What is one tip you would give first-time entrepreneurs who want to crowdfund their new ideas or ventures?
CHOOSE AN ENTREPRENEUR-FACING PLATFORM
“Spend some time researching successful projects. You’ll notice that there are core elements of a successful campaign: compelling rewards, a powerful story and out of the gate support from friends and family. At Fundable, we coach our clients through best practices, and provide them with resources to increase their chance of success. Every entrepreneur should look for that type of support.”
– Eric Corl | President / Co-Founder, Fundable LLC
READ THE FINE PRINT
“Read the fine print of what the future ramifications of fundraising are for your business after taking on crowdfunding. Walk through the different scenarios for future funding and analyze whether or not crowdfunding your first round will be a turnoff for other potential investors.”
– Abby Ross | Partner, Blueye Creative
SOLVE A PROBLEM, DON’T CREATE ONE
“When it comes to crowdfunding, the best and most successful ideas come from entrepreneurs that are trying to solve a problem, not create one. If you have a product that will solve a problem that everyone has, you’ll have a good chance of succeeding with your crowdfunding efforts.”
– Derek Johnson | CEO / Founder, Tatango
UNDERSTAND THE DOWNSIDES
“Crowdfunding is not a panacea for first-time entrepreneurs. While it can reduce the regulatory burdens of initial capital raising, it comes with downsides. You need to ask yourself whether or not you want to deal with information requests from 100 shareholders, trying to convince a seed or VC to join that quagmire or the potential of losing your friends’ and families’ savings.”
– Peter Minton | Founder / President, Minton Law Group, P.C.
BUILD MOMENTUM FIRST
“Crowdfunding campaigns can become ‘stale’ over time, much like how a house that has been on the real estate market for a while loses luster. Make sure to launch your campaign after having folks commit to participate, and then try to schedule a drip feed of interesting news throughout your campaign. Show momentum – everyone wants to back a winner!”
– Aaron Schwartz | CEO / Founder, Modify Watches
TAP INTO THE POWER OF VIDEO
“If you’re looking to crowdfund a new idea I’m going to assume you’ve done your research and have determined it’s a good route to take. Many crowdfunding success stories have said a great video was key to their success. A study by Econsultancy said that people are 97% more likely to buy your product after watching a video of it. That’s huge!”
– Natalie MacNeil | Emmy Award Winning Media Entrepreneur, She Takes on the World
DEVELOP A NETWORK OF INFLUENCERS
“Crowdfunding websites are simply funding platforms. That means you can’t rely on them to market and find funders for your venture. You’ll need to do your own marketing and develop critical mass to get your project funded. Increase your chances of getting crowdfunded by developing a strong network with plenty of influencers.”
– Benjamin Leis | Founder, Sweat EquiTees
BUILD YOUR OWN PLATFORM INSTEAD
“Follow Lockitron’s and App.net’s path. They built their own platforms to crowdfund, and it worked – now they don’t have to share a percentage. Lockitron even recently open sourced the code to do so. Check it out here: http://selfstarter.us.”
– Ben Lang | Founder, Mapped In Israel
IF YOU ALMOST-BUILD IT, THEY MAY (STILL) COME!
“For physical products, I think crowdfunding presents a unique opportunity to test a market before spending on inventory. That alone is a great reason to build a campaign to sell something that you’re fairly sure the market will love. That said, get as far into the design/build process as possible, so potential customers know you’re serious, and so you can identify challenges/costs early.”
– Derek Shanahan | Growth Marketing, Playerize
PLAN YOUR NEXT MOVE
“It’s important to have clear plans for how you will use the funds you raise and how you will sustain your success. Be sure that the funds you raise can serve to launch a profitable venture.”
– Lisa Nicole Bell | Founder / CEO, Inspired Life Media Group
ONLY RAISE WHAT YOU NEED
“Despite the big numbers that often grab headlines, most companies don’t need millions of dollars to build a minimum viable prototype (MVP). Spend as little as possible to validate your business idea and then you can attract more capital on better terms.”
– Robert J. Moore | CEO / Co-Founder, RJMetrics
MY ADVICE? DON’T!
“Your ability to raise money on crowdfunding sites is not correlated in any way to your ability to run a business. If you need outside financing, force yourself to raise money from professional investors – have the door slammed on you a few times!
Crowdfunding is ‘safe,’ but a first-time entrepreneur needs to experience hardship, and understand what experienced investors look for in a business.”
– Sunil Rajaraman | CEO / Co-Founder, Scripted.com
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.