Crowdfunding 101

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Rogers Small Business | Robin Roberts | Nov 10, 2017

How to launch a successful campaign for the funds you need

Now that seven provinces (B.C., Sask., Man., Ont., Que., N.S. and N.B.) have legalized crowdfunding for businesses – which involves collecting small contributions from a large group of people – Canadian entrepreneurs have amassed between $250 million and $300 million in the last year alone to start up and scale up their businesses.

But successful crowdfunding is not just about posting a pitch on Facebook and expecting the cash to roll in. Craig Asano, founder and CEO of the National Crowdfunding Association of Canada (NCFA), offers some tips and tools for launching a winning campaign.

Choose your model

There are many types of crowdfunding, but for entrepreneurs, there are really only two models: investment/equity and donation/rewards.

Investment/equity models allow an investor to either buy shares or securities in your venture, or to receive a profit from your product. The equity option is the most successful, according to the NCFA, but tends to work better for established companies looking to expand, rather than bootstrapping startups.

The donation/rewards model, on the other hand, allows people to give money without getting anything in return – other than rewards in the form of whatever the company is selling or providing (e.g., their name on a funders plaque, a free meal at the restaurant, etc.). This model works best for raising capital for a specific product or idea.

Plan, prepare and promote

“You wouldn’t go to market without a strategic plan,” says Asano, who recommends spending up to three months preparing your crowdfunding campaign, adding that you need a good value proposition to present to your customers or investors.

Present your project clearly – have a prototype, if appropriate – so potential donors are confident your venture is on solid ground.

To reach the maximum amount of potential investors, says Asano, you should already have a following, online and off – preferably made up of people who will care about your idea. Use social media, attend networking events, and let your family and friends (and friends of friends) in on your venture. If you can attract media attention, all the better. Research other successful (and failed) campaigns to see what worked, what didn’t and why.

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And once your campaign is launched, keep your donors or investors in the loop about its progress.

Tell a story

To boost your crowdfunding campaign’s potential for success, create an emotional connection between you, your idea and your supporters. Use video, photos and narration to tell a compelling story about why you want to launch your business or product, or grow your company. Two of the most popular crowdfunding portals, Indiegogo (for entrepreneurs) and Kickstarter (for creative projects), walk you through the process and provide online support, as do other platforms, such as Canadian companies Seedlify and FrontFundr.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing 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 vibrant and innovative online financing industry in Canada.  Learn more About Us or visit www.ncfacanada.org.

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