Any entrepreneur that is far off from the reach of domestic or international network of venture capital can rely on something that is modern and practical. This is the method of “Crowd Funding” that can get the much needed initial case or seed capital to an entrepreneur and have things commence as per the planned dates. Although many online platforms are active in each continent, while some are pretty common across entire globe, but there are few things that ensure a successful crowd funding campaign.
- Idea: The entire business proposal or idea that the startup will be based upon matters a lot. It can be a product or a service that is technologically advanced and not available in the market, which will make it yearned by anyone who gets to know about it. Fundamentally, it is something that people didn’t know, would make their lives much easier if materialised. The thought of a sophisticated product or a service simplifying life is extremely attractive to people, which makes them donate towards the seed capital through crowd funding.
- Prototype display: This is where the prototype is displayed for investor community to view. This enables the proven concept of the idea to reach to the viewers without any glitch, while it also gives a close-to-real feel of what it will be like to have it after its launch. This includes the audio-visual as well as FAQ of the service or commodity that is due to be launched and seek seed capital from the investor crowd.
- Communication: Usually, multiple investors put in small amounts, but sometimes keen investors who can pull other investors as well; do wish to get in touch with the entrepreneur for a lively discussion. This makes the need for an apt communication much more than ever before because sometimes it has been witnessed that a big investor makes up the deficit by their own investment for the project. All of it only happens if the chief investor is satisfied in his curiosity about everything that he wishes to know.
- Accounts: keeping a transparent account of how much money has been raised and by who till the last date of the crowd funding collections; will render faith upon the entrepreneurs by the investors. This practice should be further maintained because that will help the entrepreneurs in getting quick funding, if they ever so need in future from other investors.
All the above four essential things can be planned and executed with the help of relevant professionals on “pay-after” arrangements. That will allow the entrepreneur to build business relationships as well as learn to manage things without the use of money, but just the use of communication and good faith.
A survey conducted by GIC shown that many entrepreneurs started their companies through crowd funding from the year 2011, which is still in practice. Though traditional method of securing investment is much fruitful and secure, but fresh entrepreneurs without any strong financial backgrounds seldom get that kind of business support. For them crowd funding is the best way for commencing start-ups.
Majority of the start-ups started almost like it, but the most successful ones among them had their business plan incorporated with many other company’s products as well as service’s being made available on discount; so it went up in the charts quickly. However, not every other startup will have the same great and successful fate as TheLEDTV.com and 0007.ae. Hence, it is vital to follow the footsteps of other start-ups that gathered their seed capital through crowd funding.
Asking them confidentially or openly about their own tactics with crowd fund raising practices will generate plethora of ideas that will boost the much needed strategy deployment on the campaign. All this done in short time will yield great results that will benefit the entrepreneur and their idea to reach the ground; to finally materialise.
Under any circumstances, going for crowd funding is always better because the need to furnish plethora of documentations and producing security for the seed capital loan can drive any entrepreneur nuts. Hence, going the crowdfunding way is much recommended today by every management and business guru, for it’s convenient as well as makes for good marketing of the entire thing simultaneously.
Word of advice
It is greatly suggested that all the legal aspects and copyright aspects must be worked upon on the idea; least there should be any complications after a successful crowd funding campaign. Nothing breaks a startup more than an immediate legal complication to it; once it has the money to take off.