5 Real-Life Lessons About Crowdfunding

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VictoriaEcommerce | Guest Post by Victoria Greene | July 28, 2017

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Crowdfunding is a fantastic way to get a business noticed by potentially millions of people. With a successful crowdfunding campaign you can build anticipation for a new product launch, promote a good cause and spread awareness of societal issues, and advertise a company’s existing offerings to bring in more publicity and sales. There are thousands of companies that owe everything to the crowdfunding campaign that started them off. Here are five real-life lessons about crowdfunding learned from the successes of others.

How To Demonstrate Market Value

The rise in popularity of sites like AngelList have brought crowdfunding to the mainstream. In fact, many angel investors and venture capitalists see a notable crowdfunding campaign as evidence that a product has value in the eyes of the general public.

Initially, businesses like CareGuide attracted a lot of public attention on equity crowdfunding sites because the service provided a lot of value to people looking for carers. By opening up to equity crowdfunding, founder John Philip Green could attract further investment from smaller investors looking to put in sums from $25,000 to $50,000.

In an interview, Green told Globe and Mail that equity crowdfunding democratizes the investment process, giving smaller investors and companies the means to grow faster.

How To Bypass Conventional Lenders

If you have a great idea for an invention or business venture, but no previous experience in running a successful business, it can be very hard to approach conventional banks for the funding you need to get your ideas off the ground.

Jamil Kahn, founder of Smart Parka, invented a coat with gloves and a scarf attached. But he faced the very same problem when trying to secure conventional routes of funding from banks. With no previous trading history, lenders saw his business idea as too much of a risk.

However, by uploading a video of his friends modeling the coat, he was able to raise over $3.28 million through crowdfunding sites.

As one of the most successful crowdfunding campaigns of all time, he was able to pre-sell many of his Smart Parkas for $300 each.

See:  Crowdfunding raises a roof:  Tips for newbie Crowdfunders

How To Attract Masses Of Media Attention

Crowdfunding platforms allow brands to promote their products before going to launch, attracting lots of attention before going to market.

Within 16 days of starting her KickStarter campaign for her luxury lingerie brand, Stefanie Mnayarji had exceeded her initial target of raising $10,000 by 220%. In fact, her brand Luxxie Boston attracted a huge following among women who were looking for high quality, supportive underwear. Thanks to the site, she was able to raise enough money to continue business operations for the next few years, allowing her to concentrate on building publicity.

How To Maximize Business Expansion When The Time Is Right

In its decision to sell 5.5 million business shares, Ottawa-based company Shopify has become one of Canada’s most successful companies, worth over $1 billion since its launch in 2006.

The site shows you how to open a online store and manage much of it yourself with little previous experience. To promote rapid business growth, its company bosses decided earlier this year to sell a record number of shares. This allowed them to invest in marketing and new business acquisitions to keep the brand name strong. In fact, Shopify’s Head of Investor Relations, Katie Keita, revealed that this attempt to strengthen their balance sheet will result in the company returning to profitable status towards the end of 2017.

How To Build A Better Local Community

Small businesses form the backbone of a society’s prosperity. As smaller businesses grow, they provide jobs, acquire new assets, and eventually start investing in other small businesses.

From a nonprofit perspective too, crowdfunding allows the public to take more of an interest in local community development and invest in projects that mean a lot to them. In Liverpool, UK, civic crowdfunding platform Spacehive raised £40,000 to pay for a park to be built on an abandoned flyover in the city center.

Related: Cities Using Crowdfunding For Community Projects

Crowdfunding is quickly becoming a business funding favorite for company bosses who may be looking to plug the gaps in their working capital. Your ability to successfully raise money through a Fintech platform hinges on your ability to market your brand effectively.

For businesses that are just starting out, who may not be in the position to approach conventional lenders, equity crowdfunding provides a great alternative. In some cases, crowdfunding can provide you with unimaginable figures of investment funds for growth.

Victoria Greene is a freelance writer and brand consultant. She blogs at VictoriaEcommerce and loves to share tips for growing businesses looking to make the most out of the digital marketplace.

 


The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

 

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