All You Need To Know About Crowdfunding to Start a Business

What is it?


Crowdfunding is about persuading individuals to each give you a small donation: $10, $50, $100, maybe more. Once you get thousands of donors, you have some serious cash on hand.

This has all become possible in recent years thanks to a proliferation of websites that allow nonprofits, artists, musicians and yes, businesses to raise money. This is the social media version of fundraising.

There are more than 600 crowdfunding platforms around the world, with fundraising reaching billions of dollars annually, according to the research firm Massolution.

How it works?

The most common type of crowdfunding fundraising is using sites like Kickstarter and Indiegogo variety, where donations are sought in return for special rewards. That could mean free product or even a chance to be involved in designing the product or service.

It is also possible to use crowdfunding to assemble loans and royalty financing. The site LendingClub, for example, allows members to directly invest in and borrow from each other, with the claim that eliminating the banking middleman means “both sides can win” in the transactions. Royalty financing sites appear to be more rare, but the idea is to link business owners with investors who lend money for a guaranteed percentage of revenues for whatever the business is selling.


Crowdfunding provides another strategy for startups or early stage companies ready to take it to the next level — such as rolling out a product or service. Before, a business owner was subject to the caprices of individual angel investors or bank loan officers. Now it is possible to pitch a business plan to the masses.

A successful crowdfunding round not only provides your business with needed cash, but creates a base of customers who feel as though they have a stake in the business’ success.


If you don’t have an engaging story to tell, then your crowdfunding bid could be a flop. Sites such as Kickstarter don’t collect money until a fundraising goal is reached, so that’s still a lot of wasted time that could have been spent doing other things to grow the business.

It could be even worse if you meet your goal but then realize you underestimated how much money you needed. A business risks getting sued if it promises customers products or perks in return for donations, and then fails to deliver.

There is also an argument to be made that angel investors and even bank officers provide more than just money. They provide entrepreneurs with needed advice. Business owners miss out on such mentorship when they ignore traditional investors and turn to the crowd.

Final word

The potential of crowdfunding is really limitless from funding a potato salad meal to raising money for a food truck in Myanmar – but only if you get your basics right.

4 Tips to Increase Your Rates of Donor Retention

Retaining donor support is essential to the successful future of any charity or non-profit. It is one thing to gain initial support, but wholly another to retain that support and encourage regular donations.

Here are four tips to increase your rates of donor retention:

  1. Keep it personal. Understand your donors’ interests by carrying out surveys to know exactly how they interact with your cause.
  2. Separate your list. This way you can make communication more personal and appeal directly to donors’ interests. Good CRM systems will allow you to separate your list by location and donor level.
  3. Say thanks and maintain contact. It’s not enough to send out automated emails anymore. Instead, send a personalised thank you message detailing how their donation will help the cause and keep the donor informed of its impact. Charity: water makes the effort to ring their supporters on their birthdays.
  4. Encourage donors to ascend the ladder. Use data to know exactly how much and how often your donors are giving. If they are giving four times a year, it might be worth considering making them a monthly donor.

How to Maintain Relationships with Donors:

1. Give Updates on How Donations Are Spent

Donors want to know where their money is going. You can and should share this information in a variety of ways to reach as many donors as possible.
Here are a few ideas:

  • Put specifics as to how donations are being spent in an email blast
  • Post donation details on Facebook and Twitter
  • Update relevant information on your website
  • Post on your blog
  • Send a personalized email directly from a staff member saying what a donation has enabled your organization to do

The key here is to get specific. Make sure donors know the impact a specific amount of money can have in your community.

Sharing specifics can be hugely beneficial to your nonprofit as you strive to develop relationships with your donors.

Ask Your Donors Questions

Asking questions of donors is well suited for social media since it’s entirely up to your followers to decide if they’d like to respond with feedback. Social media can also be less invasive than sending an email. Some donors will value the opportunity to give their feedback. Your willingness to reach out and implement suggestions can help to make donors feel more connected to your organization on an ongoing basis. If you do ask for feedback, it’s important to follow up with donors once a decision has been made. Let your donors know that you’re listening and you value their input enough to keep them informed.

Final word

You and your donors are changing the world. It’s up to you to make sure they not only know that, but also feel that on a regular basis.

With these how to’s and tips of mine, I hope that you guys are able to learn many things. Do keep learning!

5 Secrets of Highly Successful Crowdfunding Campaigns

As crowdfunding makes gains in popularity, the battle for pageviews and pledges has become increasingly competitive, especially on portal sites that feature thousands of live projects at once. If you’re depending on a Kickstarter feature to kickstart your campaign, then you could be in trouble.

So how do you ensure that you’ve optimized your campaign for success? I’ve taken a look at a number of recently funded projects in order to identify some of the techniques, strategies, and crowdfunding secrets that will give you the best chance of meeting your goals.

1. Prepare Your Face Off

You can use crowdfunding to help validate ideas before they are fully realized, but if your campaign comes across as half-baked then your audience isn’t going to invest. People don’t want to back a campaign that’s not going to work, and you can’t use crowdfunding as a shortcut to avoid properly fleshing out your ideas.

2. Strategic Social Media

You don’t need a blanket presence on social media, though the wider your reach the better. Pick the networks that best match your marketing and content strategies and where your potential supporters are most likely to be found. Don’t forget to customize your promotion to suit each platform too.

3. Produce a Great Video

Video clips give visitors a better idea of your project. They can see you or your product in action rather than clicking through a series of static images. They are also labor-intensive, so don’t attempt to put together a clip if you don’t have the time, resources and expertise required. An amateur-looking video isn’t going to convince anyone to get involved, and at worst, could damage your campaign’s credibility.

It’s usually well worth paying for help to make your video pitch the best it can be because of the investment it will attract. There’s something about the medium that makes the video even more important than you’d think.

4. Create a Helpful Media Page

You’ve no doubt seen some of the most popular crowdfunding projects covered in the press, but this won’t happen if you don’t have a solid website and some press materials that journalists can download. Even if you’re a one-man show, don’t rely on your Facebook page to do it all. If journalists can’t find more information about your project and some high-resolution pictures to illustrate their features, they may choose to promote a different project instead.

5. Don’t Ask for Money Immediately

Tell your story and share your enthusiasm for your project, and people will naturally want to add their support. Remember that your supporters are giving you money with the expectation of getting something back: they want to receive a return on their investment, whether it’s a physical product or an emergency relief operation that swings into action.

Final word

There’s no way of guaranteeing crowdfunding success, but by studying the projects, strategies, and crowdfunding secrets that have worked for others, you can certainly maximize your chances. Like any other business venture, crowdfunding is an iterative process that start long before the doors are opened, and long after the campaign has closed.