The idea of crowdfunding for startups is relatively new and growing as is the popularity of websites such as Indiegogo, AngelList, and Kickstarter. The basic premise of these websites is that entrepreneurs can raise money for their projects and potential business ventures. It works like this: you have an idea for your product, promote it on the website, and thousands of adoring fans throw money at you so you can take your business to the next level. But what happens when no one notices your project?
First of all, what is crowdfunding? Crowdfunding is simply the act of asking high numbers of people to donate multiple, varying amounts of money to fund your project. Via the power of the internet, anyone with an idea and some motivation can ask thousands, even millions, of people to fund their project.
For some businesses, crowdfunding is the equivalent of receiving a large cash injection. But what about those projects that go unnoticed and unfunded? Many websites and the media make it sound like a surefire way to boost your company’s visibility and get fully funded, but as you might guess, that’s not always the case.
Why is nobody noticing my project?
First of all, sites like Kickstarter might not even give your idea a chance to go live on the site. Certain projects are rejected—it is in those companies’ eventual best financial interest to allow projects that seem likely to succeed, because not only does it shed positive light on their website, but many get a cut of the funding the project raises.
If it does become live on a crowdfunding website, however, how is your description of the product or service? If you are too vague, or do not have a clear vision, it will show. You need a tangible element in your pitch—something investors can see is actually moving forward and not just a concept. If your project gets some funding, but falls shy of its monetary goals (according to Kickstarter stats, on 44% of projects meet their goal), you can always re-budget and try again with a smaller financial objective.
On the bright side, the fault does not always land squarely on the entrepreneur’s shoulders either. You are presenting your product/idea to a wide world of people—any people who care to see it. These people are not necessarily a select group of investors who have an eye for innovative ideas and when to fund them.
Alternatives
It is easy for a small business venture to get lost in a website like Kickstarter. Try websites that serve smaller, more specific groups, like SmallKnot. This website caters to users who want to invest in small businesses in their specific community, and depending on your location, this could be a better way to get your idea noticed.
Another route to take is to try other forms of fundraising before you head to a crowdfunding site. If you cannot get enough capital via friends, family, a business loan, or venture capitalists, then you can use crowdfunding as a last resort. Why? Should your project fail in a public place like Indiegogo or Kickstarter, other potential investors may lose faith in you and your idea, making it harder to raise money.
Crowdfunding can be a viable, quick way to launch your business venture. It doesn’t work immediately for everyone, and sometimes your business plan or product may need some tweaking in order to generate greater appeal. Have a solid idea, a promising presentation, and something tangible investors can see working. Then, let the chips fall where they may.
As always, leave any questions or comments below.
Best of luck,
Drake Forester