects attract the attention and support of like-minded enthusiasts and experts. This often can lead into incredible ideas for the future as well as direct access to some great contacts.

 

3. Marketing

 

Crowdfunding campaigns are developing stories that have the potential to be newsworthy. When project owners share the process of running their campaigns – their triumphs, their problems and their solutions – they are building a brand story by transmitting messages that audiences can follow and be a part of.

 

Getting ready to launch

 

Before you take the plunge, you need to have answers to the following questions:

 

  • What exactly is your product or service?
  • Is there a need for your product or service? Have you researched your niche?
  • Who are you selling to?
  • How will you reach your audience / how will you deliver your goods and services?
  • What’s the span for your business: local, regional, national or international?
  • What is the price for your end product or service?

 

Once you have clear answers to all these questions, you can then decide on your strategy for crowdfunding.

 

Using CrowdPatch

 

I’m the Head of Crowdfunding at CrowdPatch, which is a crowdfunding platform for social entrepreneurs. The platform comprises highly interactive areas of interest called ‘patches’ that nurture and incubate themed projects and attract like-minded fans and followers. It is free to use throughout the process of running a rewards-based crowdfunding campaign. There are also opportunities on there to engage volunteers such as a one click sign-up process, and plenty of scope to encourage fans to share news about projects via their own social networks.

 

The key points

 

Crowdfunding is a great method of raising money, building networks and creating a buzz around your business.

 

It’s an alternative way to raising start-up costs that is becoming more and more popular. Take this as the perfect opportunity for you to raise money for your business with a bang. Tell your story throughout the process and you can kick off your business with some added publicity. Don’t forget that crowdfunding takes hard work and perseverance - but you will have fun telling the world about your products and services.

 

I would love to chat through crowdfunding with any Pioneers. If you want any advice on whether crowdfunding opportunities are right for your business, drop me a note in the comments below and I will pass along my email to you.