Crowd funding has been an alternative form of fundraising for a hugely diverse range of projects since around 2003 with the likes of ArtistShare blazing trails. While the movement started small, it’s now big business, with a heck of a lot of money available to the right project. Last year, over £1700 an hour was donated to crowd-funding sites.
But with all that competition, how can you ensure your crowd-funding project shouts louder than the rest? Well, we spoke to three local crowd-funding heroes to get the lowdown. Let’s meet them shall we?
CMO and Founder of crowd-funding investment platform CrowdCube. With a strong background in marketing, Luke is now dedicated to helping UK-based entrepreneurs raise finance to start or grow their business.
Oliver is a film producer, charity trustee, and founder of creative, green and social fundraising website, Fundsurfer. The site enables people to bring ideas to life, whether they’re independant filmmakers or social entrepreneurs.
Founder of IdeaSquares, the online space for new business ideas and crowd-funding aid. Whether your business is at the very beginning, in beta, or is ready for investment and high growth, the platform allows you to instantly receive feedback and inspiration from the crowd.
Now you’ve met the experts, here are their top 10 tips for bringing in the big bucks in the ever more crowded crowd-funding world.
1. Make your pitch compelling
“Keep your pitch clear and simple – and avoid using jargon – so that potential investors can easily understand what, and who, they are investing in. Investors wait for opportunities that move them, so inject some enthusiasm and life into your pitch summary.
“Investors wait for opportunities that move them, so inject some enthusiasm and life into your pitch summary”
“Our research shows that ‘perceived market potential’, ‘prior experience of the entrepreneur’ and ‘the idea underpinning the business’ are the most important factors for investors when making a decision, so it is very important to communicate these aspects of your business effectively. With this in mind it’s essential that these elements should form a well-written business plan with financial forecasts that add up.” Luke Lang, CrowdCube
2. Don’t launch prematurely
“Launching a project without having spent the time on developing it is a sure fire way to fail. It needs to be clear and have something appealing in the proposition. We help our users to navigate the creation, management and marketing of their project as the more support we can provide either directly or through our partners increases the chances of success.
Take it all: Follow these expert tips and people will be chucking, erm, Euros at you
[Image credit: ©Depositphotos/ra2studio]
“Focus and support at certain points, for example, a mid-campaign review can be the difference between success and failure.” Oliver Mochizuki, Fundsurfer
3. Have a strong team
“A strong team is important to a successful crowd fund. Make sure you are clear on the responsibilities of each team member and be prepared to explain to investors why you are the right team for this venture. Investors seem more likely to support campaigns with more than one person listed in the ‘team’ section.” Kirsty Ranger, IdeaSquares
4. Use your network
“Before you launch (this is part of your marketing campaign), you should reach out to your personal network of supporters to let them know that they will have the opportunity to support you soon. Send updates when you go live, with a link to the campaign and keep them updated throughout. You should be confident that you can raise 20-30% from your own network within the first three to seven days.
“Early momentum and support will mean you are 80% more likely to succeed”
“This early momentum and support will mean you are 80% more likely to succeed in your round as it provides credibility in your ability to network and engage an audience.”
Kirsty Ranger, IdeaSquares
5. Use video effectively
“Good video content is an easy way to get views on your page and is great for boosting traffic. Our Fundsurfer widget also allows you to embed your projects onto your own website, with some clever coding that’s easy to copy and paste. Having a brilliant idea for a social, green or creative project or company is the shortest route! The most important thing is to show your passion for what you are doing.” Oliver Mochizuki, Fundsurfer
“Don’t wait until the day your pitch goes live, start warming up potential investors today”
6. Start promoting yourself today
“You should start raising interest as soon as possible; don’t wait until the day your pitch goes live, start warming up potential investors today. Tell your friends, family, customers, suppliers and other potential investors, and then keep them updated with progress.
Shout about it: If you’re doing something great, start talking about it now
[Image credit: ©Depositphotos/ra2studio]
“The importance of early momentum and investment progress is a crucial factor for success; a pitch will attract more interest if it has already managed to secure a decent chunk of the target.” Luke Lang, CrowdCube
7. Offer good rewards
“One of the appealing elements of crowd funding is based on offering people unique products and experiences they can’t get anywhere else. It depends on which category you are looking at but for creative and social projects a good selection of rewards is a must.
“Be very clear on your goals and deliver!”
“Crowd funding is not charity so if you put the time into creating a number of great rewards your project will have instant appeal.” Oliver Mochizuki, Fundsurfer
8. Be realistic and fair
“Consider your valuation when you are deciding on how much to raise. Be realistic and fair. Investors will be looking for honesty and transparency. They know investing in startups is high risk, so they will be looking for a certain amount of justification for your asking price.
“A high valuation with no proof of concept or idea of market size will likely run you into trouble with crowd funding. I would recommend that you begin with raising a smaller amount for fair equity, before going on to do a larger round if successful. Be very clear on your goals and deliver! This will make your next raise much easier.” Kirsty Ranger, IdeaSquares
9. Sign up for tax incentives
“The UK has some of the most generous tax incentives in the world to help small, higher-risk businesses raise the finance they need. Registering your company with Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) gives investors substantial tax breaks – up to 50 per cent for SEIS and 30 per cent for EIS – and are a crucial ingredient for attracting investors and successfully rising equity finance.
Money talks: Don’t just think about what you can make, think about what you can save
[Image credit: ©Depositphotos/portosabbia]
“The qualifying criteria vary under each scheme but the rewards for eligible companies and investors are too attractive to ignore.” Luke Lang, CrowdCube
10. Get out there
“Entrepreneurs need to embrace the principles that underpin all good crowd funding; be proactive, well-prepared and eager to engage with investors. Keeping investors and pitch followers (sometimes over 100 people can follow a pitch that they want to track) abreast of developments by publishing regular updates can be a powerful way of converting interest into investment.
“Don’t limit yourself; get out and talk to people face-to-face, there’s nothing like it for getting investment.” Luke Lang, CrowdCube
- You may like: Interview: Kirsty Ranger founder of Bristol-based IdeaSquares, a virtual, global space for business ideas
Main image credit: ©Depositphotos/mindscanner