Social business has traditionally had many uses for organizations, be it for improving your customer relations, managing your talent or improving innovation. One thing that isn’t discussed as often is using social business for raising money.
The whole idea of crowd-funding has been around for a little while now, with sites such as Kiva utilizing the concept to help raise money for charitable causes, Zopa doing a similar job with loans for regular Joes and (until recently) Profounder were doing for organizations that required funding.
Whilst social heavyweights such as Facebook have been able to access funding both from venture capital and the stock market, many smaller companies don’t have such opportunities. Crowd-funding offers a nice avenue to give your supporters, customers and other stakeholders a tangible investment in your enterprise. Here are a few tips for how you can get started with crowd-funding.
- Research previous campaigns – whilst it’s quite probable that previous campaigns existed in very different circumstances to your own, you can still learn from what has worked and what hasn’t, so start studying some of the crowd-funding platforms to see what’s going on.
- Look at what you can offer – Whilst many crowd-funding campaigns offer stocks, some offer things such as exclusive experiences.
- What’s your budget? Whilst of course the aim is to raise money, doing this will cost you a bit. Leave yourself a 20-30 percent cushion for hidden expenses, then ask for the minimum funds needed to complete your project to make goals seem more attainable to backers.
- Who is your target audience? The key to success is being able to mobilize your community. If you already have a strong community that’s great, but if not you’ll really need to think through who they are and how you can reach them.
- Work out your elevator pitch – Figure outwhat it is that makes your business special and practice until you can summarise it in less than 20 seconds. This will form the basis of your marketing campaign.
- Over communicate – I wrote recently about the 4 keys to effective community management and you want communication to be timely, relevant and detailed. This is especially so when people are investing their cash in your enterprise.
To get a bit more insight into the potential of crowd-funding I recommend the following interview between Jessica Jackley, boss of ProFounder, and Tom Standage, digital editor at The Economist.
Reprinted by permission.