Want To Earn Your First $1 Million With Crowdfunding?
Photo: "crowd" by Michael Dornbierer
"Crowdfunding is a way entrepreneurs can raise money without using conventional financing. Could you use a few million dollars?"
Crowdfunding is a way to bypass the sometimes onerous process of raising capital. Using this approach entrepreneurs can request monetary support from the communities they wish to benefit, often in exchange for exclusive incentives. But this approach is only as effective as the marketing strategy behind it.
For years, entrepreneurs had to rely on bank loans and venture capital to raise the money necessary to fund a new idea. However, our consumer culture has shifted to one of mass participation, and that opens the door to this new method of financing.
Not every crowdfunding project is this successful. But OUYA demonstrates the magnitude of what is possible when an entrepreneur delivers what the market wants in a way the market can identify.
Successful crowdfunding entrepreneurs recognize this approach is more about tapping an existing audience for support rather than building a new audience for an idea. In the case of OUYA, they appealed to video game fans, video game professionals, gadget heads, and hacking enthusiasts. These are all "tribes" with incredible passion for their interests.
In addition to finding the right tribe to support a crowdfunding round, a well-structured marketing approach improves the odds of a positive outcome. Successful crowdfunding marketing often includes these components:
- Video. An explainer video featuring the people behind the scenes goes a long way toward establishing a connection with a tribe.
- Idea. A clear explanation of the idea is required in order for the tribe to know whether they have an interest in seeing the idea get off the ground.
- Motivation. A clear explanation of why the idea should be funded is required for the tribe to become interested in parting with their money. Part of this component is building trust that the entrepreneur has the ability to carry out his or her vision.
- Incentives. Exclusive incentives encourage the tribe to participate. Often these are tiered so top funders receive rare rewards, like lunch with the founders or early production models.
- Testimonials. Quotes from sources the tribe will recognize lend credibility to the project.
Crowdfunding can be a powerful source of revenue for entrepreneurs who wish to avoid the more conventional route to financing. With a little thought and a clear vision of what could be, ideas that would otherwise be impossible regularly launch into the marketplace.
Have you participated in crowdfunding?