Small Business News from 4imprint
In recent years entrepreneurs and SMEs may have found it difficult to access funding from traditional sources. As a result a growing number have been attracted to alternative ‘peer to peer’ investments to help them fund projects and business opportunities. Known as ‘crowdfunding’ this alternative investment source presents a very interesting option.

Wikipedia define Crowdfunding as “the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet.

“According Funding Circle, one of the UK’s leading lending platforms they’ve facilitated £330 million of loans by 30,000 people to 5,500 businesses since 2010; and the Government has made £60 million available to Crowdfunding since 2013.

If you have a business idea that needs investment – crowdfunding may be an idea worth investigating; getting started isn’t difficult and you’ll find pages and pages of information and case studies online. Should you decide to go down this route and launch your own crowdfunding project, you’ll need to start with a good pitch.

Your pitch can make or break your crowdfunding efforts. Make sure it outlines a fundraising goal, a timeline and what rewards are being offered in exchange for investment. It should clearly state exactly what your business idea is, its key selling points and marketplace differentiators. Here are some additional points you’ll also want to address:

  • What is your background, business track record and why should investors trust you?
  • What is your project and what’s so great about it?
  • How much money do you need and how will you use it?
  • What market research have you conducted and why is there a need for your venture?
  • How long will the project take and how will you update investors on its progress?

Make sure your pitch showcases not only the project itself but the people that are going to make it happen. A short, simple and engaging video is a great way of doing this. In fact, your entire presentation shouldn’t be more than 2-3 minutes. Download your video onto USBs and leave them with would-be investors.

Once you have the perfect pitch, you need to launch it. Contact friends, family, colleagues, the media, the community at large and organisations with similar interests. Create distribution lists and post your request for investment to various social media platforms asking your contacts to share your post. If you’re looking for investment greater than £5,000 include a lending platform such as Funding Circle to widen your reach.

Remember to let investors know what’s in it for them. Although you may have friends and family who want to participate to show their support, most will want something in return for their contribution. Here are some ideas:

  • The product itself: You may want to offer your product (service) at a hefty discount to investors or offer the opportunity for one investor to be the first to buy the product once it comes to fruition. You could also offer enhanced versions of the product such as those that are autographed or limited editions if appropriate.
  • Merchandise: You could give investors commemorative items such as logo’d mugs, T-shirts or keyrings. Distributing posters, postcards, badges and other souvenirs can be a great way to celebrate this exciting process.
  • Product involvement: Appeal to some investors by giving them access to behind-the-scenes footage of the product-in-the-making or the opportunity to give input during the process.
  • VIP treatment: Treat your key backers well by granting them exclusive access to launch parties and events. Consider presenting them with an award or plaques to publicly acknowledge their role in backing the organisation.

Crowdfunding can be a great way to generate funds for new business ventures. A simple pitch, a great idea and a lot of passion will go a long way.

Further Reading / Sources
Crowdfunding Wikipedia
About Funding Circle
UK Crowdfunding
www.ukcfa.org.uk Web 5 Aug. 2014
How to Create an Amazing Crowdfunding Pitch. The Huffington Post.
Need More Crowdfunders? Try These Lures. Inc.com.