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How to Raise Money for Your Business Through CrowdFunding Part 2 - - CFP

posted Apr 3, 2013, 1:50 PM by David Khorram   [ updated Apr 5, 2013, 4:19 PM ]

Are you aware of the real risks of soliciting crowd funding and what it really takes to become the next success story that brings in the gold to launch a wildly profitable startup?

In the last installment we highlighted the advantages of crowdfunding, where to get it from and some of those who have made it work already but there are some myths which need to be busted…

Crowdfunding Myths You’ll Be Happy to Bust!

Myth #1: You Have to Give Up Control of Your Business

No way. Giving up control of a business is something no entrepreneur wants to do, at least not until they cash out with a billion dollar pay day. Fortunately, while there are some sites which do want you to hand over a stake in your enterprise, there are also donation based crowdfunding and peer-to-peer funding sites which don’t. So shop around until you find the right fit.

Myth #2: You Have to Reveal All Your Personal Information to the World

Again, there are many different corwdfunding platforms with different rules and systems. This means that those who really crave their privacy won’t have to cough up their tax returns, bank statements and names of their children’s schools to get the money they need.

2 Real Threats

1. Revealing Your Idea to the World

One of the biggest advantages solo entrepreneurs have is being able to develop their product or service off the radar and get it launched well before the competition catches on. Unfortunately, one down side of crowdfunding is having to broadcast your work and strategy to the entire planet, potentially enabling someone else to beat you to the market.

2. The SEC

No one wants the government breathing down their necks. The whole point of the Obama initiative was to help small businesses avoid SEC issues. But, if things aren’t set up and done right, and especially if investors lose money, you can bet big brother will come knocking.

Why All Entrepreneurs Must Embrace the Crowd Right Now

The bottom line is that the jobs market is ugly, the stock market isn’t much prettier and no one’s quite sure what is going on in the real estate sector, making it the ideal time to launch a startup.

Forbes estimates there is around $300 billion potentially up for grabs for new business starts from the private sector but there is no telling how long it will last or when the government will make it too tough.

This is the moment to unleash your business idea and follow your passions…

Tips for Winning CrowdFunding Campaigns

In order to launch a winning crowdfunding campaign it is first essential for entrepreneurs to understand what it is that investors really want and what is most important to them when choosing where to invest.

This may vary slightly by platform but it is often far more than just money that these investors are seeking. Yes, many will want above market returns in exchange for the risk but many others mostly want to be a part of fueling a new trend and be able to say they were instrumental in bringing a product or service to life.

In terms of what experienced investors are looking for in terms of a good investment they are normally focused on a combination of the product being in a field with huge (read multi-billion dollar) potential, an experienced manager or management team, a product which fills a need and one which consumers are really interested in.

While it may appear that others have simply slapped their ideas up on the web and walked away with thousands of dollars in startup capital that is rarely the case. It does take some effort to get funded and create an attractive campaign.

Quick tips for a successful crowd funding campaign:
  • Recruit a great copywriter to give your vision life on the page
  • Pump up the campaign with social media
  • Use press releases to raise awareness and credibility
  • Look for ways to really engage potential investors so they feel a part of it

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