Have you got an app/business idea brewing that could be ‘the next big thing’?
There are a number of different ways to fund your project kick-off. You can always approach a bank, provided you have the necessary collateral and legal documents to put up against a business loan, which often isn’t the case.
You can approach friends and family if you’re confident that they will understand your commitment towards your idea. However, that might not always work which could leave you with no choice other but to put your dream project in limbo-land.
Here’s the good news…it’s the 21st century.
In this day and age it’s possible to get the required funding for your brilliant idea by harnessing the power of the internet and social media. This process is called ‘crowd funding’ and is quickly growing in popularity.
The Basics of Crowdfunding
The concept of crowd funding has its roots in the immensely popular concept of crowdsourcing.
This literally means outsourcing to the crowd. Taking a task or project that is usually performed by a contracted worker or an employee and outsourcing it to a large number of people inviting them to work on it.
Building on this concept, crowdfunding is the process by which a large number of people or a community provides funding for a particular business concept, project or cause using the internet as medium.
How Crowdfunding Works
You take your idea and approach the most relevant crowd funding website.
Once there, you make a pitch proposing your idea; set a goal as to the amount of funds you need to complete the project; and mention a deadline within which you need the funding.
Your pitch is then open for prospective patrons and enthusiasts to view and assess. If someone finds your case interesting enough, they’ll pitch in with funding. The input per individual patron could be anything from a couple of bucks and up into the thousands.
Patrons are rewarded if the project comes to fruition but no money changes hands if the funding goal is not achieved within the set deadline specified. This provides innovators with a great way to gauge the potential of their ideas and for patrons to back a project they like without taking any unnecessary risks.
For you to receive the funding you need for your project, it is important that your pitch seems passionate and interesting enough for people to back you. You need to engage the target group, arouse their interest and make sure that they purchase into the idea enough to fund your project. Here are a few tips that can help along the way –
- Selecting the best site out of the available options – The web is full of crowdfunding websites and each one has its focus point with set of pros and cons. Crowdfunding sites usually cater to a particular section of the market so it’s really important that you choose the right one for your kind of project. Look out for the focus area and the feature set of a crowdfunding site and the kind of projects that are already featured there before making your final decision.
- Target your audience correctly – Those projects that are meant for a small group of target audience tend to do well in crowdfunding sites. When you are pitching your idea it pays to first demarcate and identify the right target audience for your project. You can base your choice on various factors like location, age group, religion, ethnicity, gender and interests. You can use this Profiling Framework to identify key characteristics about your audience.
- Design the right plan – It is important to plan out the entire duration of a crowdfunding project’s timeline. It has been seen that the most amount of interest is generated when a project kicks off and when it is close to the deadline period. It’s important to have promotion strategies for the beginning, middle and end of your project if you want your funding goals to be realized satisfactorily.
- Pitch to propel – First impressions matter and with crowdfunding projects, very often what decides which way patrons will sway is your pitch. There is a lot of competition for attention at crowdfunding websites and you need to make sure that your idea stands out. Take great care while selecting a catchy name and an attractive description for your project and attach an image which draws attention.
- Transparency in operation – While patrons will fund your project if they like your idea, it’s important to be transparent about how you’re planning to spend their money. If you provide a detailed description of how you plan to go about the project using the funding you get from the patrons, it will build trust and encourage more people to buy into the idea.
- Optimise social media – Most people are aware of the power of social media when used as a marketing tool. Those who are interested in your idea might not be a part of crowdfunding websites and it makes sense to use promotional tools like social media marketing, email marketing and internet-based promotion to get noticed. Read this article on ‘How To Build A Social Media Strategy for Your Crowd funding Campaign‘
- Keep it simple – If your idea involves a large project which requires a lot of funding to kick off, you’ll stand a much better chance of achieving your funding goals if you break it up into smaller parts. Create separate crowdfunding campaigns for each part for everybody’s sanity!
- Worthwhile rewards – Patrons will always expect some kind of reward or return if your project is successful in reaching its funding goal. Devise rewards are worthwhile and likely to arouse the right kind of attention.
- Treat it as a campaign – Traffic to your project page is often the decider of how your campaign will swing. You need to take every measure possible to drive traffic to your project page during the entire duration of the crowdfunding effort. A good campaign is tracked, measured and tweaked with scientific experiments to optimise effectiveness.
- Tell a story – If you’re using audio-visual media as a means to encourage funding, make sure you tell an interesting story and engage the audience for them to believe in your project. People love a good story.
- Give credit – Patrons like being acknowledged for their contribution. Make sure that you promise to give them due credit during the course of your project and follow through with the promise.
While traditional fundraising strategies (bank loan, VC capital) are viable options, the internet has opened up channels that today’s Entrepreneur can use to fund their projects. When crowd funding an app project it’s important to:
- Tell a story, show your commitment through a detailed and realistic plan, and give a worthwhile reward in exchange for funding.
- Keep your campaign simple in nature but ensure you’re tracking and measuring effectiveness to optimise your crowdfunding campaigns performance.
- Make sure you draft a solid plan and launch your campaign on the right site to target your ideal audience.
- Use social media as a free way of promoting your crowdfunding campaign.
Have you got any tips for crowdfunding an app project?
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