03.04.20164 min read

Making Gains in Capital: 3 Ways to Make Crowdfunding Work

By Natalie Burg Finding capital to grow your business and

Finding capital to grow your business and managing small business ventures is a tall order these days. Sometimes it seems no matter whose door your knock on—the banks' or venture capitalists'—the Powers that Be just can't be convinced to invest right now. What if you didn't need to convince any high-powered, big-money lenders to get on board with your plan? While one large check might be a sizable risk for any one bank or investor, hundreds of tiny investments pose a much lower risk for the crowds of people who are convinced your idea has merit. Crowdfunding is all the buzz in startup circles, but it's also being used by small businesses to expand. According to the crowdfunding platform Kickstarter, $349 million has been successfully pledged and invested in projects on that site alone. How can you get in on that? By doing it right. Here are three tips to launch a successful crowdfunding campaign.

Pick the right platform

There are numerous crowdfunding platforms now, but they're not all the same. For example, as Pedro Hernandez explains for Small Business ComputingQuirky is a platform specifically designed for inventors, and Indiegogo is geared toward "creativity and imagination." Because it's well known, many people think of Kickstarter, but Hernandez says it's most successful for technology startups. For non-tech, non-creative small businesses, Crowdfunder is an option. "Crowdfunder is specifically geared toward startups and small businesses," says Hernandez. "The company sells 'equity, debt, and revenue-based securities to investors online,' meaning that only entrepreneurs with solid business plans need apply." Every small business is unique in some way, just like the various crowdfunding platforms. Matching the right platform to your business can help your chances of success.

Make the right pitch

Just because you won't be giving a presentation to a venture capitalist (VC), that doesn't mean you're off the hook for making a pitch. Your pitch is simply a digital one, geared toward a larger audience. D.J. Paul of the platform Crowdfunder tells the Washington Post that a successful pitch is "authentic, clear and concise," delivered to a carefully chosen audience, and your business in detail. Unlike VCs, he says, crowdfunders may not be experienced investors. “[T]he best strategy is to address someone as the consumer of the product before you pivot them,” Paul says. "The beginning of your pitch might emphasize the usefulness of your product before getting to the benefits for the investor in another layer," says the Washington Post. "But if your area is business-to-business, it’s important to build a familiar context around your service, because some potential investors may not be experts in your field."

Offer the right perks

"In exchange for their money, you'll need to offer investors a reward," writes Catherine Clifford for Entrepreneur, "whether it's a sample, the ability to vote on how a product is designed, or an opportunity to get early access to a product or service before it hits the regular markets." The better the perk, the better the pitch. Also, Clifford says, incentivize larger investments with larger perks. Are there hundreds of potential micro-investors out there, just waiting for your crowdfunding pitch? There's only one way to find out. With the right platform, the right pitch and the right perks, finding the capital you need to grow could be as easy as asking for it. Prepare your team for the marketing and sales questions VCs might ask by prepping with the "Infusionsoft Guide to Sales and Marketing" e-book.

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