business plan for crowdfunding

"One strategy that worked well for us was leveraging our niche market effectively. By focusing on book lovers, we created products that deeply resonated with a specific audience. Our “Book Lovers’ Soy Candles” became the best-selling candle business on Etsy in 2014. This taught me the importance of understanding your target market and tailoring your campaign to meet their interests and needs.

"Another key element was collaboration and community engagement. Back in 2008, I started a local artist and farmers market, which honed my skills in creating community-driven events. Sponsoring events and donating products to local charities and non-profits significantly increased our brand visibility. For anyone running a crowdfunding campaign, building a community around your product is crucial. Engage with local events, offer samples, and create a buzz around what you're offering.

“Lastly, clear and consistent communication is vital. When we launched our own website in 2015, we ensured that our branding, messaging, and visuals were all cohesive and appealing. This consistency built trust with our customers. For a crowdfunding campaign, this means having a clear project outline, regular updates, and professional visuals. Show your backers that you have a solid plan and the capability to deliver on your promises.”

2. Sahil Kakkar , CEO of RankWatch , says, “Offer tangible rewards and sell passionately.”

"When we launched RankWatch, a platform designed to enhance SEO strategies, crowdfunding was crucial for our initial financing. Our product, an innovative tool for real-time SEO monitoring and adjustments, resonated well with tech enthusiasts and marketing professionals, who constituted our main backer base. We focused heavily on transparent communication and regular updates about the development process, which helped build trust and maintain interest.

"The most effective strategy was offering tangible rewards aligned with our product's future usage, such as early access and discounted subscriptions. For those looking to run their crowdfunding campaigns, my tip is to ensure your rewards are enticing and directly related to your product or service.

“Additionally, leverage every possible channel to share your story passionately and authentically. Engaging potential backers emotionally can significantly boost your campaign's success. Keep your campaign message clear, concise, and compelling to maintain momentum and interest throughout your crowdfunding journey.”

3. Adam Garcia , Founder of The Stock Dork , says, “Highlight personal success stories.”

"Running a successful crowdfunding campaign taught me the value of storytelling. Our product, a smart budgeting app, resonated with backers because we highlighted personal success stories and demonstrated tangible benefits.

“For others venturing into crowdfunding, focus on building a genuine connection with your audience and providing clear, compelling reasons why your product matters. Authenticity and a well-crafted narrative can make all the difference.”

4. Alari Aho , CEO of Toggl , says, “Build community and foster trust.”

"Authentic storytelling played a pivotal role in our crowdfunding success. We crafted a compelling narrative around the problem our product aimed to solve, highlighting the real-life struggles and aspirations of our target audience. By connecting emotionally with our backers and sharing our journey transparently, we fostered a sense of community and trust, motivating supporters to rally behind our campaign and spread the word to their networks.

"Our product was Toggl Plan, a visual project management tool designed to streamline collaboration and increase productivity for teams of all sizes. With intuitive drag-and-drop functionality and customizable timelines, Toggl Plan empowers users to plan, track, and manage projects with ease, allowing teams to stay organized and focused on achieving their goals.

"Prioritize building a community around your product before launching your campaign. Engage with potential backers early on through social media, forums, and events, soliciting feedback and involving them in the product development process. By cultivating a loyal following and establishing credibility within your niche, you'll have a ready-made audience eager to support your crowdfunding campaign when the time comes.

“Additionally, don't underestimate the power of authenticity and transparency. Be honest about the challenges and risks involved in bringing your product to market, and demonstrate your commitment to delivering value to backers. By fostering trust and credibility, you'll not only attract more backers but also build long-lasting relationships that extend beyond the campaign.”

5. Yoyao Hsueh , Founder of Topical Maps says, “Create pre-launch buzz and engage visually.”

"Running a crowdfunding campaign for an advanced topographical mapping tool, success came from creating a compelling narrative and engaging visuals. Building excitement through a pre-launch email list and social media buzz was crucial.

“My tip: Connect emotionally with your audience, show them the problem your product solves, and maintain transparency throughout the campaign. Authenticity builds trust and drives support.”

6. Niclas Schlopsna , CEO of spectup says, “Craft a compelling product narrative.”

"One memorable crowdfunding success story from our work at SpectUp involved helping a client, Emma, launch a unique, eco-friendly travel backpack. Emma's product stood out due to its sustainable materials and innovative design features tailored for modern travelers. The key to her successful campaign was a combination of meticulous planning, compelling storytelling, and community engagement.

"We started by helping Emma craft a captivating narrative that highlighted not just the features of the backpack, but the story behind its creation and the environmental impact it aimed to address. This narrative was crucial in connecting emotionally with potential backers. High-quality visuals and a professional video further showcased the backpack's unique qualities and versatility, making it visually appealing.

"Another crucial element was building a community before the launch. Emma engaged with potential backers through social media, sharing sneak peeks and gathering feedback. This not only created buzz but also fostered a sense of ownership among early supporters. When the campaign went live, these engaged followers were ready to contribute and spread the word.

“Specific tips for others looking to run successful crowdfunding campaigns include starting with a strong, relatable story; investing in professional visuals; and actively engaging with your target audience well before the campaign launch. Setting realistic funding goals and offering attractive, meaningful rewards can also significantly boost your campaign's appeal.”

Ultimately, crowdfunding is a viable option for a lot of entrepreneurs looking to raise capital. It's a relatively accessible, effective option for several businesses that might not have the prominence or resources required to garner investments conventionally.

That said, hitting your fundraising goals via crowdsourcing isn‘t some magic bullet — so if you decide to leverage one of these platforms, be sure to set feasible goals, thoroughly understand the service you go with, and work to cultivate the buzz you’ll need to succeed.

Editor's note: This post was originally published in June 2019 and has been updated for comprehensiveness.

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How To Do Crowdfunding: With Expert Tips and Examples From Successful Campaigns

Crowdfunding is a popular way to raise money and finance your next idea. But launching a successful crowdfunding campaign isn’t as easy as creating a Kickstarter page and waiting for the money to roll in. Use this guide to launch your next crowdfunding campaign the right way.

Crowdfunding is an increasingly popular option for any small business looking to raise money. It's one of the most accessible ways of financing a new idea or product. But launching a successful crowdfunding campaign isn’t as easy as setting up a page on Kickstarter or Indiegogo and waiting for the money to roll in.

In this guide, we’ll look at how to plan, prep, and launch a successful crowdfunding campaign, as well as how to transition your idea into an enduring, self-sustaining business once your campaign is over.

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What is crowdfunding?

Instead of seeking a large sum from a single source, like angel investors or a bank, crowdfunding raises small amounts of money from a large number of people—often in exchange for direct rewards—who want to see a project succeed.

The concept of reaching a fundraising goal through crowdfunding isn’t new, but over the past decade or so, online platforms like Kickstarter, Indiegogo, GoFundMe, and Crowdfunder have made the process of raising money online for a business, product, or charitable cause easy and accessible to everyone.

Crowdfunding sites can bring a new audience to your ecommerce business and product—one you might not have otherwise reached.

These sites serve as virtual matchmakers for entrepreneurs and backers and provide the structure and space to host your campaign and the ability to accept funding.

How the crowdfunding model works

Crowdfunding sites offer you a place to host your campaign, usually in exchange for a percentage of the money raised. Backers are given various “rewards” based on the level of funding they provide.

These rewards can include an exclusive promotional item, advance access to the product being supported, or some form of public recognition—the more funding offered, the better the reward. (Some campaigns offer equity in place of rewards, but in this guide, we’ll focus on the latter model.)

Most crowdfunding platforms require you to set a financial goal for your campaign, as well as a timeframe in which to reach that goal, usually between 30 and 90 days. Some will let you keep all of the money raised during a campaign, whether you meet your goal or not. Others, like Kickstarter, use an all-or-nothing model that returns funds to backers if your campaign falls short.

If your campaign is successful, you’ll be in an excellent position to transition into a sustainable business by leveraging the audience built through your crowdfunding efforts.

Types of crowdfunding

Projects that rely on crowdfunding or online fundraising generally fall into one of three main buckets:

• Equity. Equity crowdfunding gives contributors partial ownership of a business in exchange for the capital they provide. Some sites only allow you to sell shares of your business to accredited investors, who are people who meet a specific income level.
• Donation. Donation-based crowdfunding provides no financial rewards or incentives for backers, so it’s most often used for charitable purposes or by nonprofits. The fundraiser is not required to pay anything back to donors.
• Rewards. As covered above, any type of crowdfunding campaign that incentivizes contributors with rewards (but not a stake in the resulting business) upon completion can be considered rewards-based. We’ll mostly focus on this approach throughout the rest of our guide.

Crowdfunding benefits

Crowdfunding offers several valuable perks on top of being a great way to fundraise startup capital.

It validates your ideas

The more you know about the target market for the product or business you plan to launch, the more you’ll reduce your financial risk, and crowdfunding can be an excellent tool for conducting market research.

Pre-selling your product via a crowdfunding campaign helps validate your creative projects by giving you a solid answer to the question, “Will anyone buy this?” Manufacturing your product without any indication of how it will sell could cost you a significant amount of time and money if it turns out the demand for your idea isn’t strong.

Knowing people want what you’re selling allows you to plan and scale your business with confidence.

It helps build a following

Having a solid following before you ship your first product is a rare and significant advantage. When done properly, crowdfunding, especially when combined with social media and press coverage, can help you build a dedicated audience that, ideally, will stay with you as your business grows.

It’s a source of flexible funding

Securing financing can be both time consuming and difficult for many new small-business owners. Untested ideas or new business models may not appeal to conservative lenders, like banks, and while finding private investors to help raise funds is an option, you’ll usually need to give up a portion of ownership in exchange.

Running a successful fundraising campaign can be a big undertaking, but for many founders, it also can be easier and more rewarding than traditional methods.

Learn more:   20+ Small Business Lending Statistics You Need to Know Before Applying for Financing

How to crowdfund an idea

Decide on a product or cause.

There aren’t many restrictions on what types of products or businesses can be crowdfunded, but the most successful projects tend to have a few key things in common:

• A specific product. If you look at the biggest crowdfunding success stories, you’ll find most of them focused on funding individual products, not stores. There’s a reason for that: backers tend to want to support tangible items, not broad ideas. For the best chance of success, seek backing for your best product. You can build a store later, after your initial idea has taken off.
• A targeted, niche audience. Create a product that fills a need or a gap, then find the market that craves it. Often, founders create products that solve a problem that exists in their own lives, like the founder of MindJournal did when he couldn’t find a journaling tool designed for what he needed. Develop a prototype that taps into those needs.
• Strong differentiation. To generate buzz and attract backers, your product has to be something that can’t be found elsewhere. Do your research to ensure your product is one of a kind.

Plan your campaign

Much of your crowdfunding campaign’s success will be determined by your marketing efforts. But there are other important elements you also need to plan, including your campaign’s timeline and the logistics of fulfilling backer rewards—not to mention making the transition to a sustainable long-term business after your campaign is done.

Funding goal

Your funding goal should be the minimum amount you need to create your product and fulfill rewards. Write down all your expenses, from raw materials to shipping tape, and research any big expenses you may have to account for. Add everything up, and now you have your goal.

Shorter campaigns set a tone of confidence. They should be long enough that you have time to build interest and reach your biggest potential audience, but not so long that they become background noise. Seeing that a campaign has just a few days remaining creates a sense of urgency for potential contributors, motivating them to act now, rather than later.

Perk levels

Choosing and pricing your reward tiers are important strategic steps in the crowdfunding process. Offer a range of rewards that entice users to back your project or product. If buying the product itself is the core perk, include a few lower-priced options for people who just want to support you, and scale up to some exclusive high-end perks for backers with lots of money to spend. Here are some of the more common crowdfunding tiers:

• Acknowledgments. Public acknowledgment of backer support is a good entry-level perk. For a donation as small as $5, Dominion City , a Canadian brewery that funded its bottle shop through Kickstarter, published the names of all its backers in a full-page ad taken out in a local magazine.
• Branded swag. Backers often like the thrill of being an early adopter. Offer perks that help them show their pride in participating, such as branded stickers, t-shirts, or bags. These lower-priced perks are especially good reward options if your product cost is high.
• Product pre-orders. One of the most popular perks is early or discounted access to a product. This is the best way to validate demand. If most of your marketing materials are focused on the benefits of the product, you may see higher conversions on perks that act as pre-sales.
• Creative collaborations. These perks offer backers a role in your project or business. For example, if you’re creating a comic book, you might offer to draw a backer into one of the panels or base a character on them in exchange for a specific level of financial backing.
• Unique or exclusive experiences. Backers can be interested in perks that offer exclusive access to your brand, such as a one-on-one consultation or an invitation to an exclusive event. These experiences will cut into your working hours, so use them as higher-end rewards.

Price your perks in a way that’s sustainable for your business. If you’re offering a discounted price on your product in return for backing, make sure you understand the full cost of delivering that reward to a buyer, including shipping. If you’re offering one-on-one time, you need to limit the quantity of that reward so it doesn’t disrupt your day-to-day operations.

Backers are usually your most understanding customers, because they know crowdfunding a product isn’t the same as buying one off the shelf. But that doesn’t mean they have zero expectations.

Before launching your campaign, you should have a solid, informed estimate of your production timeline. To build that estimate, consider the following:

• How many products do you plan to make? Producing one unit is different from producing 100, and producing 100 is different from producing 10,000.
• How long will production take on your ideal order size?
• How long will it take to receive your products from your manufacturer?
• How long will it take to fulfill your campaign rewards? (Use a shipping calculator to estimate the shipping times for different classes of mail.)

It helps to have your manufacturing or production process finalized before you begin your campaign. (Don’t forget to add in some additional flex time to account for unforeseen delays.)

Your timeline most likely will change as you proceed, but a well-thought-out estimate gives backers an idea of what to expect. If you do experience delays, notify your backers as soon as possible and provide an updated estimate.

Shipping and fulfillment

Before you launch your campaign and make promises to supporters, confirm that your manufacturer can ship to your location, especially if they’ve never delivered to your country before.

Also, be prepared to ship products en masse to your supporters. If 1,000 backers pre-order your product, that’s 1,000 orders you need to package and mail.

A bit of planning can go a long way in creating a smooth fulfillment process. Have you selected a carrier? Do you know the mail class and postage cost? Do you have a way to print labels ? Have you taken international shipping into consideration? Keep these factors in mind as you set and price your reward levels and communicate timelines to backers.

Here are some additional resources to help you with your shipping strategy:

• The Beginner’s Guide to Ecommerce Shipping and Fulfillment
• Shopify Shipping Services: Offer Affordable and Convenient Shipping for You and Your Customers

Don’t underestimate the importance of knowing how to manage your income and expenses during and after your campaign, especially if you don’t have much experience with business finance . A good accountant can start you on the right foot by helping you optimize your campaign earnings and make the most of your taxes, expenses, and cash flow .

Every day during the first project, we were carefully tracking pledges and total quantities. Once the project had decisively “tipped” into funding, we began ordering materials and beginning work on rewards. Valerie Schafer Franklin, Walnut Studiolo

Also take a crowdfunding site’s platform fees into consideration when setting your fundraising goals. Some sites take upward of 5% of your funding total and 3%–5% payment processing fees if your product is funded.

Communication with funders

Your campaign’s funders are your earliest fans, supporters, and customers, so keep them up to date. Communicating frequently with them builds trust, inspires further support, and keeps them apprised of any unforeseen delays or complications. Most crowdfunding platforms have tools, such as an email newsletter, to help you inform backers of your progress throughout and after the campaign.

Some information you might want to relate in a newsletter could include:

• News about funding milestones
• Updates about the product development process
• Behind-the-scenes photos
• New products or product variants
• New or expanded reward tiers
• New stock available
• Thank you messages

Market and promote your crowdfunding campaign

Think of your crowdfunding campaign as an extended product launch. To make it successful, you’ll need to dedicate some serious time to marketing and public relations, both before and during your campaign.

Lead generation

The secret to launching a successful crowdfunding campaign involves investing heavily in pre-campaign lead generation. “Before your campaign launches, spend a significant amount of ad spend collecting leads who want to know when your product launches,” explains Justin Arakaki, Director of Crowdfunding at LaunchBoom .

Justin says pre-campaign lead generation serves two benefits:

• Having a great launch day that propels your campaign to the top of platforms trending charts, which drives extra free traffic
• Learning how to position your product best for the campaign and future ads

“When you’re generating leads, you can do tons of cheap testing and surveying to figure out what about your product customers actually like and prioritize, and test different features in ads and landing pages,” says Justin. “This information helps you organize the campaign and creative assets that prioritizes specific selling points and creates a better conversion rate when the campaign is actually live.”

Creating strong momentum during campaign launch can put you at the top page of your crowdfunding site, which can mean extra (i.e, free) customers you don’t pay anything for.

That’s the whole reason you pay platform fees in the first place: to get more eyes and revenue you don’t have to pay for with ad spend.

There are a few key things you’ll need to convert visitors into backers: a compelling video, great product photos, social proof, and engaging campaign copy.

A campaign video can be repurposed across multiple platforms, making it the cornerstone of your marketing efforts. Whether you’re DIY-ing your video or working with a professional team, make sure your script explains the following:

• Who you are. Tell potential backers about yourself and your experience.
• The story of your product. Describe how you came up with your idea, the current state of your product or business, why your product matters to you—and why it will matter to your target audience.
• Why you need support. Explain why you’re raising money via crowdfunding and how that money will be spent. Make sure to include a direct ask for support.
• The rewards being offered. Include an overview of your most interesting rewards or the ones you feel will be most appealing to backers.

Keep short attention spans in mind—your video should be no more than two to three minutes long and hit your key points quickly.

If you’re planning to DIY your campaign video, here’s a guide to help you get started .

Visual Assets

The quality of your product shots can make or break a conversion with potential backers, so it’s important to make sure yours looks professional.

Here are some resources to help you take your own photos, no matter your budget:

• A Picture Is Worth a Thousand Sales: A DIY Guide to Beautiful Product Photography
• A 6-Step Guide to Natural Lighting for DIY Product Photography
• Free Course: Product Photography for Ecommerce

Photos can show off more than just your prototype and its specifications. Include other visuals to help backers get a sense of your brand as a whole, such as behind-the-scenes shots of your campaign in action and photos that demonstrate the progress you’ve made so far.

By giving potential backers an insider’s view, you’ll create a sense of connection to your team and your process.

Social proof

Including social proof on your landing page can help build credibility for your campaign. “Crowdfunding is a very innovative space by nature,” says Justin, “and a lot of these new products and entrepreneurs don’t have customer reviews, brand equity, or any proven track record to show they’ll deliver a great product.”

Justin has found the following are the agency’s highest performing creative assets:

• Product reviews from trusted third-party publications
• Campaign videos that show raw, authentic product walkthroughs to demo products

Copywriting

Well-written words are just as important to a crowdfunding campaign as high-quality photos. You’ll need a compelling title and a clear, convincing project description to build a successful campaign.

Your project’s title—the headline that will sit at the top of your campaign page—should be simple, specific, and memorable. Be sure to include the name of your project or product in your title. “New chew toy for dogs” isn’t as helpful or searchable as “Bristly: The World’s Most Effective Toothbrush for Dogs.”

Your campaign introduction should give backers a clear understanding of what your product is, what problem it solves, how it compares to other products on the market, and why it’s important to them. Don’t make people read the entire campaign page to understand the basics, but use the basics to entice them to read further.

Campaign copywriting doesn’t stop there. Some of the most successful campaigns read like long-form sales pages and include a lot of in-depth content.

Here are some additional resources to help you with your campaign copywriting:

• Ecommerce Copywriting: How to Conduct Copy Research to Boost Sales
• 9 Ways to Write Product Descriptions that Inform and Persuade Your Customers
• Share Your Story: How to Write an About Us Page (+ Templates and Examples)

Public relations (PR)

Reaching out to people who write about your niche is an important part of any crowdfunding campaign. When you hear “PR,” your mind might go straight to pitching stories to big-name media outlets, but whether you’re contacting large media outlets, smaller bloggers, or social media influencers, many elements of your approach will be the same.

Build a sizable list of contacts, and do your research

It’s a hard truth to accept: most of the people you reach out to will ignore you. Bloggers and media reporters receive dozens of pitches a day and can’t possibly respond to all of them.

Do your research to create a media list with a broad reach, but not so broad that it becomes irrelevant. That means making sure the people you’re contacting actually cover subjects and industries related to your campaign. Pitching people who don’t cover your niche wastes your time and theirs.

Consider if these points apply to each person on your media list to make sure you’re pitching the right people:

• The writer has previously covered other crowdfunding campaigns—bonus points if they were in a similar industry.
• Your product is in the industry the writer covers.
• Your product builds on or relates to the writer’s previous coverage.

Reach out before your campaign launches

There’s no reason to wait until you go live before reaching out to press and influencers. Your campaign will do much better if it gets strong coverage—and support—within the first few days of its launch.

Write a compelling pitch

Your pitch should be concise and to the point. Tell reporters and bloggers how your product fits into their beat, and hit your most important points. Also include a link to your video—it’s the quickest introduction to your product and can easily be embedded into a story or blog post.

Don’t stop pitching after your campaign launches. Writers are always looking for relevant, interesting stories, and the media has a soft spot for DIY successes. Do another round of media outreach once your campaign has some traction.

Platform promotion

Another way to promote your campaign is through the crowdfunding website itself. Danavir Sarria , an ecommerce growth consultant, says that in his experience with fundraising on Kickstarter, campaigns are normally funded by the platform’s users.

“While you can and should do everything you can outside of Kickstarter, such as using paid ads and social media” Danavir explains, “your best buyers are people who are already searching on Kickstarter.”

Danavir recommends a few ways you can reach these people:

• Doing promo swaps with other campaigns
• Become a recommended or featured campaign
• Advertise in places where crowdfunding platform users gather

He also recommends starting with a smaller campaign goal, then sending as much traffic to the page as possible in the first 48 hours. This will help improve visibility and drive more organic visitors from the platform.

Personal outreach

Attention on social platforms can be as helpful as media coverage. Use your personal network to create buzz in the days before you launch. Ask people you know to share details of your campaign on their social media feeds, blogs, or newsletters.

This initial traction can help you get additional press coverage and even grab the attention of your chosen crowdfunding platform, many of which often look for successful projects to highlight.

Don’t forget to use your personal blog or social media feeds to reach your extended network. Don’t overwhelm with email blasts and group messages, but send a few reminders about the campaign and personally contact anyone you think will help spread the word.

Examples of successful crowdfunding campaigns

There are many successful businesses that started as crowdfunding campaigns. Here are a few examples you can dig into from existing Shopify merchants.

• GNARBOX . A multimedia management company that built alist of 20,000 potential customers before it launched its crowdfunding campaign, which raised more than $500,000 in 30 days.
• BodyBoss . A physical product and related digital service that aims to “bring the gym to you.” It launched across multiple crowdfunding platforms, one after the other, and in the process raised more than half a million dollars on Kickstarter, followed by a further $1.3 million on Indiegogo.
• Wipebook . Two entrepreneurs had an idea for a zero-waste notebook that erases like a whiteboard and sold the first version of their product to validate demand before using crowdfunding to scale up and build buzz. They met their funding goal of $4,000 within a few hours, and went on to raise more than $500,000 over their 30-day campaign.

Setting up your own web presence

The best time to establish your web presence is before your campaign launches—or at the latest, during your campaign.

If your crowdfunding platform ends up featuring you, or if you get some social media or press buzz, you’ll probably see a lot of visitors coming to your campaign page.

When you have a web presence of your own that will live on after your campaign ends, you’ll be able to build links from established websites early on, and that can pay long-term search engine optimization (SEO) dividends.

You should treat your campaign as a way to ultimately bring people over to a platform you own and control—and that will live on beyond your campaign.

Do you have a distinctive voice that might work as a blog? Do you want people to know the story of your brand, not just your product? Do you have other products for sale you’d like people to know about? These are all good ways to build connections with your backers, and there’s only so much information you can fit on a campaign page.

If you have active Twitter and Facebook profiles, you’ll probably get an influx of followers once your campaign launches. This will be useful for future marketing and engagement. That same logic applies for your website. Not only will it give you a chance to get attention, it’ll also provide you with a great head start on building an email list for future engagement—and sales.

For a detailed tutorial, here’s a guide on moving from Kickstarter to Shopify that covers everything you need to know about setting up a web presence to take pre-orders, capitalize on your campaign’s momentum, and make the move to a sustainable long-term business when it’s done.

Learn how to create your online store

Get step-by-step help setting up a Shopify store for your campaign with Shopify Compass’s new course, Getting Started With Shopify . Learn from a six-figure store owner who built her business on Shopify and can help you build yours, too.

Your campaign is just the beginning

Successful crowdfunding projects can help you get the capital you need to produce a product, but don’t take your eyes off the long-term goal of building an enduring business.

Think of a crowdfunding campaign as a wedding: you want it to be spectacular, but what’s most important is how things work out in the long term. Once you’ve run a successful crowdfunding campaign, you’ll have proven market demand , connected with active supporters, and earned the funds to start a business .

If you’re looking for a traditional business loan, check out Shopify Capital . We can help you get funded with minimal paperwork and no credit checks. Merchants receive funds within a few days after an accepted offer and can use the money for things like inventory, payroll, and marketing.

Illustration by Rose Wong  

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Crowdfunding FAQ

Is crowdfunding a donation or an investment, what are the disadvantages of crowdfunding, what is the best site to use for crowdfunding.

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Crowdfunding for business: 17 best sites to get capital for your startup.

As a small business owner, you might be looking for ideas of where to get the capital to take your business venture or startup idea to the next level. After you have made a business plan, invested your own savings, and worked your business as a side hustle for a few months, it is time to raise some real funds.

Heading to the bank for a traditional business loan is not your only option anymore. Crowdfunding platforms where people can invest in your project, idea, or business are all over the internet these days. But what, exactly, is a crowdfunding platform? How do you leverage crowdfunding for business? And, if you do decide crowdfunding platforms are the right move to raise funds for your small business, which websites should you explore?

Let’s jump into everything you need to know about crowdfunding for business: What it is, how to run successful crowdfunding campaigns, and every must-know crowdfunding site out there today for businesses.

What Is Crowdfunding?

First things first. Before we jump into how you can use crowdfunding as a strategy for raising funds for your business, let’s quickly cover what, exactly, crowdfunding is.

Crowdfunding, as the name implies, is when multiple investors (a “crowd”) fund a business or project. So, instead of a small business generating investment from one or two large sources, they appeal to a larger group of potential investors to get the capital they need to move their businesses forward.

But that capital doesn’t always come for free. In exchange for their investment, investors expect something in return—and what that “something” is will depend on the type of crowdfunding a small business decides to use to raise capital.

There are 4 main types of crowdfunding:

• Equity Crowdfunding Equity crowdfunding (also known as equity-based crowdfunding) is arguably the most traditional form of crowdfunding. With equity crowdfunding, small business owners sell equity in their company in exchange for funding.
• Rewards Crowdfunding When you think of the word “crowdfunding,” chances are, you’re thinking of reward-based crowdfunding. Made popular by crowdfunding websites like Kickstarter, rewards crowdfunding is based on rewarding investors with products, experiences, services, or other rewards (hence the name) in exchange for donations from investors.
• Donation Crowdfunding Donation crowdfunding is popular with non-profits and small local businesses. It’s simple: Investors donate money to companies they want to back—and the companies accept the money without any expectation to pay it back.
• Debt Crowdfunding Debt crowdfunding has a similar structure to traditional small business loans—except instead of borrowing money from a bank or lending company, the business borrows money from individuals or small groups of investors. Generally, the terms of debt crowdfunding mirror that of a traditional business loan—including things like a set annual percentage rate and defined payment plan.

Crowdfunding for Business: Best Practices

Now that you know what crowdfunding is (and the different types of crowdfunding), let’s jump into how to make crowdfunding work for your business.

There are a few best practices you’ll want to keep in mind when using crowdfunding to raise capital for your business.

Use the Right Crowdfunding Site

Not all crowdfunding sites are created equal. For example, some are designed as fundraising platforms and are best suited for driving donations, some are designed to create successful campaigns around new product launches, and others are strictly for equity crowdfunding. Before you jump into a crowdfunding venture, make sure to research the different crowdfunding sites on the market, and choose the site that’s the best fit for your needs and business goals.

Create a Clear Strategy to Drive Investor Interest

Crowdfunding has gotten hugely popular in recent years—which means that there are more small businesses than ever using these platforms to raise money. So before you launch a crowdfunding campaign, make sure you’re taking the time to define your strategy . That includes what type of investors you’re targeting, how you’re going to market your crowdfunding campaign and grab the attention of your ideal investors, and how you’re going to convince investors that your business is one they want to invest in.

Communicate With Your Investors

In traditional investing, your business might have one or two investors that have a large sum invested in the company. Crowdfunding is different; depending on the type of crowdfunding campaigns you’re running, you may have hundreds (or thousands!) of individual backers investing small sums. But that doesn’t mean they’re any less interested in their investment—or less entitled to information about how that investment is panning out.

Make sure to regularly communicate with your backers and keep them up to date with how your business/project is progressing. For example, if you’re using rewards crowdfunding to develop and launch a new product, make sure to share regular updates with your investors about how product development is going (including photo and video updates)—as well as up-to-date information about when they can expect to have their product in hand.

Don’t Bite Off More Than You Can Chew

The possibilities for business crowdfunding are exciting. But you don’t want to get so caught up in the excitement that you overpromise. If you want to run a successful campaign, define how much you need in funds raised—and, just as importantly, what you can deliver based on those funds.

For example, if you’re running a rewards-based crowdfunding campaign, set a realistic crowdfunding goal that gives you the capital you need—but don’t accept capital from so many investors that, at the end of the day, you can’t actually deliver the rewards (we’re looking at you, Coolest Cooler). Or, if you’re tapping into equity crowdfunding sites, don’t sell so much of your equity that your business model is no longer sustainable.

Bottom line? A successful crowdfunding campaign can be a great way to hit a funding goal and get financial support for your business—but if you bite off more than you can chew, it can do more harm than good. So define your funding goals, build your strategy accordingly, and don’t go overboard. (That’s how businesses fail with crowdfunding!)

The Best Crowdfunding Sites for Small Businesses

Now that you understand what business crowdfunding is, let’s jump into every crowdfunding site you need to know to effectively manage your next crowdfunding campaign, launch crowdfunding projects, and raise money for your small business:

1. Kickstarter

Kickstarter is arguably the most popular and well-known crowdfunding site on the internet. The company has helped millions of artists, musicians, filmmakers, designers, small businesses, and other creators raise over $6.7 billion to fund more than 225,000 projects successfully. It is an all-or-nothing situation with funding as you have to meet the goal you set within the allotted time or everyone gets their money back.

It is free to create a project campaign on Kickstarter, but if you successfully get funded, a 5% fee is owed from your collected funds. You will also get charged processing fees between 3% and 5%.

2. Indiegogo

Indiegogo doesn’t just offer live crowdfunding campaigns, they also have a marketplace for innovative products. They have helped entrepreneurs raise well over $1 billion for more than 800,000 projects. Find out if your idea has legs—and the foundation for a successful campaign—and raise starter capital with Indiegogo’s “global network of early adopters.”

With this crowdfunding platform, you don’t have to stop raising money at a specific time. There are no fundraising targets or deadlines and you can apply equity, offer securities, revenue-sharing, and even cryptocurrency sales.

Indiegogo charges 5% in platform fees for all projects. If you’re raising money for a cause, you don’t have to pay any fees with Indiegogo’s sister platform—GoFundMe.

3. Crowd Supply

Whether you want to bring a family recipe to market or build electronics, Crowd Supply can help you. Their mission is to “bring original, useful, respectful hardware to life” has come to fruition with 80% of its launched projects being successfully funded (2x more than Kickstarter). The average amount raised per successful project is $61,000 (6x more than Kickstarter for comparable projects). Crowd Supply also boasts that 100% of their successfully funded campaigns have delivered to backers (or are on track to do so)—which is a higher success rate than other platforms.

Crowd Supply helps project owners with everything from launching campaigns to marketing to customer support to order fulfillment. In exchange, you’ll pay a percentage of gross campaign sales (not including processing fees)—typically 12%.

4. Crowdfunder

If you’re based in the U.K., you’ll want to check out Crowdfunder. This crowdfunding supports different types of crowdfunding, including both rewards and donation-based crowdfunding for small businesses. To date, the platform has raised over £250 million for over 300,000 projects. The platform also boasts a community of 1 million supporters.

While Crowdfunder doesn’t charge platform fees for charities and non-profits, any for-profit projects (including business ventures) will pay a 5% platform fee (plus 2.4% in transaction/processing fees).

5. Experiment

This is the platform to fund scientific discoveries and scientific research. Experiment backers fund projects that “push the boundaries of knowledge” like dinosaur fossil evacuations to the historical study of medieval monasteries. They fund project scientists without the overhead costs they would have to otherwise face with university grants (which can be 50%–60%).

To date, the site boasts 1075 funded projects/crowdfunding campaigns, over 52,000 backers, and more than $10 million in funds raised. It’s also worth noting that Experiment is an all-or-nothing platform—so if your crowdfunding campaign fails to hit your fundraising goal, no backers will be charged and the project owner won’t receive any funds.

It is free to start a project, but once you receive full funding Experiment charges an 8% platform fee plus payment processing fees of 3%–5%.

Chuffed helps social causes aimed at helping animals, your community, or the environment. This fundraising platform is for not-for-profit companies and cause-based organizations exclusively. Their most successful campaigns have raised an average of $7,000. Nearly 8,000 campaigns have collectively raised $18 million.

Donors pay your payment processing fees. So, a $100 donation would require a $3 fee from the donor. Plus, all donors are encouraged to make a small donation to Chuffed too.

Patreon helps artists, musicians, writers, and creators of all kinds get paid by running a membership business for their fans. This stream of revenue comes from fans paying you a subscription fee of their choosing in exchange for exclusive experiences and behind-the-scenes content. To date, more than $3.5 billion has been paid out to the more than 250,000 creators on the platform—courtesy of Patreon’s 8 million active monthly investors (known as “patrons”).

Patreon charges creators fees between 5% and 12%, depending on the plan you choose (different plans offer different levels of support from the platform). Patreon also charges payment processing fees between 2.9% and 5%.

8. Fundable

Fundable is a successful crowdfunding site specifically designed for startups and small businesses (to date, the platform has helped users raise over $568 million in pledged funds). To get started, create a profile on Fundable and then choose a program. Consumer-facing companies can raise up to $50,000 with their rewards program that allows entrepreneurs to sell their products (that includes taking pre-orders and selling merchandise).

If you’re looking for a higher level of investment, you’ll want to tap into their equity crowdfunding model, which allows companies to raise between $50,000 to $10 million for their product, service, or B2B-based business by seeking investment from accredited investors.

It’s free to create a company profile on Fundable—and once you decide you want to start raising funds, you’ll pay a monthly subscription fee (starting at $179 per month). There are no success fees, but for rewards-based funding, there is a processing fee of 3.5% + $.30 per transaction.

9. WeFunder

Are you a startup looking to raise a solid amount of money in a relatively short time frame? You’ll want to give WeFunder a try. With WeFunder, you can connect with investors (the platform boasts over 1 million investors!) to raise anywhere between $50,000 and $50 million, with most campaigns wrapping up and hitting their goals between 30 and 90 days.

It is free to create a WeFunder profile and they don’t charge any up-front fees. However, for Regulation CF, founders will pay 7.5% of any successful crowdfunding campaigns. For Regulation A, WeFunder charges a flat fee of $375,000 (the equivalent of 7.5% on a $5 million funding round).

10. SeedInvest

Are you a high-growth, early-stage company looking to raise either convertible note funding or run equity-based campaigns? If so, SeedInvest may be the platform for you.

SeedInvest is a go-to for tech startups. If you plan to target priced rounds of equity, be prepared to provide SeedInvest with your pre-money valuation. If it’s convertible notes you’re after, you’ll have to provide the valuation cap, conversion discount, interest rate, and term length. Currently, SeedInvest has a network of over 697,000 investors—and to date, more than $465 million has been raised on the platform.

One thing to keep in mind with SeedInvest? It can be a lengthy process. Once you’ve created an application, you’ll need to go through a rigorous screening process and conduct due diligence before you can create a profile on the site. Be prepared to devote at least 60 days (potentially more!) to the process.

If you raise money through SeedInvest, you should also expect to pay some fees, including a 7.5% placement fee charged on the total amount raised. (That’s only paid on the successful completion of your campaign.) You can also expect a 5% capital or equity fee based on the amount raised and up to $10,000 to cover legal and administrative expenses (for example, due diligence, escrow, marketing, and legal reimbursement).

If you’re looking to crowdfund a more personal passion project, Fundly could be a good resource. Touted as a crowdfunding platform to “raise money for anything,” Fundly makes it simple to crowdfund anything from a community project to a creative endeavor to a big trip. And best of all, they do it with no raise requirements or startup fees involved.

Fundly also allows you to access your money quickly; payments can be withdrawn within 48 hours of a donation. (You can even set up automatic transfers.)

All Fundly users pay a 4.9% transaction fee on donations—plus a 2.9% credit card process fee and $.030 per transaction in the U.S. and Canada. (Rates in the U.K. and Australia differ slightly.)

12. LendingClub

LendingClub provides both personal loans (up to $40,000) and business loans (up to $500,000). But LendingClub isn’t a bank. Here’s how it works for business loans: Business owners apply for a loan through LendingClub. LendingClub screens the borrower, then connects them with a network of investors that are able to purchase notes that correspond to fractions of loans. The business owner gets the capital upfront (terms range from 1 to 5 years with fixed monthly payments and no prepayment penalties).

LendingClub has stricter requirements than other crowdfunding sites; for example, in order to apply for a business loan, your business needs to be based in the U.S., have been in business for 12 months or more, have annual sales of $50,000 or more, and the loan applicant must own at least 20% of the business.

In terms of fees, LendingClub charges an origination fee of between 3.49% and 7.49%, a total monthly payment per $10,000 borrowed of between $227 and $1,781 with total annualized rates of 9.77% to 35.98%.

13. FundRazr

If you’re looking to raise funds for corporate social responsibility initiatives or employee and/or workplace programs, you’ll definitely want to check out FundRazr. This platform (which also supports non-profits and individuals) is touted for being simple, straightforward, and easy to use. They also offer a suite of tools (including CRM and social media integrations) to help you take your fundraising efforts to the next level.

Platform fees range between 0% and 5%—and all FundRazr users will be required to pay industry-standard third-party payment processing fees (currently, FundRazr offers payment processing through Stripe and PayPal).

14. StartSomeGood

Are you trying to raise funds for a cause-based mission—like a nonprofit or a socially conscious business venture? If so, be sure to check out StartSomeGood.

StartSomeGood offers two types of crowdfunding: One-Off (which, as the name implies, is designed for one-off projects, like hosting a cause-based event or funding the opening of a community center) and Recurring (which is great if you’re looking for ongoing funds to support your business as it does good in the community). They also offer users a ton of support in getting their campaign off the ground—including access to the platform’s 120,000+ social media followers.

StartSomeGood charges a 5% service fee on all successfully processed pledges.

15. GoGetFunding

From Animals & Pets to Community, Sports to Volunteer & Travel, crowdfunding platform GoGetFunding has a huge variety of categories, making it a popular choice for individual crowdfunding campaigns. However, the site does also offer a Business & Startups category—so if you’re looking for crowdfunding for businesses, this platform is definitely worth a look.

Getting started is easy; all you have to do is create a profile with your fundraiser details—for example, the title of your campaign, target, and currency (GoGetFunding does crowdfunding on an international scale)—and you’re ready to launch.

Another perk of GoGetFunding is that their platform fee is lower than many competitors—just 4%.

16. EquityNet

EquityNet is an equity crowdfunding platform that helps business owners raise capital—between $100,000 and $100 million—by connecting them with their network of accredited investors. To date, more than 1,000 companies have raised over $600 million in capital through the EquityNet platform.

One of the perks of EquityNet is that they accept all legal and ethical companies that apply (according to EquityNet, competitors accept less than 5% of applicants). They also only work with high-quality accredited investors (currently, the investor network has over 20,000 investors, including individuals and VCs)—so you know that the backing you get is coming from legitimate, reliable sources.

Unlike other platforms, EquityNet offers flat-fee crowdfunding; instead of taking a cut of your raised funds, EquityNet charges a monthly membership fee (while the platform offers a free option, paid options range from $299 per month to $2,990 per month).

Seedrs offers U.K. businesses the opportunity to crowdfund, both from their audiences (for example, social media followers) and from a network of individual investors—making this a great one-stop shop for small business owners that want to explore both crowdfunding and more traditional investments.

You only pay fees on Seedrs if you run a successful campaign. If you are successful, expect to pay a 6% success fee, a £2,500 completion fee (excl. VAT), and payment processing fees.

Deanna Debara

About the author

Deanna deBara is an entrepreneur, speaker, and freelance writer who specializes in business and productivity topics. When she's not busy writing, she enjoys exploring the Pacific Northwest with her husband and dog. See more of her work and learn more about her services at deannadebara.com .

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How to Crowdfund a Small Business

Fuel Your Small Business Dreams: Expert Tips to Successfully Crowdfund Your Next Venture.

Published: March 28, 2023 | Updated: April 22, 2024

One of the things we can all relate to is that little fluttering feeling that comes around whenever we come up with a meaningful idea. When that idea can be turned into a reality, things get even better. If you’ve been working hard to create a small business,  crowdfunding can give you just the boost you need to turn that idea into a reality. 

No matter how good a business plan is, sometimes money just doesn’t stretch far enough to get the idea going. Getting a loan isn’t always a smart option, either. However, online platforms like Kickstarter and Indiegogo have led a revolution by allowing people to support ideas they like from all across the world.

Crowdfunding allows you to tap into a base of backers and future customers that support your vision, in exchange for a fee that goes to the crowdfunding platform. With fewer strings attached than a loan or other traditional means of investing in a business.

When it comes to crowdfunding your business, you’ll need to have a well-thought-out strategy that clearly communicates your vision and engages with potential backers. If that seems stressful, don’t worry. While it won’t be easy, it’s less complicated than it seems. 

Key Takeaways

Can i use crowdfunding to start a business, should you crowdfund your small business, four types of small business crowdfunding; a breakdown, three stages and tips for a succesful crowdfunding campaign, during the campaign, after the campaign, where to find the best crowdfunding for small business support and expertise online.

• You’ll want to develop a clear and concise communication strategy and crowdfunding pitch that focuses on your unique idea. 
• Setting clear goals, being transparent with potential backers, and having a strategy in place can help your crowdfunding campaign be more successful. 
• Engaging with backers before, during, and after the campaign is essential. Make sure to be transparent and give regular updates.
• Giving backers incentives is a great way to connect with potential customers.

Crowdfunding has been capturing the attention of entrepreneurs for a while now, and it’s not hard to see why. There’s a lot of power in community and crowdfunding harnesses that power to allow backers to feel like they have a stake in your success. Crowdfunding platforms have huge audiences that are always ready to back the next big idea, after all, that’s why they use the platform. 

So, yes. You definitely can use crowdfunding to start a business, but should you?

Crowdfunding is a super valuable resource for those looking to bring their ideas to life and the best part is that they come with less risk than traditional financing options like banks and investors. Crowdfunding allows you to test your idea among potential customers before you invest significant amounts of time and money into building inventory and setting up shop only to find there isn’t as much demand for your product as you thought.

If you’re on the fence about crowdfunding your small business, here are a few pros and cons to help you out.

What Are the Advantages of Crowdfunding for Small Businesses?

• Crowdfunding opens the door to a pool of potential backers, supporters, and customers without relying on traditional financing methods. No borrowing. No interest rates. 
• Setting up a crowdfunding platform and pitch is very accessible, making it a great option for entrepreneurs at every level. 
• A successful crowdfunding campaign can be helpful in validating a product or service before you commit fully. 
• Some crowdfunding pitches can catch the eye of media coverage and gain lots of exposure.
• Crowdfunding can help raise money for a project, but it can also help build a community around your product or service that ensures continued success outside of the platform. 

What Are the Disadvantages of Crowdfunding for Small Businesses?

• Because crowdfunding is so easily accessible, it can be competitive and it may be difficult to stand out from the crowd. 
• Creating a crowdfunding campaign can be time-consuming, but keep in mind that setting up a successful business also takes time and money. 
• It may be hard to match the high expectations of backers and customers.

Believe it or not, there is more than one type of crowdfunding. There are actually four: equity crowdfunding, backer crowdfunding, reward crowdfunding, and lending crowdfunding. This is crucial information if you’re considering crowdfunding as an option, so let’s go through them all. 

Equity Crowdfunding

Equity crowdfunding is when backers invest in a company in exchange for equity or ownership of your project. If you’re looking to expand your team and invite new people in, equity crowdfunding might be the right choice for you. Do keep in mind that this type of crowdfunding means you’ll lose some autonomy over the project. It’s also important to be up to date when it comes to local, state, and federal laws and regulations as well as the rules and regulations of specific platforms that may not allow for this model of crowdfunding.

Backer Crowdfunding

This is the kind of crowdfunding you probably think of when you hear the word and this is the kind that LaunchBoom helps you master. When you raise money this way, backers support your idea because they want to see it become a reality. For projects that offer solutions to backers’ everyday problems and are looking for a community of shared values, this type of crowdfunding is a great option. 

Reward Crowdfunding

Reward crowdfunding is pretty much like backer crowdfunding, with one difference: backers offer their support in exchange for a reward or perk. This could mean getting early access to products and special discounts, among other incentives. This is a good choice if your product or service is tangible because it makes offering perks easier. 

Lending Crowdfunding

Last, but not least, lending, as the name suggests, is when money is borrowed with the expectation that it will be paid back with interest. The reason this is a cool option is that it’s an innovative twist on more traditional financing and loans, and it can also help a business quickly raise the funds it needs to get off the ground.

When it comes to launching a successful crowdfunding campaign, there are three stages involved, each with different responsibilities and needs: the pre-launch, during the campaign, and after the campaign. Let’s dive into these. 

The pre-launch is one of the most important stages because it’s the work that you do here that will determine your success on launch day. In fact, this is where most of the work of the campaign will be done. From validating your product to building a mailing list of supporters to crafting a prototype, this is the stage we like to refer to as the Test Boom.

Establish Your Kickstarter or Indiegogo Platform

First off, you need to decide where the crowdfunding is happening. Kickstarter and Indiegogo are great online platforms that can help set the foundation of your campaign. They are also the most successful platforms with the largest audiences, so these are the platforms we would recommend. 

That said, deciding which one is right for your business is going to depend on the type of business you’re planning to launch. If you have an idea for a board game, for example, you’ll want to go with Kickstarter as this is one of their most successful categories. Indiegogo, on the other hand, would be better suited if your business falls into the tech category. Here is a link that will help you decide which platform suits your business best.

Understand Your Target Audience, Marketing Goals, and Budget

Next, you need to sit down, create a plan, and learn it backward and forwards. This includes understanding who your target audience is by creating a customer profile, getting to know their interests, behaviors, and habits, setting clear and concise marketing goals with a strong presence, and coming up with an intelligent budget that you can stick to and be transparent about.

Finding your audience and validating your product is all about identifying what your ideal customer is missing in their lives and providing it. This can take a few tries and may you require you to tweak your product or even launch a new one you never intended to create. It’s all about filling your customers’ needs. Here is a more in-depth look at how to validate your product.

Set Realistic Goals for Your Small Business

Now that you’ve got a clear idea of what your product is, it’s time to set specific goals for your project. What is your funding goal? How will the money be used? How much money are you asking for? Making sure you know the answers to questions like these can help you more effectively make your dreams come true.

You’ll want to take everything into account including platform fees, fixed costs, variable costs, average order value, and break-even count.

We’ve put together a handy guide here to help you with setting a funding goal.  

Create a Compelling Video Pitch

A video pitch is key. This element might be one of the most time-consuming and creatively-exhausting parts of the process, but it can really make or break the campaign. Make sure you highlight and showcase who you are, what you’re looking for, and why you’re product is the one that will change your backers lives. You’ll want to create a sense of urgency that leaves backers feeling as though they might miss out if they don’t get behind your brand now. This is why it’s more important to focus your message on how the product will affect the customer rather than displaying your passion for your project.

For more info on how to craft the perfect pitch, check out this guide.

Create Launch Strategy That Brings It All Together

Before the campaign launches, you’ll want to come up with a comprehensive launch strategy that combines all the elements that we just talked about. You’ll want to get people excited about what’s to come and start creating a community of hyped backers that are dying to support your idea. 

Roll Out a Launch Strategy

You’ve already got the launch strategy plan in place and now it’s time to have what we call a Launch Boom. Make sure you’re keeping the campaign visible and active on social media, your website, emails, or any other way you can communicate the message. You’ll want to keep in touch with backers, sending regular updates and keeping the community engaged and excited. Don’t lose that momentum! 

Utilize Social Media and Email Marketing Channels

Let’s not kid ourselves, social media and email marketing channels are everything when it comes to getting the word out, and using them strategically and intelligently is the way to make your campaign blow up. The more traffic you drive toward the platform, the better you can ensure success.

In this case, Facebook is one of the most effective ways to control the traffic you get. With the sheer amount of data that Facebook provides, using its ads is a no-brainer that will allow you to craft your message and see the results in real-time allowing you to tweak your messaging and targets.

Provide Frequent Updates to Backers

Once someone decides to support your idea, they’ll want to stay in the know. Let your backers know what’s going on, and how it’s going, and provide all necessary information to be as transparent and communicative as possible with your new crowdfunding family. You’ve spent time building your mailing list, now it’s time to mobilize them for the launch!

Create Engaging Content

GRAB ATTENTION! And hold it! You want to keep the community you’re building engaged and excited about your project. Use your voice in your own way and find out how to connect with backers and potential supporters. This is where knowing and understanding your target audience and what makes them tick is vital to success.

Use Urgency

You’ll want to create a sense of urgency during the crowdfunding campaign. Most platforms allow for the pitch to be active for a few weeks and we recommend a campaign length of 30 days at most. This ensures that potential backers are feeling the FOMO and decide to support you right away. 

Make a Strong Final Push and Raise More With Add-Ons

Just because the campaign is coming to an end, doesn’t mean it’s time to kick your feet up. You can still give it one last adrenaline-packed push to bring it to the next level. Consider offering incentives, rewards, or bonuses to backers that contribute at higher levels. At the end of the day, every single penny counts. 

Deliver on Promised Rewards (Make Sure Your VIP Backers Get Their Product First)

Now that the campaign is over, it’s time to really get to work and deliver on the promises you made. Depending on your project, you might’ve offered a first grab of the product, special discounts, and more. 

Stay Connected with Backers

Keep backers in the loop by sending regular updates that show progress and make sure you always revise the growth and expansion. After all, backers got behind your idea because they want to see it come to fruition.

Utilize Funds for Business Growth

Obviously, the money raised goes nowhere other than your business. You’ve already outlined what the money is going towards, so get that show on the road. Maybe you’re getting new equipment, making prototypes, expanding product lines, or hiring more people for the team. 

Be Transparent

Whatever you decide to do with the funds, you want to be transparent with your supporters. There’s no easier way to ruin your reputation than to be or appear dishonest. Keep the positive vibes in the air by always being transparent and straightforward about what’s going on behind closed doors. 

Thank Your Backers

We’ve all been taught to say “please” and “thank you”, so make sure not to forget your manners when speaking to backers and the community that supported your project. Tap into the sea of gratitude and make sure all backers know how much their contribution means to you and the project.

No doubt about it: crowdfunding has fundamentally changed the way many small businesses are able to get up and running, and it seems this is only the beginning. The right approach can do wonders for an idea by building awareness and excitement, reaching new potential backers, and creating a community that loves your project as much as you do.

As prepared as you may be, sometimes you need a little help. That’s where LaunchBoom comes in. Crowdfunding marketing is our jam. We’re here to make sure that every aspect of your strategy is executed perfectly. 

The LaunchBoom process focuses on every stage of crowdfunding, from the pre-launch to the height of the campaign and all the way to the post-campaign. All along the way, you’ll find expert guidance, data-driven insights, and a strategy that has raised over $100M for our partners, big and small.

Whether you’re looking to build your brand, generate awareness and excitement, tell a story, create compelling content, or showcase your project, LaunchBoom has got your back.

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How to Crowdfund Your Business

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A crowdfunding campaign can offer a great way to get money for your small business. But running a successful crowdfunding campaign takes more work than just asking for money on a fundraising site―you need to carefully develop and execute your campaign.

That’s why we’ve created this guide to the business crowdfunding process. We’ll walk you through every step of a successful crowdfunding campaign―from verifying that crowdfunding can help your business to getting and using your raised funds. 

Let’s figure out how to get your business funded .

How to crowdfund your small business

• Make sure crowdfunding will work for your business
• Choose the right crowdfunding platform
• Plan your crowdfunding campaign
• Launch your campaign
• Use your new funds

1. Make sure crowdfunding will work for your business

Before you get too invested in crowdfunding, you need to make sure crowdfunding is a workable option for your small business.

See, not all businesses are suited to the crowdfunding process. So you’ll want to consider if your business idea makes sense for crowdfunding, make sure you have the resources to run a campaign, and understand (and plan for) the potential for failure.

Business idea

Some kinds of businesses tend to perform better on crowdfunding sites than others.

As a general rule, product-based businesses raise more funds than service-based businesses . For example, a business offering a new board game, women’s jeans with deep pockets, or a fast device charger will likely do better than an attorney’s office, cleaning service, or restaurant.

Now, that’s not always true. You will sometimes see restaurants, nonprofits, and other service-based businesses run a successful crowdfunding campaign. But in those cases, the business usually has a big following and some standout feature (like a celebrity on staff).

For the most part, though, crowdfunding works best for businesses with exciting new products. If that’s not your business, you may want to explore other business funding options .

Let’s say your business idea has what it takes to fundraise. Do you have the resources to run a good crowdfunding campaign?

These resources include things like time, money, and fans. You might want to ask yourself these questions:

• Can my business wait a month or more to get funding?
• Do I have the skills to create a strong pitch and great marketing materials?
• If I don’t have the skills, do I have the money to pay someone to create those materials for me?
• Does my business have loyal customers that will invest in my campaign?
• Do I have a large social network that I can share my campaign with?

If you can’t answer yes to most of those, then it might not be the best time for you to start crowdfunding. Maybe look at a small-business loan or other kind of funding instead.

But if you have the resources, you’re much more likely to have a successful campaign.

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Success rates

Finally, you need to understand that not every business runs a successful campaign .

In fact, some crowdfunding sites have estimated success rates of below 5% (like GoFundMe ). Sure, others (like Kickstarter ) have much higher rates around 35% or so. Either way, though, many crowdfunding campaigns end in failure.

So you need to have a backup plan. What happens if you don’t get the funding you want? And are you okay spending time and money on a potentially unsuccessful campaign?

To be clear, we really hope your business idea succeeds and you get all the money you want. We just know crowdfunding isn’t a guarantee.

But if you still think crowdfunding sounds like a good fit for your business, then let’s move on to the next step.

2. Choose the right crowdfunding platform

The platform you use matters. See, crowdfunding platforms offer different types of campaigns, rules about who can use them, audiences of investors, and so on. So you’ll want to spend some time finding the best crowdfunding site for your specific business.

Campaign types

For starters, think about what kind of crowdfunding platform you want to run.

• Rewards-based crowdfunding has investors pledge money in return for a reward, like merchandise.
• Equity crowdfunding (also called regulation crowdfunding) lets accredited investors and non-accredited investors offer money in exchange for equity in your business .
• Debt crowdfunding has backers contribute money with the understanding you’ll pay them back.
• Donation crowdfunding lets people donate money to your business without getting anything in return.

Most crowdfunding sites use rewards-based crowdfunding or equity crowdfunding. In either case, make sure you’re willing and able to give investors what they want―whether that’s a reward or equity.

Funding options

You’ll also need to decide what type of funding you want.

• All-or-nothing campaigns require you to meet your fundraising goal to keep any money.
• Keep-what-you-raise campaigns let you keep any money you raise, even if you don’t meet your fundraising goal.

Keeping whatever you raise might sound like the better deal. But keep in mind, if you use rewards-based crowdfunding, you’ll have to deliver rewards to your backers even if you don’t meet your fundraising goal. Can you afford to do that? If not, we suggest sticking with all-or-nothing campaigns.

Other factors

You may also want to consider some additional factors.

Is there an audience you’re aiming for? You may want to target angel investors , for example, or to focus on venture capital firms . Or maybe you don’t care about accredited investors, but you do want to focus on women. Either way, that could influence your platform choice.

Don’t forget about platform fees either. Most crowdfunding sites charge fairly standard fees (around 5% of what you raise for rewards platforms and around 7% for equity platforms), but you will see some variation between platforms.

And finally, think about platform requirements. Some platforms, like Republic crowdfunding , have lots of criteria for businesses that want to crowdfund. Others, like GoFundMe, let pretty much anyone crowdfund. So consider whether or not you want to worry about meeting certain criteria―and whether or not you can.

Platform options

With all that in mind, you’re ready to pick a crowdfunding platform.

Best crowdfunding for entrepreneurs

Data as of 3/21/22. Offers and availability may vary by location and are subject to change.

We’ve listed some of our favorite crowdfunding sites in the table above. You can learn more about them and other options in our rankings of the best crowdfunding for startups .

3. Plan your crowdfunding campaign

Once you’ve picked a platform, you’re ready to work on your campaign. But that doesn’t mean launching it immediately―instead, take the time to carefully plan it out.

This means planning out things like these:

• Fundraising goal
• Campaign length
• Reward tiers (if doing rewards-based crowdfunding)
• Campaign materials
• Marketing materials

Pay close attention to those last two. You’ll want to use images, video, and text to entice potential investors. And make sure you have a strategy for where and how you’ll advertise your campaign.

As you make these materials, remember that a well-designed campaign can make the difference between successful fundraising and coming up short. So you may find it worthwhile to invest in professional help.

If you’re using an equity crowdfunding campaign, like Wefunder , you’ll also need to make sure you meet all the legal requirements for regulation crowdfunding―like filling a Form C. (You may even want to meet with an attorney about this.)

Got everything ready? Then it’s time to crowdfund.

4. Launch your campaign

At this point, you can finally launch your crowdfunding campaign.

Everything you’ve done up to this point will come into play. You’ll be on the right platform with an appropriate fundraising goal and deadline. And you’ll have all the materials you need to get eyes on your campaign and then to get investors to back you.

That doesn’t mean your work is over, though. You should be actively advertising your campaign while it’s active. And likewise, you need to actively manage your campaign page. Answer questions, post updates, and find other ways to interact with existing backers and potential investors.

You may even want to add additional reward tiers (if your platform allows you to) if you find your campaign going really well.

And don’t give up if your campaign doesn’t launch with quite the bang you hoped for―lots of campaigns can gain steam (and investors) over time.

With any luck, you’ll meet your fundraising goal. In that case, congrats on your successful campaign! But your crowdfunding journey isn’t over quite yet.

5. Use your new funds

After running a successful campaign, you’ll get the money you raised.

How long this takes depends on your platform. It can be anywhere from a few days to a few weeks.

Regardless, this means it’s time to deliver on your promises.

• With rewards crowdfunding , you’ll need to send rewards out. Sometimes this takes a while, especially if you’re manufacturing a new product, but make sure you keep your backers updated. Staying in touch will help investors feel confident in your business―and make them more likely to back your future campaigns.
• With equity crowdfunding , you may have new reporting requirements. (As with most things related to regulation crowdfunding, this is the kind of thing you may want to work with a lawyer on.)
• With debt crowdfunding (like with Kiva loans ), your repayment term will start. You’ll need to start making regular loan payments.
• With donation crowdfunding , you don’t have to do anything for your backers. But it’s nice to say thank you.

And of course, it’s time to use your new funds to build your business. (Hopefully you already know how you’re going to do this.)

Remember that crowdfunding doesn’t have to be a one-time thing. Plenty of entrepreneurs crowdfund business idea after business idea. So whether or not your first campaign worked out, you can always launch another one. In that case, it’s back to step one.

Browse hundreds of loan options, custom-tailored to your business and budget needs, from a single, simple platform.

The takeaway

Business crowdfunding can get you funding without a loan.

But as a business owner, you’ll want to carefully consider whether or not crowdfunding is a good idea for your specific business. If you choose to move forward, you’ll need to choose the right crowdfunding platform for your goals and then plan a strategic campaign.

If all goes well, you’ll end up with a successful campaign. You may have some obligations to meet at that point. But if you like, then you can start the process over and create a new crowdfunding campaign for your small business.

Crowdfunding isn’t the only way to get free money for your business. Learn more about startup business grants .

Related reading

• 6 Best GoFundMe Alternatives for Business Crowdfunding 2023
• Crowdfunding vs. Peer-to-Peer Lending: Which Funding Option Will Work Better for You?
• Indiegogo Review 2023
• 6 Ways to Self-Finance Your Business
• Small-Business Grants for Women 2023: 5 Programs with Free Money for Women

Business crowdfunding FAQ

Is crowdfunding good for a small business.

Crowdfunding can be good for some small businesses. It tends to work best for small businesses that have a cool new product (like new tech, a fun game, or innovative clothing) and that have the resources to run a good campaign.

Can you crowdfund to start a business?

Yes, you can crowdfund to start a business―theoretically, anyway.

Some platforms have requirements that mean your business needs to be off the ground (like Kickstarter, which requires functional prototypes of your business idea). And many investors are more likely to back established businesses than brand-new startups.

In other words, it may not be easy to crowdfund a new business―but it is possible.

What is the best way to crowdfund?

The best way to crowdfund really depends on your specific business idea. Some businesses will do better with rewards crowdfunding, for example, while others will do better with equity crowdfunding.

That said, we think most businesses should stick to all-or-nothing fundraising. That way, you won’t get stuck with obligations (like fulfilling rewards) that you can’t afford to keep.

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Top 10 Crowdfunding Options for Small Business [2021]

• Small Business

Starting a business is a big decision, and we couldn’t be any more excited for you!

You’ve developed your stellar business idea , worked on your plan , but wait… what’s this? You still need funding?

You have a plethora of options when it comes to small business or startup funding: Traditional lenders, alternative lenders, grants, and then there’s another thoroughly modern way of getting funds — online crowdfunding.

As some loans are becoming harder and harder to acquire , crowdfunding sites are seeing an increase in usage and funding .

So, what is crowdfunding? How can it help you launch your small business? That’s what we’ll discuss in this blog post. Stick around to learn about crowdfunding, tips for crowdfunding success, and the top ten crowdfunding sites for small businesses and startups. 

Crowdfunding your small business

Crowdfunding “ is the use of small amounts of capital from a large number of individuals to finance a new business venture .” A big issue with traditional lending methods is that it can be incredibly hard to receive the capital you need to succeed. Unless you have proven success in business, positive cash flow, and great credit history, banks aren’t likely to approve your loan requests.

Crowdfunding is a great answer to this problem as it allows you to get backing from friends, family, established investors, and complete strangers who believe in your business. Crowdfunding has really democratized the world of small business and startup funding.

Before starting a crowdfunding campaign, it’s important to note that on many sites (but not all), if you don’t meet your crowdfunding goal you won’t receive the funding. That said, here’s how you can boost your chances of meeting your crowdfunding campaign goal. 

Tips for crowdfunding success

A great business idea alone won’t help you get the crowdfunding results you’re seeking. We’ve put together the following tips to increase your chances of running a successful crowdfunding campaign so you can fund your business. 

Preparation and planning

Crowdfunding isn’t a shortcut to launching a business, and people are wary of investing in half-cooked business ideas as they’re too risky.

If you haven’t already, now is the time to develop and vet your business idea and create a small business plan . 

Review successful crowdfunding campaigns

Time is money, don’t waste yours by reinventing the wheel. Instead of striking out alone, look to other crowdfunding campaigns to find what worked and what hasn’t, focusing on campaigns in an industry similar to yours.

Can you find any similar traits among successful campaigns? Perhaps they offered equity stakes in their small business or offered big rewards to initial investors. How did they present their campaign? Did they use lots of images and videos to convey their message and appeal? After reviewing these campaigns, you should start to notice common themes and elements. 

Familiarize yourself with the Terms & Conditions

It’s your responsibility and in your best interest to review different crowdfunding sites’ terms before utilizing them for your campaigns. Each site has its own billing policies or ways of collecting revenue, some sites may prohibit certain industries, and others may have certain age requirements in order to use their services. As you review, you may find one site’s terms more agreeable than another’s.

Be your own PR person

When it comes to crowdfunding, you are your biggest advocate. If people don’t know about your business and crowdfunding campaign, how are they going to invest in it? Here are a few ways you can work on your business and brand awareness:

• Where should people turn if they need more information about your business? Creating a website establishes your digital presence and not having a site is pretty inexcusable these days. If you don’t have a product or service to sell yet, focus on your “About” and “Contact us” pages. If you’re really serious, create a “Press” page that offers images and information that journalists and others can use in their features.  
• Help motivate people to visit your site by making your domain name short, memorable, and relevant. If the .com you want isn’t available, don’t panic — there are multitudes of available TLDs for all sorts of industries. Can’t find the .com you want for your new yoga studio? Try the .yoga TLD. Is the domain you chose for your e-commerce store unavailable? Try .store or .online.
• Social media is a form of social proof and helps you build your brand while keeping you in touch with potential investors and customers.
• Encourage your friends, family, and followers to share news and posts about your business. It’s called social media for a reason — networking is essential!

You want people to know about your business so it can gain traction and get funding, so don’t be shy in promoting it and your crowdfunding campaign. 

Back your campaign before it goes online

Being the first person to do something can be nerve-wracking, and that includes being the first person to back your crowdfunding campaign. However, it’s easier to justify doing something when you see that others are doing it, too. Use this to your advantage by having some investors already lined up before your crowdfunding campaign goes live.

You don’t need professional angel investors — having some friends and family willing to donate at the beginning of your campaign works just as well to lend credibility to your business idea. 

Add a little character

Every good campaign uses facts to help support the appeal, but the great ones know that emotions matter, too. When a person finds your crowdfunding campaign, what do you want them to feel? What emotions should your campaign elicit? Excitement? Desire for your product? Write your crowdfunding appeal to influence the emotions you want someone to feel when reading it.

Show the people behind the scenes making it happen. Your investors want to know about the team that’s turning ideas into reality just as much as they want to know about your business. Ideas are great, but it’s the people that make them happen. 

What are the different types of crowdfunding campaigns?

Crowdfunding campaigns can be broken out into four main categories:

• Donation – when people donate money to your crowdfunding appeal and are promised nothing in return.
• Debt – any money pledged by your supporters is paid back (usually with interest) by a certain deadline. This is a lot like a traditional loan.
•   Rewards – in this scenario, you promise a certain reward based on the amount of money someone pledges to your crowdfunding campaign. You can offer services or products as rewards to entice people to donate funds. Consider offering different reward tiers with corresponding pledge tiers. For example, you can offer one reward to people who pledge between $10 – $100, a better reward for people who pledge $101 – $500, and so on.
• Equity – this is exactly what it sounds like. When you perform an equity crowdfunding campaign, you’re giving an investor a percentage of ownership in your business in return for funding. 

Top Crowdfunding Sites

Since launching in 2010, GoFundMe is one of the most widely-used crowdfunding platforms. They describe themselves as the “world’s largest, free social fundraising platform.” However, one thing to note is that the platform is only free for campaigns in certain currencies and countries. Also, they apply standard transaction fees to debit and credit card transactions.

Unlike some other platforms that return funds to donors if you don’t meet your goal, GoFundMe allows you to keep whatever amount you raise. With “over $9 billion raised from more than 120 million donations,” you should take the time to review the platform to see if it’s a good fit for your needs. 

Kickstarter

Do you have an innovative product or service that you know will make a difference in your industry? Kickstarter is a crowdfunding platform that helps “ make ideas into reality .” Their mission is to “help bring creative projects to life.” This crowdfunding platform launched in 2009 and since then $5.3 billion has been raised for different projects with 188,101 of them being successful.

Kickstarter is all-or-nothing. If you don’t meet the funding goal for your project then your financial backers won’t be charged for their pledges and you do not receive any funds. Kickstarter charges a flat 5% fee from the funds your campaign collects, but only if it’s successful. If a project doesn’t reach its goal then no fees are charged. Also, they charge a standard payment processing fee of about 3%-5%. 

According to their website, “Indiegogo is where early adopters and innovation seekers find lively, imaginative tech before it hits the mainstream.”

Indiegogo is both a crowdfunding platform and a marketplace. They help small businesses and entrepreneurs take their ideas from concepts to reality and even help you ship your products. They provide services and resources, including access to key partners for the duration of your project. Unlike some other crowdfunding sites, Indiegogo is there to support you for the lifecycle of your campaign and project. Since its launch in 2008 Indiegogo has successfully helped entrepreneurs bring over 800,000 ideas to life.

They charge a 5% platform fee, and that amount is based on the amount of funding you raise, not your ultimate project goal. They also charge a standard payment processing fee that’s dependent upon your location and currency, though it appears to hover around 3% for many currencies.  

Crowd Supply

Crowd Supply’s mission is to “bring original, useful, respectful hardware to life.” Like Indiegogo, Crowd Supply is dedicated to helping entrepreneurs from funding to delivery, and 100% of funded projects have been delivered to backers. They’ve got a great success rate, too — 70% of launched projects have achieved funding.

When you bring an idea or product to Crowd Supply for backing, you’ll see two “Launch Plan” options: Basic and Standard. Here’s how they differ:

Patreon exists to “change the way art is valued.” Over 200,000 creators use Patreon to allow their “most passionate fans [to] support [their] creative work via monthly membership.”

To use Patreon you establish a monthly subscription rate (you can create tiers) for your fans and followers. When that amount is paid, they receive exclusive access to your content. Your supporters join a community that supports you and receive a behind-the-scenes look into your creative process. Patreon allows you to make recurring income — it’s not a one time backing or funding for your creative pursuits.

Like Crowd Supply, Patreon has different pricing based upon the plan you choose:

Crowdfunder

Crowdfunder is a place “where entrepreneurs and investors meet.” When you choose to use Crowdfunder you’re joining a community of over 200,000 members and 15,000 accredited investors.

This site is based around equity crowdfunding , meaning that you’ll need to offer an equity stake in your business in order to receive funding. Like most other crowdfunding sites, Crowdfunder offers resources to help you create the perfect crowdfunding appeal.

They also offer a few plans at different price points:

CircleUp allows you to create two types of crowdfunding campaigns: equity and credit. They are selective about the businesses they work with, but if you make it through their approval process then you’ll find an array of services available to you.

CircleUp focuses on helping small businesses find the right investor. Many traditional funding and loan opportunities aren’t made available to small businesses, and so they seek to fill the gap, primarily focusing on consumer brands.

Before you can start using their services, you have to apply here . 

Fundable is designed around business crowdfunding, and they’re “dedicated exclusively to helping companies raise capital.”

The team at Fundable takes a hands-on approach to help customers, “ from profile creation to marketing, [they’re] there at each step. ” To date, people have committed $615 million in funding on their platform.  

It’s free to set up a company profile on Fundable, and a flat fee of $179 USD per month to fundraise. If you choose to run a rewards-type campaign on their platform then there’s a standard credit card processing fee charged by WePay, their payment processor. 

Republic recognizes that “many startups’ success depends on their ability to get funded.” They built Republic to address that, and their “funding portal and broker dealer are SEC-registered and members of FINRA .” And they support diversity . “25% of investments on Republic have gone to companies with underrepresented founders of color and 44% have gone to companies with a female founder.” The industry average is 1% and 13%, respectively.

As an SEC-registered business, their cost and pricing structure is a bit different from other crowdfunding sites. Find out more about how much it costs to raise money on Republic here .   

Wefunder has helped fund 451 startups and raised over $164.5 million. They’re the self-described “Kickstarter for investing,” the difference being that Wefunder lets people invest in your company with small ownership stakes whereas Kickstarter allows you to sell products. Right now, Wefunder is only available to businesses and startups located in the United States.

They don’t charge any up-front fees and offer to price match if you find a better offer elsewhere. Wefunder collects 7.5% of your total fundraised amount if your campaign is successful.

Ready to crowdfund your small business funding?

Crowdfunding is a great and thoroughly modern way to find and raise capital for your small business. 

There are a multitude of crowdfunding sites, many of which cater to specific industries and products, so don’t despair if you didn’t find a perfect solution in the list above. 

If you’ve run crowdfunding campaigns before, share your best practices with us in the comments below!

Natalie Brownell

Domain.com Marketing Manager. She believes in the power of words and loves a good story. She resides in MA and spends her days behind the keyboard with her two feline coworkers. Connect with her on LinkedIn .

Complete guide to crowdfunding for business

If you have an entrepreneurial dream, crowdfunding may help you make it come true. Learn what's involved and how to succeed in our handy guide.

Ready to start your business? Plans start at $0 + filing fees.

by   LegalZoom staff

Read more...

Updated on: February 12, 2024 · 14 min read

3 types of crowdfunding and their pros and cons

How to crowdfund a business in 7 steps, crowdfunding regulations and legal considerations, expert tips for the best crowdfunding results, addiional crowdfunding resoources.

Funding your entrepreneurial dreams can be hard work. Money doesn't always stretch as far as you think it will, and loans to start your business have staunch prerequisites like credit score minimums and required collateral. That's why crowdfunding for business is popular among aspiring and even experienced entrepreneurs. Crowdfunding directs interested investors right to your bank account.

Online platforms like Kickstarter , Indiegogo , and Patreon will host your crowdfunding campaign for a fee, allowing potential investors to discover and contribute. You can market it almost any way you want, and there are fewer strings attached to raising funds than there are to acquiring a loan or attracting investors in other ways.

Below, explore tips from experts on crowdfunding for businesses, as well as tips for building a crowdfunding campaign and regulations to keep in mind during the process. 

There are three main types of crowdfunding that you can explore to raise funds for your startup:

• Equity crowdfunding
• Donation crowdfunding
• Reward crowdfunding

Each of these presents opportunities and challenges relative to how the funds are acquired. If you're wondering whether you need to pay back crowdfunding, the answer is usually no for funds raised to launch a small business.

While other forms of crowdfunding exist in addition to the three below, they're not ideal for funding a startup or a small business. If you find your business in growth mode later on, however, and need to raise cash, you can finance your debt by crowdfunding for a business acquisition. This method isn't recommended for startups because the debt could render your company inoperable without enough funds.

Read on to see which one of these three crowdfunding methods works best for your startup idea so you can start raising money as soon as possible.

1. Equity crowdfunding

To participate in equity-based crowdfunding, be prepared to offer shares of your company to your investors in exchange for their funds. Equity crowdfunding removes debt from the equation by substituting equity for the business loans you would otherwise repay.

• There's no need to repay costly loans or reimburse investments.
• Raise up to $5 million annually from accredited and ordinary investors.
• Funding pitches require lots of information about company operations.
• You must adhere to state and federal filing requirements after closing.

2. Donation crowdfunding

Donation-based crowdfunding removes the question of investment and solely focuses on funds acquired. Donors give funds to a business, organization, or idea that they support or believe in without an expectation of compensation for their efforts.

• Donated capital doesn't need to be reimbursed.
• Donors don't receive an ownership interest.
• Donations can be much lower than funds from other sources.
• Campaigns often fail to meet fundraising goals.

3. Reward crowdfunding

Crowdfunding that offers rewards is sometimes called “seed crowdfunding." Reward-based crowdfunding is similar to donation-based but offers a reward to donors in the form of a product or service.

• Rewards may draw more donors and more attention to your business.
• Anyone can contribute to your campaign.
• Raising a large amount of money requires a massive donor base.
• You might have to return funds if you don't meet your goal.

It would be nice if business funds just fell into your lap, but the reality is that securing crowdfunding takes diligent work and lots of preparation.

Knowledge of alternative funding options and awareness of regulations are both important to ensure a successful and compliant crowdfunding campaign. However, you'll want to do more to prepare for your first effort. These seven steps can guide you as you develop your business idea and move toward launching your pitch.

1. Solidify your ideea

The entire ethos of crowdfunding is securing money from as many parties as possible. To do so, you'll need to convince those parties that your idea is worth their money in the first place. Data from the U.S. Bureau of Labor Statistics shows that fifty percent of businesses fail by the five-year mark. Tellingly, the top-cited reason for small business failure is inadequate market research.

Some important considerations to ponder when working out your idea are:

• Saturation: How crowded is this industry, and what are the barriers to entry?
• Competition: How competitive will my business be among existing rivals?
• Inimitability: What truly makes my idea unique? Why will people want it?

Once you're sure your idea is solid and you've gathered data to prove its viability, you can begin to think more about the audience you'll cater to.

2. Identify your audience

The more people you're able to reach with your campaign, the more likely you are to meet your crowdfunding goal. Though not always the case, investors might be more likely to contribute to campaigns they relate to. Consider your business's audience before launching your pitch so you can tell your investors exactly who you plan to target with their funds. Think about these questions when determining the right audience:

• Motivation: What am I trying to get my audience to do?
• Intention: Who would be most interested in doing that?
• Solution: Why and how does my idea solve their problem?

Put in the work to target a receptive audience and your story's more likely to resonate with them.

3. Develop and share your story

Speaking of your “story," investors will likely take interest in the background behind your startup idea. Storytelling puts you in command as you lead investors on a journey through your reasoning for developing your idea, your plans for solving challenges, and your expectations for growth. Ask yourself these questions while you think about your story:

• Passion: Why do I believe in this idea?
• R eflection: Which challenges that I faced have contributed to this idea?
• Direction: What is my mission with this idea?

Passion is contagious, and sharing your story should make you excited. If you can make investors visualize how their contributions benefit your idea, you might have an easier time winning them over and meeting your goal.

Better yet, include a video proposal explaining your idea in-depth, in your own words. According to Marina Vaamonde, a commercial real estate investor and founder of PropertyCashin , “The best accompanying media in any crowdfunding campaign is a video." She insists that campaigns with other forms of media like charts or infographics “do not perform" in the same way as those with a video. There are videographers who specialize in crowdfunding campaigns if you require professional assistance.

4. Set your funding goals

Do you know how much you need to raise? You might be asking yourself how much it costs to start a business . It's vital to have enough money to keep operations running smoothly while you grow your business and work toward profitability. There are a few questions that can help you come up with an appropriate number for your crowdfunding goal:

• Selection: What costs are associated with the online platform I chose?
• Pivotability: If I don't meet my fundraising goal, will I forfeit funds raised?
• Expansion: If I exceed my goals, what will I do with the extra money?

You might factor in many different costs when calculating your final number. Crowdfunding campaigns might require marketing or administrative expenses. You'll also want to consider any costs associated with launching your business, like marketing and operation expenses.

You may want to avoid a round number for your final goal in order to stand out from the crowd. Research from the University of Hong Kong found that among campaigns targeting $13,000 or less, those with round-numbered goals (such as $5,000) were 6%–10% less likely to be successful.

5. Promote your campaign

After you set goals and choose a platform to host your campaign, you must receive approval from the platform to begin fundraising. Your pitch and plans take time to review, but the extra eyes on your project may catch errors you missed. The pitch you submit should entice readers and answer the basics about your “why." You have your audience, you have goals, and you have a story ready to share, so think about these questions when gearing up to market your campaign:

• Networking: Are there industry influencers that might help with promotion?
• Advertising: What industry-specific events could I target with advertising?
• Gratification: Am I showing my investors appreciation for their contributions?

Indiegogo analyzed the results of over 100,000 campaigns to dissect what makes crowdfunding successful. The research found that campaigns with promotion timeframes between 30 and 39 days achieved their goals more often than those with shorter or longer windows. Additionally, campaigns that offered perks after launch were more likely to entice new investors throughout the duration of the campaign.

Fundraising is the result of relationship-building. It may be as simple as hooking someone with your pitch, but you'll probably need to network heavily to spread the word about your campaign. Like many relationships, your bond with your investors should be built on honesty and transparency.

6. Focus on transparency

It's likely that anyone who invests in your startup won't receive direct monetary compensation in return. To reassure them during and after your campaign, create a list of important metrics that investors would want to know. A few important questions that focus on transparency are:

• Foresight: Are there any foreseeable problems I don't know how to solve?
• Insight: Do any of my investors have experience in a similar position?
• Proactivity: If I fail to meet my goal, how will I share that news?

Transparency builds trust, which reinforces your investors' belief in you and their decision to invest. Keep building that trust to encourage future investments, or even convert your investors into customers.

7. Ask for and listen to feedback

No matter how successful your campaign is, it will provide valuable lessons to inform future business decisions. Your investors might voice their feedback about your campaign, but be prepared to ask questions either way. Some ideas are:

• Hindsight: What could I have done differently to improve my outcome?
• Resourcefulness: Have I posted on a crowdfunding forum to solicit feedback?
• Personalization: Have I asked friends or family for personalized recommendations?

These questions are a jumping-off point. Ideally, you should spend time reviewing your campaign in hindsight to capture fresh takeaways. Don't be afraid to ask questions from other crowdfunders in online communities and forums, either.

Crowdfunding is still a relatively new way to fund your small business , and regulations around this method of raising money are not set in stone. The Securities and Exchange Commission (SEC) governs federal regulations around raising money in this manner. Check out the requirements and considerations below that you should note before launching your crowdfunding campaign.

Adhere to SEC regulations

In March 2021, the SEC increased the maximum intake for certain types of crowdfunding from $1 million to $5 million annually. This change might make the tactic even more lucrative to industries like technology and health care, where barriers to entry include sky-high upfront costs.

SEC regulations apply mostly to equity-based campaigns, since they involve the exchange of securities for investments. If you decide that equity crowdfunding is right for your business idea, be sure to adhere to those guidelines to avoid future liability.

Defend your work and ideas

When you promote a campaign, you expose your ideas to a large number of people. Since you can't guess the intentions of everyone who might come across your pitch, it's important to guard your startup ideas with intellectual property protection.

If your work and ideas are protected, not only will you feel safer pitching them to others, but donors will know you're serious about limiting liability and protecting their investment.

Assess your tax liabilities

In every case when you crowdfund money for a business idea, the proceeds count as taxable income. How much tax liability you or your business incurs depends on which type of business entity you form, what state your business calls home, and what method you used to crowdsource the funds. Be sure to consult with a professional who can help you determine your correct tax liability.

Sourcing money from a large number of people means there are many eyes on your ideas once your pitch is out in the world. This is both exciting and nerve-wracking; all those eyes could convert to investors or even customers, while there are also people on the lookout to take advantage of unprotected intellectual property .

Plan ahead to score more support

Crowdfunding thrives on support from as many people as possible. To score that support and raise more money, you should plan several months in advance for your campaign.

Stephen Light, CMO of Nolah Sleep , believes it's especially important to reference past crowdfunding campaigns to influence future ones: “Use the data gathered to create another campaign that addresses these issues." Diligent planning and careful analysis of others' failures could help you meet or exceed your goals in the long run.

Prioritize transparency to create trust

If investors aren't sure about the ongoings of your operations while fleshing out your business idea, they're less likely to give you any money and “your crowdfunding campaign will likely be unsuccessful," says Nate Tsang, founder and CEO of WallStreetZen . Build a foundation of trust by communicating openly and honestly with your investors at every stage of the crowdfunding campaign and beyond.

Focs on long-term community engaggement

Communities drive crowdfunding forward. Harriet Chan, co-founder of CocoFinder , says, “Crowdfunding may provide many startups with access to cash, but it lacks the expertise of banks or angel investors. The community spirit of crowdfunding is essential for sustainable projects." Engaging with a community of crowdfunders offers access to valuable insight from veterans that many aspiring entrepreneurs might miss.

Cop successful crowdfunding camppaigns

Studying the failures of past campaigns isn't the only way to learn from them. Dave Herman, president of EZ Surety Bonds , believes that successful campaigns have lessons to offer as well: “Don't be afraid to copy crowdfunding campaigns that worked. Most startups want to be innovative...but this can also be their downfall." By copying the strongest elements of goal-exceeding campaigns, you can fortify your own endeavor with tried-and-true knowledge.

Crowdfunding is an especially hot topic because it democratizes business investments. People without large amounts of capital can now make contributions to business ideas they believe in without jumping through legal hoops. Because of this popularity, there are many resources available where you can learn about crowdfunding or start a new campaign of your own. Read on for a few popular options that can continue your learning experience.

Crowdfunding platforms to start raising money now

The best crowdfunding platform is one that caters to your niche needs and is scalable to the size of your endeavor. There are countless websites that act as hosting platforms for campaigns.

Patient searching and probing questions can identify the right platform for your exact goals and needs. However, there are several popular platforms that have lots to offer for most general fundraising efforts. Check out three crowdfunding websites for business below that offer unique benefits:

Kickstarter: The most popular crowdfunding platform, Kickstarter operates with binary funding rules where you forfeit proceeds if you don't reach your goal.

• Collection fee: 5% plus 3%–5% processing fee
• Best for: General campaigns, first-timers

Indiegogo: In addition to traditional crowdfunding, Indiegogo has a “global network of early adopters" of innovative products launched by the platform's users.

• Collection fee: 5%
• Best for: Unique or innovative products, services, or solutions

Patreon: Different from the other platforms mentioned, Patreon charges users a monthly subscription fee in exchange for access to a creator's content.

• Collection fee: 5% plus monthly processing and payout fees
• Best for: Creative endeavors, artist showcases

Courses to learn crowdfunding basics

Online courses allow you to immerse yourself in crowd-sourced fundraising at your own pace. Below are three examples of free, paid, and subscription-based classes that cover everything from why crowdfunding exists to demonstrations for specific platforms.

How To Crowdfund ( Udemy ): Udemy's course is an introduction to the topic that covers types of crowdfunding, regulations, and the history of this type of fundraising.

• Cost: $29.99
• Best for: Beginners looking for an introduction to crowdfunding

Crowdfunding (Wharton School of Business, University of Pennsylvania via Coursera ): This analysis-driven class uses data from hundreds of thousands of crowdfunding campaigns to assess what separates successes from failures.

• Cost: Free (certificate requires a monthly Coursera membership, $34–$79)
• Best For: Advanced users who want data-driven insight

Other Online Crowdfunding Classes ( Skillshare ): Skillshare offers a large variety of instructor-led courses discussing specific platforms and crowdfunding strategies.

• Cost: $13.99+ per month
• Best for: Users seeking knowledge about niche crowdfunding topics

Thorough research is the best way to prepare for a successful campaign launch and a healthy business down the line. With a little help and determination, you'll be well on your way to meeting or exceeding your fundraising goals.

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Crafting Your Crowdfunding Blueprint

Precision in planning crowdfunding business plans with big4 professionalism.

Crowdfunding is a modern fundraising approach, pooling small investments from a diverse group to finance compelling business ideas, especially beneficial in the Early Revenue stage. Investors seek a clear story on how their support contributes to a valuable product or service.

Crowdfunding business plans, tailored for startups, strategically navigate entry points to this market. While more accessible and cost-effective, a successful crowdfunding project demands effort to be perceived as valuable.

Recognizing the absence of a one-size-fits-all approach to crowdfunding, StartupWize is dedicated to delivering personalized crowdfunding campaigns. We aim to create a campaign that effectively communicates with investors, enhances project visibility, and attracts capital.

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Perfect business plans take time for creation but effectively saves time in getting results. Our writers, designers, analysts, and consultants bring their experience of working with successful startups to help you put your best plan forward.

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General Question

Crowdfunding is a fundraising approach that gathers small contributions from a diverse pool of investors, diverging from traditional methods by leveraging collective support for business ideas.

A crowdfunding business plan strategically assesses entry points into the crowdfunding market, focusing on establishing a project that backers perceive as valuable. It differs from traditional plans by leveraging the unique dynamics of crowdfunding platforms.

Crowdfunding offers a more accessible and cost-effective fundraising avenue, tapping into a wider network of potential backers. However, it requires substantial effort to present the project as valuable to attract support.

While free templates provide a starting point, our service goes beyond by offering personalized crowdfunding plans. We ensure your plan stands out, effectively communicates with potential backers, and maximizes your project's visibility, increasing your chances of successful fundraising.

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Are You Ready for Equity Based Crowdfunding?

23 min. read

Updated October 27, 2023

Are you an emerging entrepreneur with an underfunded venture? Could your business flourish with a gush of money and hype? Then, the unveiling of the Securities and Exchange Commission’s proposed equity crowdfunding rules reveals a panacea for growing your business’s coffers.

The SEC’s proposed rules (mandated by the JOBS Act of 2012) amend the Securities Act of 1933 and the Securities Exchange Act of 1934 to allow the offer and sale of securities through an internet crowdfunding campaign, similar in some respects to donation crowdfunding campaigns conducted on Kickstarter and Indiegogo.

Donation and equity crowdfunding both appeal to the public’s desire to participate collectively in fulfilling others’ entrepreneurial visions.

Whether launching the next internet sensation, filming a sci-fi fantasy, mass producing savory barbecue sauce, or creating a must-have tech gadget, entrepreneurs will witness this spirited support—not only from the public’s funding, but also from their subsequent purchases of the products they help forge.

If your business needs financing, consider equity crowdfunding; its distinctive traits will lure investors desiring the rewards of investment returns and investor protection, in addition to the goodwill generated by their support.

• Equity crowdfunding vs. donation crowdfunding

Equity crowdfunding differs from donation crowdfunding in two major ways. Unlike donation crowdfunding, which allows merely nominal consideration in exchange for donations, equity crowdfunding entails the offer and sale of debt or equity securities in exchange for financial support.

Additionally, a fundraising business offering and selling securities must comply with the regulations of the SEC, the federal government’s securities watchdog. The SEC’s proposed equity crowdfunding rules regulate, in part:

• Your business (the securities issuer)
• The intermediary facilitating your business’ securities offering (the broker-dealer or funding portal)
• The investors
• How to prepare for equity based crowdfunding

This article discusses the six action items that you can do now (plus one item you don’t want to do) to optimize your readiness for equity crowdfunding when these rules become effective.

Your compliance obligations will surge once your business starts the process of offering securities to potential investors—so start early.

1. Set a Fundraising Goal

The proposed equity crowdfunding rules allow your business to fundraise up to $1 million per 12 month period in its aggregate equity crowdfunding campaigns.

The proposed equity crowdfunding rules allow your business to fundraise up to $1 million per 12 month period…

Given this limitation, your business’s securities offering may not supply all of the funding your business needs; so, you should look at equity crowdfunding as only one of many tools in your business’s funding arsenal.

Furthermore, before you rush to fundraise any amount for your business, you must answer two questions pivotal for crowdfunding success:

• Is this a strategic amount for my business to fundraise?
• Does my business have the necessary resources to conduct this equity crowdfunding campaign?

Select a Strategic Target Amount:

Let’s suppose you own a craft brewery that needs financing to brew a new line of specialty beers, and your brewery has the requisite funds to participate successfully in equity crowdfunding.

First, you must set a minimum amount to fundraise and the deadline date to fundraise this amount. This minimum amount your business aims to fundraise is the target amount. If your brewery fails to fundraise its target amount by the deadline date, it collects nothing.

You determine that your brewery needs $250,000 to get its beers in various markets and you set a fundraising deadline to ensure your brewery’s first special project will be bottled and shipped by the start of the season. The three scenarios below illustrate the results of different tactics to fundraise $250,000.

Scenario 1: Your business sets a deadline date of 4/30/16 to fundraise its target amount of $250,000. As of 2/25/16, your business has fundraised $250,000. Your business collects $250,000. Congratulations! Scenario 2: Your business sets a deadline date of 4/30/16 to fundraise its target amount of $250,000. As of the deadline date, your business has only fundraised $225,000. Unfortunately, because your business failed to fundraise the entire target amount by the deadline date, it cannot collect anything and all committed funds will be returned to investors. Accordingly, you are forced to postpone your brewery’s new product line.

A failed campaign results in an unrecoverable loss of time, money, and opportunity. To lessen the chances of failure, you should tactically lower your brewery’s optimal target amount and simultaneously declare a maximum offering amount. The maximum offering amount equals the target amount plus any additional amount your business seeks to fundraise after meeting its target amount.

Now let’s see what happens when your brewery employs the maximum offering amount tactic to fundraise $250,000.

Scenario 3: Your business sets a deadline date of 4/30/16 to fundraise its lowered target amount of $150,000. As of 2/25/16, your business has fundraised $150,000 (which it will collect). Your business then aims to fundraise an additional $100,000. The target amount plus the additional $100,000 equals the maximum offering amount. As of the deadline date, your business has only fundraised $75,000 of the additional requested $100,000. Even though your business failed to fundraise its entire maximum offering amount, it still collects an impressive $225,000. Success! Plus, most (if not all) of your brewery’s plans will be funded.

One rule dominates the equity crowdfunding realm— your business must fundraise its target amount at minimum to collect any funds. But as the scenario above shows, your business can collect funds even if it fails to fundraise its maximum offering amount.

Using the cautious maximum offering amount approach will generally reap the most long-term success, because the target amount could be reached at a lower dollar amount.

Evaluate Your Business:

As demonstrated above, your business’s success in collecting equity crowdfunding proceeds determines the worthiness of its campaign—and this occurs, in part, by setting an appropriate target amount.

Simply aiming to collect any proceeds typifies a deficient equity crowdfunding effort. A successful campaign collects enough proceeds both to justify your business costs and satisfy your key business needs. When setting an appropriate target amount, use the following checklist as an aid:

• Develop an internal spending plan for your prospective equity crowdfunding proceeds
• Itemize and prioritize needs within your internal spending plan to select a worthwhile minimum target amount (and maximum offering amount)
• Assess your business’s finances, administrative capabilities, compliance capabilities, regulatory obligations, and other business obligations
• Evaluate the amount your business can reasonably collect
• Evaluate the administrative and financial costs of running the campaign

To reiterate, costs can comprise a significant part of your business’s equity crowdfunding proceeds and their consideration drives any determination of an appropriate fundraising amount.

For example, the intermediary fee—one of the heftier mandatory business costs—may devour 15% of the securities offering, by the SEC’s estimate. Accordingly, intermediary costs for your brewery’s $250,000 securities offering may total $37,500. Other costs, including legal, promoter, and accounting costs, can also comprise a considerable amount of your crowdfunding budget.

Understand Your Business’s Value:

Additionally, you must set your business’s strategic funding goals in conjunction with your business’s valuation and share price.

What is your business worth? That is the essential question. At minimum, examine your business’s value from an analysis of its financial documents and the viewpoint of the likely investor. Your business’s intrinsic value or potential investors’ perception of your business’s value matters, too—what share value or share price prompts them to buy?

Additionally, you must consider what you are selling to investors, is it a portion of your business or a portion of your business’s specific assets? Also important, select your business’s methodology for pricing shares and consider the ideal number of investors for your business to manage.

Your notion of this value is intertwined in your business’s securities offering statement, which describes to potential investors the terms of their crowdfunding securities. Accordingly, material terms of your business’s securities offering statement will include the following:

• Securities type
• Cancellation and reconfirmation rights
• Share class
• Securities resales
• Purchase price
• Voting rights

Finalize the Equity Crowdfunding Spending Plan:

Equity crowdfunding campaigns trigger disclosure obligations linked to your business’s maximum fundraising goals. Concurrent with declaring a target amount (and maximum offering amount, if applicable), the proposed rules require your business to arm potential investors with a full understanding of any potential equity crowdfunding proceeds.

This will be your business’s final equity crowdfunding spending plan. Setting an indiscriminate target amount situates your business’s campaign poorly if the spending explanation falters under scrutiny from potential investors (or the intermediary).

Accordingly, be prepared to defend any funding request outlined in your business’s spending plan. For example, will the public rally around an emerging craft brewery striving to mass produce four slightly distinct squash flavored beers—pumpkin, acorn, butternut, and winter medley—to be shipped everywhere from Anchorage to Accra?

2. Develop Your Business Plan

The public convening (albeit, virtually) to weigh the value of your business’s securities offering forms the centerpiece of equity crowdfunding. To that end, the proposed equity crowdfunding rules require your business to release its business plan , to enable those prospective investors to have an informed discussion.

The proposed equity crowdfunding rules require you to release a business plan…

At minimum, your business must submit a description of its project, idea, or business for the public to probe (disclosure of a traditional business plan is not required).

Don’t use this minimum standard to justify withholding a meaningful picture of your business from the public—this defeats the purpose of equity crowdfunding and may dissuade prospective investors from buying your business’s securities.

When drafting your crowdfunding business plan, satisfy two objectives—complying with crowdfunding regulations and selling a sufficient amount of crowdfunding securities. To attract crowdfunding investors with your business plan, including the following may help them push the buy button.

Specify Permissible Reasons for Needing Funding:

Luckily, almost every business, idea, or project is fair game. You just need to specify one. Beware—detailing plans to engage in mergers or acquisitions with unspecified companies disqualifies your business from offering or selling crowdfunding securities.

Brand Your Business with a Pithy Mission Statement:

Communicate your business’s value in a few sentences, and with a style and plan that captivates. An impressive mission statement inspires the public to buy your business’s vision before they dig into your business’s value.

Tout Your Business’s Strengths :

Your business plan is a great place to show your management and creative prowess, product innovation or usefulness, business or technology development talents, and demonstrated interest from relevant parties. Superiority in business skills excites prospective investors about your business’s crowdfunding campaign.

For many small and emerging businesses, minimal information exists to assist a securities buying decision. When information is thin, a call to pathos can work wonders.

Omit Proprietary and Confidential Information:

The SEC does not require inclusion of proprietary and confidential information in a crowdfunding business plan. Remember, the public (including your business’s competitors) will access disclosure about your business, so you must refrain from divulging proprietary and confidential information to satisfy the public’s quest for information.

3. Grow Your Network

Get a network:.

Your business’s equity crowdfunding campaign success largely depends on the power of your business’s network. Powerful business networks are ample, prosperous, and engaged.

Strive to develop a vast business network that will both buy crowdfunding securities in sufficient amounts and promote your business’s crowdfunding campaign to others.

Your business’s equity crowdfunding campaign success largely depends on the power of your business’s network.

So here’s the obvious question at hand—do you still have to develop a vast network if a few people buy prodigious amounts of securities? No, but only if your business’s network is affluent. For most, this is a mythical situation. The proposed equity crowdfunding rules limit each person’s total securities purchased per 12 month period in crowdfunding securities offerings—and these limits vary based on the person’s annual income or net worth.

• People with both an annual income and net worth less than $100,000 may invest the greater of $2,000 or 5% of annual income or net worth per 12 month period (or no more than $5,000).
• People with either an annual income or net worth at or above $100,000 may invest the greater of 10% of annual income or net worth per 12 month period, but no more than $100,000.

How many investors does your business need to collect its equity crowdfunding proceeds? Given the financial status of people in your business’s network, what average amount can each invest? You should also assume that these people will invest in other crowdfunding securities.

Once again, let’s pretend that you need to raise a significant amount of money for your brewery. Recall, your brewery collects equity crowdfunding proceeds only if it raises the target amount by the deadline. Let’s look at the four scenarios below to see how variations in network size and securities offering affects the average amount each person must invest for your brewery to meet its target amount.

Scenario 1: Each person invests an average of $2,000 in your brewery’s $1 million securities offering. Your brewery will need 500 network members to meet its target amount.

Scenario 2: Each person invests an average of $500 in your brewery’s $1 million securities offering. Your brewery will then need 2,000 network members to meet its target amount.

It is also important to note that a smaller equity crowdfunding campaign may not ease your duty to develop your network—smaller offerings may likely attract investors spending smaller amounts.

Scenario 3: Each person invests an average of $500 in your brewery’s $250,000 securities offering. Your brewery needs 500 network members to meet its target amount. Scenario 4: Each person invests an average of $125 in your brewery’s $250,000 securities offering. Your brewery now needs 2,000 network members to meet its target amount.

Of course, don’t expect everyone in your business’s network to buy crowdfunding securities or that all of your business’s investors will come from its network. Once you have estimated the number of network members or investors necessary for crowdfunding success, ramp up networking with real life and internet contacts (both social and professional).

Look at these early network members as collaborators—engaged aptly, they can help pitch your equity crowdfunding campaign on the intermediary’s communication channel (the online space where the public will discuss your business’s securities offering).

Engage Your Network:

Developing an impassioned network that bankrolls your business’s crowdfunding securities offering must form the linchpin in your crowdfunding strategic plan. To keep people engaged with your business efforts, generate and spread news about your business . The internet offers an easy, economical, and ideal platform to share your business’s narrative. This critical and influential narrative operates as a magnet, retaining and attracting people to your business’s network. Also essential to your business’s narrative is a polished business website, which for many stands as a fundamental test of business credibility and viability.

Most of your network’s retention and growth presumably will come through your interactions and networking on social media platforms , such as Facebook, Google Hangout, and Twitter. They deliver a superior form of communication with the public because you alone can craft the message you want the public to know, and direct interactions allow the public to feel a deeper connection to your business.

The intermediary’s communication channel—another form of social media—will serve as the primary place that your business can discuss its crowdfunding securities with the public under the proposed rules (extremely limited advertisements of the offering are allowed outside of the intermediary’s communication channel).

Importantly, this limitation does not restrict business discussion and promotion unrelated to the crowdfunding campaign. Accordingly, your business may continue to use social media to build relationships and circulate information. Once your business begins selling crowdfunding securities, you can effortlessly inform your business’s engaged network that they may purchase and discuss those securities on the intermediary’s internet platform.

4. Perform Background Checks

Saving investors from the prospect of fraud and other misconduct entails, in part, evaluating your business for red flags. For this reason, the intermediary, under the proposed equity crowdfunding rules, must conduct a background and securities enforcement regulatory history check on some of your business’ covered persons. Due to this mandate, rethink your business’s foray into equity crowdfunding if its adverse background will prevent or deter the public from buying its securities. Feel free to proceed, however, if you can turn the adverse information to your business’s advantage.

Before selecting an intermediary to facilitate your business’s securities offering, launch your plan to overcome the fallout of the background check.

Three questions will help your business clear any hurdles:

• Has anyone in my business committed misconduct?
• Will this misconduct endanger my business’s securities offering?
• How would I handle any history of misconduct in my business?

Identify Persons Subject to Background Checks:

Entities and titled persons (and untitled persons performing similar functions) who are covered persons per the proposed rules include:

• Your business, and any predecessor of your business or affiliated business
• Your business’s directors, officers, and general partner or managing member
• Your business’s beneficial owners (those owning 20% or more of the business’s outstanding voting securities)
• Promoters connected with your business’s offering
• Compensated solicitors and their directors, officers, general partner or managing member

Passing the intermediary’s background and securities history check hinges on the past behavior of only some of your business’s covered persons—in particular, your business, and its officers, directors, and beneficial owners. Note that the past behavior of your business’s other covered persons could also derail your business’s securities offering.

Identify Adverse Backgrounds:

After you identify your business’s covered persons, vet them via a background and securities history check or other factual inquiry to uncover any history of criminal or civil misconduct (this also gives you a chance to correct any inaccuracies in the system) and to judge any misconduct’s impact on your business’s crowdfunding campaign.

Misconduct requiring either exclusion from equity crowdfunding or disclosure of such misconduct is known as a disqualifying event. Disqualifying events under the proposed rules include the following:

• Certain criminal convictions
• Certain court injunctions and restraining orders
• Certain final orders of specified regulators
• Certain USPS false representation orders
• Certain SEC disciplinary, and cease-and-desist orders
• Certain SEC orders and stop orders related to SEC Reg. A
• Suspension or expulsion from SRO membership or association with an SRO member

You can review a broader list of disqualifying events similar to the proposed equity crowdfunding rules on the SEC’s website.

If your business’s covered persons committed a disqualifying event before the legalization of the crowdfunding regulations, those disqualifying events do not unilaterally bar your business from offering crowdfunding securities.

Yet, you must continue identifying covered persons with adverse backgrounds for two reasons. First, your business must disclose these disqualifying events in its securities offering materials. Second, if an unknown disqualifying event materializes later, your due diligence may save your business from SEC sanctions.

Understand the Risks of Adverse Backgrounds:

Even if the misconduct committed by your business’s covered persons is not a disqualifying event, the intermediary and the public may deduce that those acts impute fraud or other transgressions to your business’s crowdfunding campaign. The intermediary and the public also can extend this reasoning to the problematic history of all persons associated with your business (not just covered persons).

The intermediary and the public wield great power under the proposed rules. This fierce power enables the intermediary to block or remove your business’s securities offering from its platform based on a judgment—not necessarily a reasonable belief—that the offering appears fraudulent or lacks a commitment to investor protection.

Equally important, the public with misgivings about your business can refrain from buying your business’s securities or worse—bash your business’s securities offering on the intermediary’s communication channel. How will your business respond to this type of judgment? Be prepared to respond civilly to the intermediary and the public about all issues (fair or not) that emerge about your business.

Overcome Problematic History:

Discovering all covered persons with a problematic history before selecting an intermediary pivotally allows you to strategize a favorable outcome. The following steps can help your business’s securities offering proceed by demonstrating a commitment to compliance:

• Construct a winning narrative supportive of your business (and the person, if still associated) for the intermediary’s and the public’s approval. This also rallies the public around your business’s securities offering before it manufactures its own story about your business’s adverse background.
• Demonstrate your business’s values of integrity and commitment to compliance—emphatically and enthusiastically.
• Reject the prior practices and culture that led to the past misconduct.
• Exclude affected persons from covered roles by 1.) restructuring share ownership to less than 20% beneficial ownership, 2.) changing their job responsibilities to non-covered functions within the business, or 3.) terminating them.

If the intermediary is unswayed by your business’s enhanced dedication to compliance, refine your pitch and select an intermediary receptive to your business’s securities offering (which includes your business’s adverse background).

5. Hire Attorneys and Accountants

Securities regulatory compliance plus rising profits equals long term equity crowdfunding success. Acquire assistance with the compliance requirements from attorneys and accountants with a securities regulatory purview. Applying this legal and accounting advice should demonstrate your conscientiousness in preparing a credible securities offering. Vitally, prioritizing legal issues helps your business deftly reduce the prospect of SEC investigations and sanctions, investor dissatisfaction, and intermediary disputes—the three primary legal risks inherent in securities offerings.

Ensure Understanding of the Securities Laws:

The SEC, in its investor protection mission, imposes obligations and restrictions on your business and its securities offering. Your business’s primary securities obligations comprise 1.) disclosing and reporting required information about your business’s securities offering, background, operations, plans, and finances, and 2.) filing that required information on various versions of Form C (the offering statement that crowdfunding securities issuers must use to disclose required information).

Additional crowdfunding regulations include limits on securities offering advertisements, and promoter compensation and activities. Managing investor expectations—through transparent and complete disclosure—limit investor dissatisfaction; although, either non-existent investment returns or a non-existent/uncertain secondary securities market predictably escalates such dissatisfaction.

Managing investor expectations—through transparent and complete disclosure—limit investor dissatisfaction

Sufficiently increasing your comprehension of the crowdfunding regulations substantially diminishes your business’s likelihood of non-compliance. Still, navigating the unknown landscape of the new equity crowdfunding regulations will be tricky and time-consuming, especially for the inexperienced entrepreneur.

Determine Terms of the Intermediary Agreement:

Your business’s choice of registered intermediary will be one of the principal decisions of your business’s crowdfunding campaign. There will be numerous broker-dealers and funding portals vying to be each business’s sole permissible intermediary.

The intermediary will, among other things, facilitate the securities offering, host discussion of the crowdfunding offering, and assess each business’s worthiness to issue securities. Leverage your options to get the most favorable intermediary agreement.

The intermediary agreement covers primarily the intermediary’s 1.) internet-based platform to conduct the securities offering and 2.) online communication channels to discuss the securities offering. Some issues you’ll want to review with the intermediary are:

• Facilitation of the securities offering
• Collection of investment proceeds
• Intermediary fees
• Provision of issuer disclosures
• Termination of securities offering
• Availability of communication channels
• Promotion of the intermediary

Consider that securities regulations disallow funding portals from offering all of the services normally provided by broker-dealers; both, though, may sell document preparation assistance, disclosure templates, securities regulatory consultations, and so on. Determine if your business needs the securities offering services provided by a broker-dealer.

Retain an Accountant:

Your business’s choice of accountant and disclosure of financial information may influence prospective investors’ assessments of your business’s credibility and viability—or their securities buying decision.

When your business hires accountants, establish 1.) whether they are independent or non-independent, and 2.) that your business’s financial statements are prepared using U.S. GAAP standards.

Under the proposed equity crowdfunding rules, elements of your financial disclosure (including the independence status of your accountant and accounting services required) are tied to your business’s maximum funding goals.

Fundraising Goal:

• Over $500,000

Obligations:

• Hire an independent auditor to audit financial statements
• Disclose audited financial statements
• Over $100,000 up to $500,000
• Hire an independent public accountant to review financial statements
• Disclose reviewed financial statements
• Up to $100,000
• Hire an independent or non-independent accountant
• Disclose your business’ income tax returns and financial statements certified by one of your business’ principal executive officers

Importantly, make sure you comprehend your business’s financial statements. When the public questions the numbers in your business’s financial statements in the intermediary’s communication channel (and they will), can you respond capably?

Additionally, the proposed rules require your business to describe its financial condition, including your business’s historical results of operations, liquidity, and capital resources (as necessary).

If your business has no operating history, describe its financial milestones and operational liquidity and other challenges.

If your business has an operating history, describe whether the historical results and cash flows are indicative of future results.

Moreover, your business must include the effect the crowdfunding proceeds (and any other pending sources of capital) will have on its financial condition. For example, is this crowdfunding campaign “do or die” for the success of your business? Accountants can help navigate the instructions to these questions, ensuring you provide a transparent and material overview of your business’s prospects.

6. Cover Upfront Costs for Equity Crowdfunding Offering

Frankly, it’s going to take a sweet sum of money upfront to finance your business vision with equity crowdfunding. Moreover, the bigger the securities offering, the higher the upfront costs—although, some costs are fixed.

And, many of the huge crowdfunding bills—like accounting and legal services—will be due before your business collects one equity crowdfunding dollar. Fortunately, some bills can be delayed and paid for with crowdfunding proceeds (like intermediary services), so disclose these in your equity crowdfunding spending plan. Prioritize upfront costs based on both your budget and compliance needs.

Finally—Don’t Sell Securities to the Crowd, Yet:

Even if you forego acting on any suggested “do,” here is one “don’t” you must observe. Don’t attempt to sell crowdfunding securities before the crowdfunding regulations go into effect. Selling unregistered crowdfunding securities to the public will result in SEC repercussions that could undermine your business financing goals.

Disclaimer: This article is intended to be general information only. Nothing in this article constitutes legal advice. Please consult with an attorney before making any legal decisions.

Kali Banks is a regulatory lawyer with experience in the securities arena, including sharing her insights and strategies for successfully navigating the complicated world of government regulations. Kali received her law degree from Harvard Law School.

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Written by Allie Decker | April 18, 2022

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Crowdfunding has revolutionized who can start a business. Instead of rehearsing pitches for big-wig investors or wining and dining wealthy relatives, self-starters can turn to the masses to fund their small business ideas…but only if they do it right.

Crowdfunding simply means funding a project, business, or other venture by raising small sums of money from a lot of people. This method often includes offering incremental rewards to financial backers, depending on how much is contributed.

Developed over 20 years ago, crowdfunding has matured into a go-to method for those looking to get their ideas off the ground. No longer are dreamers, developers, and go-getters stymied by limited capital or resources. Crowdfunding has brought to life countless projects and businesses, from watches  to beehives  to Foundr’s own coffee table book .

Over the years, Foundr has talked to many crowdfunding pros and compiled their best advice for you on how to get crowdfunding for business startups. Now in shiny infographic form!

Want to display this infographic on your site?

Embed this infographic into your website pages by copying and pasting the code below:

<p><strong>Please include attribution to Foundr.com with this graphic.</strong><br /><br /><a href=’https://foundr.com/crowdfunding’ ><img src=’https://foundr.com/wp-content/uploads/2019/07/Foundr-Crowdfunding-Inforgraphic-High-Res-1.jpg’ alt=’How to Crowdfund Like the Pros And Get (Lots of) Money for Your Idea’ width=’650px’ border=’0′ /></a></p>

Still want to go deeper on this topic? Read on.

Entrepreneurs, Here’s Why Crowdfunding Matters to You

Crowdfunding is changing the way entrepreneurs bring products to market. Crowdfunding allows new projects and ventures to raise money, build brand awareness, and gather priceless feedback—all while still working on product and supply chain development. It also provides an open, honest avenue between businesses and backers, a rare commodity afforded to consumers today.

Thanks to crowdfunding, startups are no longer rewarded based on presentations and pitches. Sure, you should be able to present your business well, but you aren’t limited to doing so on stage or in a boardroom. (To those who hate public speaking, rejoice!)

Crowdfunding also uses your audience and fanbase to your advantage. Traditional methods of startup funding (VCs, bank loans, rich uncles) didn’t care how many Instagram followers or email subscribers you had. Now, crowdfunding allows you to leverage your fans and followers to grow your business, offering rewards in exchange for support.

Crowdfunding has blazed an advantageous trail for entrepreneurs and small businesses. Let’s talk about how to hop on this trail and use crowdfunding to start and fund your venture.

Crowdfunding is Competitive—Make Sure Your Product is Killer

Before we venture too far into the weeds, let’s back it up.

Whatever you’re crowdfunding for, it needs to be awesome . And by awesome, we mean jaw-dropping, eye-opening, flabbergasting … you get the gist.

And we’re not kidding. With over 600 crowdfunding platforms around the world and countless projects entering the crowdfunding scene every day, the competition for both attention and funding has never been greater. In order to stand out, your product has to stand up, tall.

What makes for a good product or venture?

• It meets a need
• It solves a problem
• It excited people
• All of the above

Answer: There isn’t one answer.

Any of these choices would be correct, but you’ve got to pick at least one. (Or, even better, all of them!) Without one of these stipulations, your product could fall through the cracks and be swallowed up by the loud, busy world of crowdfunding. It doesn’t matter which answer you choose, as long as it’s relevant and important to your audience.

Now, determining what’s important and distilling that into a message are two different ballgames. Here’s where to start:

• Determine your target audience and do some research on their demographics and psychographics . Ask yourself questions as they pertain to your product. For example, if you were crowdfunding for a desk accessory ( Gather , for example), you’d want to know your audience’s work habits, organizational preferences, design tastes, and financial capabilities. Gather this information through forums, social media, in-person interviews, or good ol’ fashioned surveys.
• Construct your Value Proposition (VP) . Your value proposition is basically a simple statement that summarizes why someone should buy your product. This statement should convince a backer that your particular offering will add more value than a similar product would. For example, take a look at Arsenal , a current Kickstarter campaign for a digital camera assistant. Their VP reads “Capture amazing images in any conditions and get complete control of your DSLR or mirrorless camera—all from your smartphone.” It summarizes the gist of the product while simultaneously begging you to continue reading.
• Build your crowdfunding campaign around your VP . As you describe your product, communicate with your backers, and post on social media, always return to your VP and how your product is meeting needs, solving problems, and/or exciting people.

Crowdfunding is Won or Lost Before Your Campaign Begins

So, you’ve got a great product that you know  your audience appreciates. What now?

It’s time for the planning and prep phase. This is, hands down, the most important part of crowdfunding.

What’s Your Endgame?

To begin, start at the end. What is the end goal of your campaign? Envision the perfect outcome. Figure out exactly what you need to do to get there. List specific action steps, not broad goals.

Let’s say your end goal is to fund your business and expand your product line. Backtracking to pinpoint specific tasks, you’d have to grow your audience on social media and email so to build awareness around your coming campaign, create marketing and promotional materials for your campaign, such as videos, GIFs, images, and copy, and determine your rewards for financial backers and secure all means of production and distribution.

This list is far from exhaustive. From these tasks, you’d need to backtrack further into weekly and monthly deliverables that ensure you remain on task and adhere to your timeline.

Start Early

Speaking of a timeline, the next step in the planning phase is to start early. (This isn’t so much a step as it is a strong  recommendation.) Planning a campaign is complex and can hardly be completed in a month, much less a few days. Give yourself more than enough time to perfect it.

We’ve heard some say to start planning two to three months before launch, but even six months in advance wouldn’t hurt. Some pieces of campaign preparation can’t be forced or fast-forwarded, so it’s best to give them more time than you think necessary. These include:

• Securing press for your campaign.  Writing a press release and pitching your product and campaign take time, not to mention how long it takes for journalists to respond (or don’t) and schedule your campaign into their content calendar. Because most crowdfunding campaigns are limited to one or two months, don’t wait until your campaign begins to start seeking press. It’s better to have your audience waiting on you than you waiting on press.
• Creating promotional materials.  A crowdfunding campaign is super important and should be treated as such. Subpar photography and copy won’t do, especially if this is your audience’s first impression of your business and/or product. You may have limited funds, but this is where you should invest a good amount. Hire a good photographer and copywriter or do work-for-trade.
• Garnering attention on social media and over email. “Good things take time” hasn’t been truer than when applied to building an audience on social media or growing an email list. And a sizeable audience on both platforms can make or break campaign success. As Khierstyn Ross, crowdfunding product launch specialist, told us, “If you launch your campaign with zero audience, you are launching to crickets.” Launching a campaign to a dependable audience will help you hit the ground running, fast.

Decide What Kind of Funding

It’s important to decide what kind of funding you want for your campaign. The choices are fixed or flexible funding. Fixed funding means that you only keep the money if you raise at least 100% of your funding goal. Flexible funding means that you keep whatever money you raise, even if it doesn’t hit your goal. The choice is entirely up to you, although some crowdfunding platforms only allow one or the other.

Most entrepreneurs go with fixed funding. Why? Well, most projects require a minimum amount of funds to enter production. (This is also how campaigns decide on their funding goal, but more on that later.) Fixed funding ensures that projects can’t be required to deliver if the necessary funding isn’t raised.

When deciding between the two options, look at your overall production and distribution costs. If you can’t create and distribute your product without raising a certain amount of money, we’d encourage fixed funding. But, if you can afford to complete your project if only half the amount is raised, or the product is easily scalable, maybe flexible funding is right for you.

Pick a Platform

Now, it’s time to consider what campaign platform you’ll use. Kickstarter  and Indiegogo  are the top dogs, although there are over 600 available worldwide. Some other cool sites include TeeSpring  (for t-shirts, obviously), Patreon , and Australia-based Pozible .

What’s the difference between Kickstarter and Indiegogo? Between the 2, Kickstarter has a bigger market share. Indiegogo allows a wider range of projects to be crowdfunded, whereas Kickstarter requires that projects create something that can be shared with others. Kickstarter offers fixed funding only, while Indiegogo offers both. If you reach your funding goal, Indiegogo takes 4%, and Kickstarter takes 5%. (Both charge a 3-5% fee on credit card and PayPal payments.)

Other platforms vary in the same ways, offering different packages based on product, project, funding preference, and fees. When determining what’s best for you, make sure you return to step one of the planning processes and remember your campaign’s end goal.

Set Your Funding Goal

After choosing a platform, calculate your funding goal. How much money will it take for your dream to become a reality? (This is the most math you’ll do while reading this post, we promise.)

Time to put your numbers to work. While calculating this, consider everything from production, to shipping, to supplies, to labor. If you’ve paid for advertising or creative help while building your campaign, include this, too, so that you can stay in the green. Don’t forget to factor in fees, and always (always!) add a cushion.

Account for everything, and be sure to analyze every step in your post-funding plan to ensure you’ll have enough money to work with. (Foundr tip: pay extra special attention to shipping costs!)

Create a Killer Project Page

Last, but most certainly not least, create an awesome project page. A professional-grade page that leverages all sorts of media (video, GIFs, images) will do wonders for your campaign. Remember: This is most likely your audience’s first impression of your business and/or product. You may not be pitching to an investment firm, but you should still ensure your brand always puts its best foot forward. Your campaign page is no exception.

As we stated above, shaky photography and last-minute copy just won’t do. You may have limited funds going into this campaign, but this is where you should invest them. Hire solid independent contractors  or do work-for-trade. You should at least feature three main mediums:

An Engaging Video

On Kickstarter and Indiegogo, your video will literally be the first thing your visitors see. They’ll most likely watch this before moving down the page. These few minutes should tell the story of your business, product, and the people behind it. (Remember how we said crowdfunding creates an honest avenue between you and your backers? This video is a chance to capitalize on that.) Be simple and straightforward; don’t waste time on a cheesy commercial-esque film. Be passionate and honest—that’s what sets us apart as entrepreneurs, anyhow. To see an example of a great Kickstarter video, check out Gravity ’s Kickstarter campaign.

Beautiful Visuals

People love  pictures, and your visitors will want to see your project in action. Capture plenty of images to share on the campaign page, and consider creating a few GIFs for fun. Don’t forget about using branded infographics  to break down the more complicated parts of your campaign, such as your proposed distribution timeline or perhaps how your product idea was conceived. Foundr’s own Kickstarter campaign  used visuals to not only showcase its product but also embolden certain words and phrases, effectively catching the attention of every reader and driving their VP home.

Flawless Copy

Professional sales copy can make or break a major marketing campaign, not to mention the small corner of the Internet that is your crowdfunding page. Because your backers and visitors will be looking for clarity and assurance in your copy, this is not the place to cut corners.

Make sure that your writing answers all potential questions and mentions (multiple times) your project’s value proposition. Remind your readers time and time again why they should support your campaign. For a great example, read up on the Indiegogo campaign “ Good Night Stories for Rebel Girls .” It may have you buying a children’s book, even if you have no kids (not speaking from experience or anything).

Make Your Crowdfunding Campaign Soar From the Start

Cue Michael Buffer’s “Let’s Get Ready to Ruuuumble..”

It’s time for your planning and preparation to pay off, literally. After spending months building a beautiful campaign, how do you ensure your efforts don’t nosedive? Listen up.

Day one is critical. In fact, successful campaigns don’t use nearly the entire time allotted to hit their goal. They nail most, if not all, of their target early on with a big initial surge, and this builds a chain reaction of momentum. The week before you launch, remind your audience on social media and email that your campaign is about to begin. Don’t let them forget!

Shoot for lots of funding on day one. Encourage your friends, family, and anyone else close to you to support you early on. Crowdfunding is great in this respect because people outside your target audience can still “donate” to the cause. Funding can have a snowball effect and bump your campaign to the top of the list if successful early on. Consider holding a launch party so that everyone can rally around the campaign as it takes off.

Next, don’t neglect your press coverage. If you’ve contacted writers, bloggers, and journalists, keep your eyes and ears peeled for publications that mention your name. Set up a Google alert so that you don’t miss anything, and be sure to share (read: brag about) any mention of your campaign. This will boost your authority and drive even more backers to your page.

If you can afford it, consider hiring a PR agency with specific crowdfunding experience. An agency, albeit pricey, can point out holes in your promotional strategy and help you fill them while you focus on the bigger picture of the campaign. PR firms focused on crowdfunding can differ in many ways, and the answers to these questions can help you decide which firm is best for you:

• Do they “get” you and understand why you’re pursuing your project?
• Do they understand your target market and have access to this audience?
• Do they have ample storytelling skills?
• Do they have experience with reward planning?

If you’re considering an agency, check out firms like Enventys Partners , Funded Today , CrowdBooster , GoGoStarters , and Agency 2.0 .

Another way to garner press is by reaching out to industry influencers. If you understand where your audience hangs out, you’ll know which influencers can help spread the word about your campaign. A heads up: Most influencers will want your product for free, but that’s a small price to pay for promotion to an extended audience.

Regardless of how you or the press discusses your campaign, always keep your message consistent and clear. Never deviate from your and your project’s story, and stay true to your value proposition message.

Finally, remain open and humble. Crowdfunding will draw a crowd (literally) of commentary and feedback. It invites a kind of spotlight and scrutiny that many people are not ready for.

Most of this will be priceless to you (some corporations have to pay for focus groups to gather that type of intel), but some of it will be hurtful and negative. Sadly, that’s the emotional price to pay when putting yourself out there on the Internet. Stay open-minded and be open to connections with others. You never know how others can help you.

Turn Your Launch into a Sustainable Business

There’s no secret formula to the art of crowdfunding. If you’ve got an awesome product to share with the world, crowdfunding can not only help you make it a reality, but it’ll also transform the way you bring it to market and interact with your audience. To make the most out of a crowdfunding campaign, it’s best to be prepared, consistent, and humble.

Check out our catalog of free business courses , from copywriting to Facebook ads, our instructors will provide you with the strategies to transform your launch into a sustainable business.

About Allie Decker

Allie is a content marketer and freelance writer . She develops high-converting content for HubSpot and has collaborated with the folks at Entrepreneur , Neil Patel, Kogneta, and, BounceX, and more. Her words are bookmarked by entrepreneurs, small business owners, and marketers worldwide. Follow her on LinkedIn and Twitter .

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How To Start Crowdfunding Platform Business [PLAN]

• by Olaoluwa
• April 25, 2023 August 28, 2024

CROWDFUNDING BUSINESS STARTUP GUIDE

Being in themselves platforms for connecting would-be entrepreneurs with micro-investors, a crowdfunding business would not stand successfully without a working and comprehensive business plan .

There are entrepreneurs interested in starting a crowdfunding business, but possess little or no skill in writing a working business plan. It is due to this problem that this article is written to help these classes of people write good business plans through availing them this BUSINESS STARTUP GUIDE to work with.

With this crowdfunding BUSINESS STARTUP GUIDE, you can effectively write your own unique business plan by following the laid out format. All you have to do is to brainstorm and supply information unique to your own business.

Here is how to start a crowdfunding business.

– Executive Summary – Products and Services – Our Vision – Our Mission – Market Analysis/Trends – Target Market – Competitive Advantage – Sales and Marketing Strategy – Publicity and Advert Strategies – Sources of Income – Sales Projection – Payment Channels – Source of Startup Funding

Executive Summary

Crowdfunding Connect LLC is a crowdfunding business connecting potential entrepreneurs with micro financiers. Our duty is to provide that critical market place or junction where a potential entrepreneur is able to showcase/pitch his/her business to investors with the most impressive business idea getting full funding from the pool of financiers.

We will be getting a commission on every successful completion of business agreement or investment.

Products and Services

Our products and services are mostly online base, as both interested investors and potential entrepreneurs are provided a meeting platform to transact business. This does not come free however, as we would be earning on every submitted project on our site.

Also, whether the transaction between the investor and the potential entrepreneur is successful or not, we will still be paid for services rendered. However, when the business is successful, a bigger fee is paid to us for facilitation.

Our Vision at Crowdfunding Connect LLC is to build the largest crowdfunding business in the United States within our first decade of operations. We intend achieving this through the promotion of our services through different media, such as the use of the internet, local radio and TV stations and also through word of mouth dissemination from satisfied clients who have benefittedfrom our services.

Our Mission

Is to be the foremost crowdfunding business through excellent customer care service provided by highly motivated work staff, who share our goals and objectives.

Market Analysis/Trends

This sector has witnessed tremendous growth in recent years and this growth is predicted not to wane in the coming years, especially as enlightenment grows among potential entrepreneurs about the benefits of using this service for generation of funding.

As a result of the growth, it has witnessed the emergence of several websites providing similar services to both investors and entrepreneurs. It is expected that in no distant time, this option will overtake other well known options used in funding small businesses.

Target Market

Our target market at Crowdfunding Connect LLC is the assorted business segment, especially the small and medium scale businesses and investors. These startups and the investors will be provided a critical platform where both will meet and discuss the terms of their operations.

Our concern is to facilitate this meet and to ensure that both parties enjoy the services provided. We will not be focusing on any particular business niche, but will be open to all business types and investors interested in either a particular business/businesses.

Competitive Advantage

Our competitive advantage over our competitors is that we will be providing a broad range of services across all business niches, with clients expected from every business area. We will also be engaging the services of the very best of crowdfunding professionals and provide adequate motivations through attractive remunerations that will ensure that their very best is given.

Also, the services of a crowdfunding business strategist will be engaged to ensure exceptional services.

Sales and Marketing Strategies

The sales and marketing strategies to be deployed will include committing resources to ensure that our website always appears on the first page of search engines. This will be possible through enlisting the expert services of IT professionals that will ensure that contents on our websites are search engine optimized (SEO).

Also, links from will be shared on all the social media platforms that will always link back to the website whenever they are clicked.

Publicity and Advert Strategies

The publicity and advert strategies to be deployed will include using social media platforms like Facebook, Twitter, Instagram and all other social media platforms that will advertise the services provided by us. These adverts will be made to look attractive.

All these will be managed by the very best hands, the IT department, due to the reliance of the internet as an important tool of business.

Sources of Income

Our main sources of revenue will be solely from the services rendered by us. Whenever an application for funding is indicated, it involves a fee charged. Part of these funds is remitted to us.

Also, for every successful transaction resulting in investment, Crowdfunding Connect will be benefiting from the transaction costs charged these parties for using our services.

Sales Projection

It is projected that within a three year period, we will experience an impressive revenue growth.

However, the effects of recession, natural disasters and other misfortunes are discounted;

– First Year $250,000 – Second Year $660,000 – Third Year $1,200,000 Payment Channels

Due to the nature of our business which is online based, we will be using electronic means of payment for services. These include the use of cards (credit, debit, smart etc), mobile banking, and electronic banking.

Sources of Startup Funding

The sources of funding for this business will come from savings and also through debt financing. 40% of this funding will come from savings while the rest of 60% of the funds will come through debt financing.

This is a crowdfunding business plan sample you can use to write your own very unique business plan. With the steps made available within this business plan, you will be properly guided to accurately brainstorm on what is unique to your own crowdfunding business.

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DfE Business Plan 2024-25

Date published: 09 September 2024

The Department for Economy’s (DfE) 2024/25 Business Plan provides a forward look over the next three years and sets out what DfE needs to do to deliver growth for the economy in Northern Ireland.

It highlights upcoming key projects and actions that we plan to take including the restructuring of Invest NI so that it is more focused on regional economic development; a Renewable Electricity Support Scheme; a new electricity grid connection policy; an Aviation and Route Development Policy; improved support for people with special educational needs (SEN) after they leave school; and a circular economy strategy.

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