There is more to CrowdFunding than the money.
I would say there are three major benefits to CrowdFunding before the funds arrive in your bank account.
Firstly there is the issue of ‘Market Validation‘. Well what do I mean by that? Venture Capitalists and Business Angels have now warmed to CrowdFunding. Initially they were very sceptical and felt that when a successfully crowdfunded business wanted to go for another round of funding they did not want to deal with hundreds of smaller investors. There was obviously the issue of whether your idea would gain traction as well.
I have come across many situations were Venture Capitalists and Business Angles are saying to businesses and budding start-ups – ‘go and do a crowd fund first and then come to us‘.
You see CrowdFunding helps take the risk out of a concept for both entrepreneur and investor. The business idea can be tested on the crowd. The crowd will do their due diligence and vote with their wallets. Going to the crowd will also reduce your own personal financial investment as testing via Crowdfunding can be done very cheaply. Future investors can now see – including the bank manager – that traction has been gained and backing given by early adopters.
Secondly there is the issue of marketing. CrowdFunding is a great marketing strategy within its-self. Even if you fail at your first attempt at crowdfunding you will have at least gained greater awareness for the process and insight into your product or service. Going through the process of a campaign will alert you to how the process works and give you an idea of how you can do better next time. Those who succeeded at crowdfunding will inevitably look to do it again.
There is one thing that I hear from project creators all the time, in fact it is the most common comment I have heard over and over and that is ‘I wish I had built up awareness and engaged my crowd BEFORE launching my campaign. Having a launch strategy is crucial to a successful campaign where most of the work is actually done before launching your campaign vs running to catch up after your campaign goes live.
Thirdly a CrowdFunding campaign allows you to grow the size of your support base. The campaign gives you the excuse to contact your crowd letting them know what is going to happen and later, once the campaign goes live, reaching out again for support. Remember those that support you also have networks and if they are passionate about what you are doing then they will be open to spreading the word via their own networks.
Finally you can move ahead with the money once you reach your target. Your project, once fully funded, will move you into a different process and routine secure with the knowledge that you have concluded the three most important part of the crowdfunding process in addition to the funds you raise.
To conclude here are the benefits to CrowdFunding in order of importance:
1. Market validation
2. Increased awareness via marketing
3. Increased support both in terms of funds and ‘in kind‘
There are other spin offs but these four concepts should provide you with the motivation to commit to starting your own Crowdfunding campaign today.