The New Rules of Fund Raising

The New Rules of Fund Raising

The world of fundraising has been turned on its head. A decade ago, entrepreneurs had limited sources for capital — angel investors, venture capital funds, and rich Uncles. Today, entrepreneurs have a plethora of options.

AngelList pioneered online funding platforms, which spawned dozens of similar offerings to make meeting angel investors easier. Kickstarter and Indiegogo were the first to make raising pre-sale dollars on your brilliant idea a reality.

To date, over $1,000,000,000 has been pledged to Kickstarter projects, with the average project receiving approximately $20,000; enough to seed the initial stages of most ideas. Indiegogo doesn’t report up-to-date numbers, but based on historical data one could extrapolate that close to $200,000,000 has been pledged. It is projected that a total of $5,000,000,000 will be pledged across all crowd funding platforms in 2014.

Enough data has been collected over the past five years to establish best practices for crowd funding campaigns. I recently developed a course that teaches entrepreneurs the three key aspects of raising capital on a crowd funding platform. You can view it here for free.

Contact List

Raising capital on crowd funding is a function of who you know and the good news is that you can meet nearly anyone using social media. Ask Stacy Ferriera, who at 18 years of age secured an investment from Richard Branson by tweeting him on Twitter.
Entrepreneurs are using social media to get the attention of influencers who can move mountains.

Messaging

The key to crowd funding is weaving a compelling story through video, images, and text. The most successful campaigns use video to highlight the people behind the campaigns and display the passion behind the project. It helps if your campaign is solving a real problem that people care about, such as home security.

Entrepreneurs who provide a passionate solution to a real problem increase their chances of success.

Campaign Management

Campaign management is the aspect that most entrepreneurs fail to prepare for during their campaign. It is easy to focus on the launch, but many grow tired of campaigning by day 10. The key is to develop a 30-day plan ahead of time and recruit others (interns, virtual assistants, etc.) to carry the load.

Entrepreneurs who understand it is a marathon, not a sprint, are best equipped to meet their funding goal.

Have you tried crowd funding? What are some of the technics that helped you get across the finish line? Let me know in the comments.

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