In previous years, entrepreneurs needed a decent amount of starting capital and/or a great credit score to get an idea off the ground. Now, with the advent of crowdfunding we’re seeing young 20-somethings launch amazing companies without investing a significant amount of their own funds. Typically speaking, an aspiring startup would use its flagship product to attract investments and donations. However, by utilizing the following tips you can also use crowdfunding to raise funds for a business that will be providing a service instead:
1. Pick the Right Platform
A good friend of mine, Per Wickstrom, founder of Best Drug Rehab in Manistee, Michigan, explained the importance of this step when telling me the story of how he’s managed to successfully launch a chain of rehab facilities. Keep in mind that some crowdfunding sites are product-oriented, which means you would need a prototype/description of a specific product in order to start a fundraiser page. For example, Kickstarter and Indiegogo are great platforms for launching a tech/creative product. On the other hand, private investment crowdfunding platforms like EquityNet might be more ideal for attracting investors for a service-based company.
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2. Creating an Appealing Business Model
Once you’ve decided on an ideal platform for your campaign, the next step is to devise and refine a business model that will be convincing enough to impress serious investors. There are plenty of guides online that will teach you how to create a business model, but aside from the basic process you’ll need to insert some innovation and creativity if you want to stand out from the ever-expanding crowd of “wantrepeneurs.”
3. Devising a Convincing Pitch and Fundraising Page
A business model by itself won’t get you far if you don’t know how to pitch and present it in a persuasive manner. Per told me this was the biggest challenge he faced when attempting to raise funds for the launching of Choices Recovery in South Bend, Indiana. Although the processes involved in completing this step would go beyond the scope of this article, you can find plenty of guides on this subject online.
4. Show Examples and Provide Exclusive Trials
Sometimes people don’t want to hear or read what you’ll be doing as a company, they want to see it firsthand. Give your prospective investors the opportunity to take advantage of an exclusive free trial so they can decide whether it is something they’d be interested in investing in based on experience rather than words on a page.
Crowdfunding is not only a great way to get a business funded, it’s also an excellent way to network with people who can provide some valuable input and insight that will help you improve your services so that the brand will be more readily accepted when it comes time to launch. Even if you already have an awesome business model that is attracting a lot of attention and investments, never let complacency keep you from improvement.