Joel Hughes

Joel Hughes

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Joel Hughes

Joel Hughes

Joel Hughes has over 10 years of experience spanning retail management, recruitment, marketing and business development, which has allowed him to develop a set of valuable, transferrable skills that have been focused on the crowdfunding sector.

Joel Hughes

Four Ways to Raise Funds For Your Business

Do you have a concept or business idea that you want to turn into a reality? For most people, raising the initial capital to launch a business is a difficult obstacle to overcome. Thanks to innovations in financial technology there are new funding methods that can help you take your business or product to the next level. Here’s a breakdown from crowdfunding platform, Indiegogo of a few different ways you can fund your business.

1. Loans

One of the most common ways to fund a business is a loan, which you can obtain through your friends, family, or more traditionally, a bank.

It’s a great idea to tap into your personal network in order to raise funds as it doesn’t require the formal paperwork that getting a loan from a bank does, and it’s much easier and faster. However, it takes years to build a strong relationship and trust with a person before you can ask for a personal loan, and straining your relationship is a major risk.

Banks, on the other hand, can give you a loan with a fixed interest rate and clear conditions, which in many ways makes the process of returning the money simpler. Banks are also generally less interested in your day-to-day decisions and more interested in getting a return on their investment. However, getting funding from a bank loan takes a lot of paperwork and proof of the viability of your business. Banks don’t like taking risks, so they will always want to see a business and funding allocation plan, and proven history of your sales before they consider funding you. For many early stage start-ups, it’s difficult or even impossible to fulfil all of these requirements

2. Angel Investors

Angel investors are individuals with private wealth who invest in businesses in exchange for a percentage of equity. Instead of making any regular payments or paying interest, they will make money only if you do. The process of finding an angel investor for your business venture is actually less daunting than you might think, as long as your pitch and growth plan are realistic and you’re ready to give up a share of your business. Besides simply providing money, they often help you establish valuable skills and connections that you wouldn’t be able to tap into without them. Because they are often seasoned entrepreneurs, or have worked with many other entrepreneurs, they are more likely to understand the timeline you might be working with.

Just like with any relationship, you want to ensure that you are comfortable working with a particular angel investor before making a commitment. Angel investors take part ownership in the company, so they will have some decision making power as you build your business and you will not have total control of your venture.

3. Venture Capital

Unlike angel investors, who are private individuals, venture capital firms usually only fund products that have the potential to grow into a large business and thus provide a large return on investment. A venture capital firm generally offers access to an exclusive and influential business network, and can mentor you through the process of growing your start-up, which can help take your business to the next level.

On the other hand, in order for a venture capital firm to invest their time and resources in your business, they want to see a substantial amount of financial return. Usually, they will take a chunk of equity in exchange for their involvement, and be involved in your major business decisions.

4. Crowdfunding

With crowdfunding, you’re directly going directly to ‘the crowd’, or public, to raise money for your business. In addition to raising funds, you can also scope out the popularity of your idea, and get some word-of-mouth marketing. In this way, crowdfunding allows you to validate your product before you manufacture and start shipping it. Moreover, you can get valuable feedback and advice from your target audience as well as keep the reigns on your business’s creative direction and ownership. If you’re interested in raising funds using crowdfunding, here are some tips that you can follow.

Although crowdfunding might seem like an easy task, you need to invest a lot of time and effort if you want to be successful as there are many elements involved in a crowdfunding campaign. You need to ensure that you put together a great team, create a detailed campaign story with both text and video, establish an engaging social media presence, and build a great community database to increase your chance of being successful. Despite your best efforts, there’s no guarantee that you’ll reach your funding goal if your product or business isn’t as innovative to your target audience as you might think.

If you have a great business idea and you’re ready to turn it into a reality, it’s important to understand as much as possible about the various financing options available to you before you take the plunge and commit. Regardless of whether you choose to raise funds through a loan, angel investor, venture capital or crowdfunding, ensure that you’re comfortable with the method you choose, as well as the idea of potentially giving up some equity or control of your business.

 

 

 

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10 Tips to successfully crowdfunding your idea

Instead of struggling to secure bank loans or venture funding, crowdfunding can be a great way for businesses and individuals to raise funds for their ideas. A common misconception is that you can go from an idea to a final concept immediately; however, running a successful crowdfunding campaign takes extensive pre-launch, as well as a continuing strategy to maintain momentum of both contributions and publicity.

Here are some tried and true tips for how to put together a crowdfunding campaign that people will want to support:

Research & Planning

Don’t rush into your campaign. We recommend beginning the planning process at least two months before your chosen launch date. The longer you plan it out, the more time you will have to stress test and build out a solid plan. Use this time to research campaigns similar to yours, both successful and unsuccessful ones, in order to learn as much as you can from them. Reach out to campaigners who achieved their goal, and don’t be afraid to ask them for any insights they’ve picked up from running their campaign. Be realistic and set an achievable funding goal. Campaigns that achieve their goals are seen as more trustworthy and likely to succeed and therefore tend to get more support and pledges from supporters. For more pre-launch advice, take a look at our checklist here.

Don’t do it alone

‘United we stand, divided we fall’ is the perfect phrase to describe how a successful crowdfunding campaign works – having allies is crucial. We recommend putting together a talented team so that you can divide tasks such as creating your pitch video and campaign page images, shipping perks and managing your social media channels, amongst many others. Moreover, campaigns that are run by teams raise an average of three times more than those who try to go solo.

Focus on social media

Social media is a great tool for generating a ‘buzz’ around your campaign as well as building your community. As there are many platforms out there, work with your team to make sure that you only choose the ones that are relevant to your project, and that you have the bandwidth to maintain them. Update your social media pages regularly to keep the your supporters informed, and always coming back for more.

Develop a strong community

Building a strong community and potential audience for your campaign is crucial for running a successful crowdfunding campaign. There are various ways in which you can build your database including partnerships with companies, attending and hosting events, and holding competitions on your social media channels. Remember that everyone who you interact with is a potential supporter of your campaign. Thus, aim to build an extensive database as the more people who you can reach the better chance of success you have.

Offer irresistible incentives

Create perks that are both exciting rewards for your backers, as well as achievable for your team. When designing your perks, ensure that they are varied enough to suit every wallet and that you are able to get them to contributors in a timely fashion.

Tell your story through the campaign

Your campaign page is the first impression that potential backers get, so make sure that it’s your best. Be honest with your audience about who you are, what you want to do, how you’ll be achieving it and what you’ll be using the funds for. Use a combination of infographics, an engaging pitch video and professional images to tell the audience your story. We recommend breaking your text up into sections and keeping it succinct to make it easier to read and digest.

Launch your campaign in stages

Split your database of potential contributors into core supporters, which are usually family and friends, and the remaining supporters, who may be strangers. Reach out to your core supporters during your “soft launch” which usually takes place one to two days before the “official” launch date. The soft launch is usually done to help you reach 30% of your goal before launching to the public. This encourages trust, and therefore further donations from others.

Keep the pace

Did you know that 42% of funds are raised in the first and last 3 days of a campaign? It’s important to keep the momentum going until the very end. A great way to boost your campaign is through emails and social media, as well as any other perks added whilst your campaign is in progress. Also ensure your team keeps your community updated with new perks and amounts raised to keep the momentum going.

Consider the Press

Consider spreading the word about your campaign through PR outreach. Decide whether you would draft the press release and contact your media yourself or hire a PR agency or freelancer to do so depending on your budget. You can use campaign milestones as ways to keep the press interested in your project as it progresses after your initial ‘launch’ push.

Follow up with your community

Even when your campaign is closed, thank your community for their support and keep them in the loop about where you are with product development, manufacturing and shipping. They contributed to be part of your journey, and you never know when you might need them again!

 

If you’re looking for a way to raise funds for your idea, crowdfunding will help you fund your project, and do some great marketing in the meantime. To make the most of your crowdfunding experience, make sure that you are fully prepared with a great team, a strong plan-of-action and an extensive database of people who are interested in your project. 

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