Crowdfunding has changed the funding landscape for businesses and investors. To maximize the process, here are some tips from our experts shared in a recent Google hangout.
If you’re the entrepreneur:
Your marketing has just begun. Seth Levine, managing director at venture capital firm Foundry Group says some startups assume that posting to crowdfunding platforms is enough to get the word out about their business. He reminds fledgling enterprises that these platforms are still just one tool among many and you’ll need a promotions plan.
Think about your investors. Entrepreneurs who crowdfund have a special responsibility to their funders. These investors can be demanding and delivering on your promises to them can be time-consuming, says Wole Coaxum, a business banking executive at Chase. Consider your commitments carefully.
Related: When It's Time to Raise Capital
If you’re the investor.
Know the risks. Says Levine, investing in startups can be fun, though it is risky. He suggests you spread your money out across several investments. He says, “You’re much better making 20 $5,000 investments than 2 $50,000 investments if you have 100 grand.”
Try, try again. Marc Nager, CEO of entrepreneurship nonprofit UpGlobal, explains that the best way to learn about crowdfunding investments is to do it. “There’s only one way to learn.”
For more tips and tricks, watch this short video.