This is How Small business Owners are Making it Big with Crowdfunding
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Startup revolution in countries over the world is generating demands in huge proportions for an increase in funding to business ideas. Even in the case of India, entrepreneurs are making a mark for themselves overcoming hurdles such as lack of funds by opting for crowdfunding.
The estimated volume of total crowdfunding worldwide is $16 billion where American giant Kickstarter alone launched more than 350,000 projects as of April 2017. In India, as the current events are switching Indians to digital transactions, people's confidence in using internet for transactions is increasing, thus providing a major boost to those who plan to opt for crowdfunding.
Amitha Singh co-founded Ideas R Us a year ago with the vision of creating new bonds between parents and kids with boards games when a personal story to engage with her kids turned into a journey of reaching living rooms across the country and internationally too.
Aiming to achieve a target of INR 450,000 in 45 days, their project Chor-Police, a 3 in 1 board game, accumulated an amount 16% higher with 159 backers from 31 cities across 13 countries.
Singh says, "One of the biggest benefits of crowdfunding is the ability to reach out to people from beyond your immediate network to help validate an idea, at as little cost as possible. This is especially beneficial for smaller businesses that are looking at market validation, and for a small player to enter the market and make a mark requires access to huge amount resources which is not a possibility."
"Besides crowdfunding also helps increase visibility, thereby bringing in more collaborators to help make the idea a success. We have initiated 8 to 10 conversations, of which more than 50% would surely lead to successful collaborations in the near future," says Singh, pleased with the exposure crowdfunding gave to her project.
Crowdfunding is not just limited to products in consumer market or in technology; rather it enables artists to take off with creative projects not backed by a big production house. Vernita Verma, Founder of Varnan Films, who is a filmmaker and artist brand manager, funded a music album production for an independent musician as well as a film on hearing health awareness.
Online campaigning might not always help alone so the campaign is often exposed to offline opportunities. "The requirement for the musician was INR 1,000,000 which couldn't be achieved via online campaign so we had to opt for crowdfunding with our personal contacts offline," says Vernita Verma.
"My biggest learning with the kind of projects I was doing, especially the film, was that there are people out there ready to support and a campaign helps you reaching out to those people. When they see it not as a film but a project, they get more confidence to support it," says Verma whose target of INR 400,000 was fulfilled after health professionals contributed to the health-based film offline.
While product validation is the core of crowdfunding where people choose to invest in an idea, it can also serve as a medium of creating a consumer base just like it happened with Raybaby, a baby monitor constantly monitoring the child's breathing and sleeping keeping parents alerted via a custom app.
Ranjana Nair of RIoT Solutions used kickstarter.com to raise a minimum of $50,000 and ended up with about triple the amount with 1200 people pledging a minimum of $99 and a maximum of $500. Ranjana says "Crowdfunding can be about collecting pre-orders of the product. It helped understand our market even before we launched the product. Our 1200 customers were our source of inspiration to move forward with the product. People were ready to put in money into an idea and ready to wait."
"We excelled in our PR because we were covered by top news agencies like CNBC, Techcrunch and Engaged in the US. We were in the top products to look out for in 2018 in Wired UK." adds Nair.
These women give their top tips to help you succeed in your crowdfunding campaign.
1. Research well and choose the right platform.
Vernita advises "Most important is the platform you use for the campaign. There are plenty of options, so choose wisely. Have a clear plan ready, there will be people ready to support the project only if they see the clarity. The first major chunk of support will come from your own friends and family. Don't underestimate your resources. Rest, outsiders will follow later.
2. Offer Rewards
"While most backers do not get on board based on the quality or quantity of rewards you will give them, do spend time planning the rewards and make good ones or don't give any at all" adds Singh.
3. Pitch correctly
Singh says, "Spend time and resources on the pitch video. It is the single most important tool that you will be using in your campaign."
"Your video should tell the customer clearly in less than 45 seconds what you are selling" adds Ranjana.
4. Marketing and Engagement
"Have an engagement and marketing plan for your campaign. If you don't have the skills to put one together, reach out to people in your professional network to do it for you. You could even sign up to pay them post completion of the campaign. Don't forget to include these costs and any others in your crowdfunding target." says Singh while Ranjana focuses on trying to gain followers before the product launch, "Start your groundwork by attending exhibitions, events and online marketing at least 3 months before you launch."
5. Update your backers
Keep reminding your backers that they made a wise decision. "Show your backers who you are. Be in constant touch with them throughout your campaign. Have live videos and keep them updated" says Nair.
Last but not the least, follow a genuine approach. Remember, a large percentage of the money is generated through the personal network; the people you know, so take a direct approach in all your communication.