Understanding Crowd Funding

There really is not a lot to understand about crowdfunding once you analyse the actual word. As an entrepreneur, unless you're very lucky, you want finance to kick-start your idea. And then quite often you again need finance if you wish to expand. There are a variety of ways you can raise that finance and in the modern jargon one such way is via crowdfunding.

The word funding we equate with to raise funds or money. And the word crowd of course means a group of people so in today's Internet-based society we understand crowdfunding to mean a way of raising money via a group of people. The Internet of course makes it so much easier to communicate our ideas and to make contact with a large number of people at little or no cost. So while there has always been a need for entrepreneurs to raise start-up capital and then capital for expansion, one popular method today is to raise a small amount of money from a large number of people; hence crowdfunding.

The good old family and friends

We can look at potential sources of finance from a variety of levels.

The first level is for many entrepreneurs their friends and family. They are able to explain their idea to those close to them, to people who understand them andwho are more likely to give them the time of day. But from that first level of dealing with people we know we move to other levels in particular to people we may know slightly or indirectly or people with whom we have no contact whatsoever.

Some entrepreneurs will argue that it can be extremely hard to convince family and friends to invest in their project and whether or not that's true it can certainly be difficult to get an investment from someone who knows nothing about you. So if you want to go about getting involved in crowdfunding and particularly with people who have no contact with you at all, then you had better get your act together. Now there are entrepreneurs who have hit upon the idea of getting crowdfunding up and running. There are a number of platforms which enable entrepreneurs like you to pitch their wares so to speak. Platforms such as Indiegogo, RocketHub and Kickstarter are all worth investigating. You have an idea. You need finance. You decide to get involved in crowd funding. Youhave a variety of entrepreneurs who are willing to help you get involved.

The pitch is everything 

So you've decided that crowdfunding is a great way for you to either get started or to expand your business and you've investigated various platforms and chosen one of them to launch your pitch. There is never a more important time than now to get the pitch just right. Remember there are people who are looking for entrepreneurs who they believe are onto a good thing. There are people with money to invest. But you have competition. People won’t invest in your project through crowdfunding unless you persuade them. The pitch is everything. Now maybe you need to think outside the square here. You need to think about what will cause somebody to get excited about your project. If you know what inspires them or drives them to invest with you then you will structure your pitch accordingly.

Your average man and woman

You need to understand that the majority of people who invest via crowdfunding are not professional investors who have a great deal of experience in this field.

They are far more likely to be your average person in the street and they will have different reasons for investing in a particular project. These reasons can include the following.

  • You are offering a reward to investors and that reward appeals.
  • You have a background purpose for your project and that purpose appeals.
  • You have a winning presentation which looks fantastic and that pitch appeals.

Remember that you are involved in crowdfunding as an online operator. You need to have mastery of social media. One of the primary tools used in this activity will be video. The better your presentation, the better your chances ofbeing a successful salesperson. Of course you have to get the message right but you also have to get the presentation absolutely spot on. Unless you are a talented person as far ascreating a video message is concerned, hire an expert. Remember you are just one of many entrepreneurs who are out pitching their project. You need to be impressive.