Crowdfunders: Fund your new business!

It isn’t easy to get a new business venture off the ground unless you have access to stacks of cash, or you’ve found a major investor, or, even less likely these days, you’ve discovered a bank that is still lending to small business start-ups. However, there is a new way of finding that seed money and it is through starting a crowdfunder campaign.

There are a few crowdfunder providers online, and one of the best known is Kickstarter. When Peppermint went to the website it was interesting to note that the first message we received was that it now has projects running in Spain; that’s good news for Spanish companies and for the businesses run by expats on the Costa del Sol, as well as the other coasts.

Crowdfunders originated in the creative industries. Anyone who has ever worked in film knows that the search for funding, whether it is a 10-minute short, or a full-length feature, is sometimes a lifelong quest that tends to keep hitting brick walls.

So, film makers started asking their friends and family to pitch in some cash in return for a piece of the profits, or some other reward. This is nothing new in one sense, but then some smart people had the idea of formalising it as an online business and creating secure sites where the investors could send their money and know that they wouldn’t lose it.

Crowdfunders have now expanded to include rock concerts, new restaurants, technology inventions and games. Some crowdfunders seek investment for community gardens, or want to help people who have lost their homes. The list is endless. Crowdfunders work because lots of people can get involved with your project – it’s not just for the wealthy investor.

If you’re starting a crowdfunder you need to think about a range of awards you can offer your investors. You may have a €20 reward, then various packages up to €5000 or €10,000 rewards. It depends how much you need. During the recent Greek crisis, a young London chap started a Bailout Fund for Greece on Indiegogo and for €3 you could get a signed photo f Alex Tsipras the Prime minister of Greece. It didn’t manage to reach its target, but the money raised—almost €2m—is going to help children and young people in Greece.

If you have a business project, particularly a start up, a crowdfunder might be the answer. Here are some tips from Digital Trends that we’d recommend following:

• • Research other crowdfunder projects to see what’s on offer
• • Look at all the crowdfunder platforms to see what suits your project best
• • Back somebody else’s project so you can get a real feel for how it works. You don’t have to invest much
• • Consider how to present your story – it will need to be compelling and persuasive – you might need to hire a professional writer and marketing person
• • Set a deadline and a time frame for your crowdfunder. For example, campaigns that run for 30 days or less are known to be the most successful.
• • Use social media to draw attention to your crowdfunder – that’s why short campaigns work better as you only have to keep people interested for a short and intense period of time
• • Choose the right funding goal – make sure it’s enough to get you started
• • Offer plenty of ‘low pledge investment’ rewards. It’s easier to get €25 from people than it is to get €2,500
• • Be transparent – let your investors know what the risks are with your venture
• • Keep communicating with your investors after the campaign has finished. You might need them again

The world of crowdfunding is a fascinating one – it isn’t a completely pain-free way of raising money but it’s a great alternative to the more traditional methods, and in many ways it keeps more control of your business with you.

If you’re thinking of putting together a crowdfunder and need help with making a video to present your campaign and assistance with a marketing plan for your crowdfunder, plus a compelling story that will attract investors, then contact Jade Thompson on +34 951 316 553 or email info@peppermintcreate.com