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Getting The Most From Your Marketing Strategy For Start Up Crowdfunding Success

Start up crowdfunding can be one of the most challenging and critical aspects of bringing your vision to life. Crowdfunding has become a new and popular way for start ups around the world to get funds in recent years. With the rise of online platforms and the widespread availability of investments, crowdfunding has created new ways for small businesses to get money and connect with an increased number of possible supporters. We’ll go into the specifics of crowdfunding, including its benefits and drawbacks, as well as the important things to think about when determining if it’s the best option for the business you own.

start up crowdfunding

What is Crowdfunding?

Start up crowdfunding is a method of raising funds for a project or venture by gathering small contributions from a large number of individuals, typically through online platforms. Traditional ways of getting money involve asking a small group of investors or financial institutions to give money. Crowdfunding, on the other hand, uses the power of the “crowd,” or the public, to back ideas and projects that they find interesting.

There are several types of crowdfunding, each with its own unique characteristics:

  1. Equity Crowdfunding:
    In this model, investors receive equity (ownership) shares in the start up in exchange for their financial contributions.
  2. Reward-based Crowdfunding:
    Contributors receive rewards, such as products, services, or other perks, based on the amount of their contribution.
  3. Donation-based Crowdfunding:
    Supporters contribute funds without expecting any financial return or tangible rewards, often motivated by a belief in the project’s mission or cause.

Start Up Crowdfunding in Ireland

The good news for Irish startups is that the crowdfunding landscape is flourishing. Platforms like Spark Crowdfunding and Fundit offer user-friendly interfaces, expert guidance, and access to a diverse pool of potential investors. Additionally, government initiatives like the Employment Investment Incentive Scheme (EIIS) can make your venture even more attractive to equity crowdfunding investors by offering tax relief benefits. This supportive ecosystem provides a fertile ground for Irish startups to leverage the power of crowdfunding.

Resources for Start Ups

Ireland also offers several resources to support start ups in their crowdfunding journey, including:

  1. Enterprise Ireland:
    Provides funding, advice, and support for start ups, including those exploring crowdfunding options. Their resources can help entrepreneurs develop robust business plans and marketing strategies to attract backers.
  2. Local Enterprise Offices (LEOs):
    Offer mentoring, financial assistance, and networking opportunities to help start ups prepare for crowdfunding campaigns.
  3. Crowdfunding Consultants:
    Professionals who specialise in helping start ups design and execute successful crowdfunding campaigns, from creating compelling pitches to managing post-campaign fulfilment.

Pros and Cons of Start Up Crowdfunding

Like any financing method, crowdfunding comes with its set of advantages and disadvantages. Understanding these can help you determine if it’s the right path for your start up:

Pros and Cons of Start Up Crowdfunding

Crowdfunding Fees

Most crowdfunding platforms charge fees for hosting campaigns and facilitating transactions. These fees can vary widely, but usually range from 5% to 10% of the total funds raised, plus payment processing fees (usually around 3-5%).

It’s essential to carefully evaluate and factor in these fees when determining your funding goals and the overall viability of a start up crowdfunding campaign. While the fees may seem reasonable, they can significantly impact the total funding received by your start up, especially for smaller campaigns or those with modest funding goals.

start up funding ireland

Crowdfunding Investment Return

Understanding how investment returns work in equity crowdfunding is essential for both start ups and investors.

How It Works

In equity crowdfunding, investors purchase shares or equity in the start up. The return on investment (ROI) depends on the future success of the company. If the company grows and becomes profitable, the value of the shares increases, providing a return to the investors.

Investor Expectations

Investors generally expect:

  1. Capital Growth:
    The primary expectation is that the value of their shares will increase as the start up grows.
  2. Dividends:
    Some start ups may offer dividends, sharing a portion of profits with shareholders. However, this is less common among early-stage start ups, which usually reinvest profits to fuel growth.
  3. Exit Opportunities:
    Investors look for exit opportunities, such as the start up being acquired, going public, or another liquidity event that allows them to sell their shares at a profit.

Meeting Investor Expectations

To meet investor expectations, start ups should focus on:

  1. Transparent Communication:
    Regularly update investors on progress, financials, and milestones. Transparency builds trust and keeps investors engaged.
  2. Great Business Plan:
    Present a well-thought-out business plan that outlines growth strategies, market opportunities, and financial projections.
  3. Governance and Compliance:
    Ensure good corporate governance and comply with legal and regulatory requirements to protect investor interests.
  4. Scalable Growth:
    Demonstrate a clear path to scalable growth, showing how the business can expand and increase in value over time.

Is Crowdfunding Right for Your Start Up?

Taking into account the pros and cons we’ve talked about, whether crowdfunding is right for your new business relies on a few important factors:

  1. Stage of Development:
    Crowdfunding is suitable for early-stage start ups seeking seed funding or with a minimum viable product.
  2. Product or Service Type:
    Products with mass appeal, strong emotional resonance, or unique value proposition are better suited for crowdfunding campaigns.
  3. Marketing and Community-Building Capabilities:
    Successful crowdfunding requires strong marketing and community-building efforts.
  4. Funding Needs and Goals:
    Crowdfunding is suitable for smaller funding rounds or projects with specific goals.
  5. Intellectual Property and Competitive Considerations:
    Start ups may need to disclose sensitive information, potentially compromising their competitive advantages.

The decision to use crowdfunding should be based on a thorough assessment of your start up’s circumstances, goals, and resources, ensuring it aligns with your business strategy and funding requirements.

Exploring Crowdfunding Platforms for Small Businesses

Crowdfunding has become an essential tool for small businesses seeking to raise capital, reach new audiences, and validate their products. Below, we review some of the most successful platforms our clients have used over the years.

1. Seedrs

Seedrs is an equity crowdfunding platform that allows startups to raise funds by offering shares to investors. It is particularly popular in Europe and provides businesses with access to a large pool of potential investors. Seedrs also offers a secondary market, enabling investors to buy and sell shares, enhancing liquidity.

2. Crowdcube

Crowdcube is another prominent equity crowdfunding platform, focusing on helping startups and growing businesses raise capital. It offers a straightforward process for businesses to create campaigns and pitch to potential investors. Crowdcube is known for its large investor base and has successfully funded numerous high-profile campaigns.

3. Spark Crowdfunding

Spark Crowdfunding is an Irish equity crowdfunding platform that supports startups and early-stage companies in raising funds. Spark Crowdfunding is noted for its strong local focus, making it an excellent choice for Irish businesses looking to secure investment from within the country.

4. Kickstarter

Kickstarter is one of the most well-known rewards-based crowdfunding platforms. It is ideal for creative projects such as art, technology, and design. Kickstarter campaigns operate on an all-or-nothing funding model, meaning projects must reach their funding goal to receive any money. This platform is popular for its wide reach and ability to engage a global audience.

5. Indiegogo

Indiegogo offers flexible crowdfunding options for a wide range of projects, from tech innovations to creative endeavours. Unlike Kickstarter, Indiegogo provides both fixed and flexible funding models, allowing campaigners to keep funds even if they do not reach their goal. This flexibility makes it a versatile option for various types of projects.

Crowdfunding can be a powerful way to bring your business ideas to life, connect with your audience, and gain valuable feedback. Choosing the right platform depends on your specific needs, goals, and the type of project you are undertaking. Explore these options to find the best fit for your business journey. Crowdfunding is not just about raising money; it’s about building a community, creating a brand, and laying the groundwork for future success.

Top Tips for Successful Crowdfunding Campaigns

Crowdfunding can be a powerful tool for raising capital and gaining support for your project. However, success doesn’t come easily; it requires thorough planning, execution, and promotion. Here are some top tips to help you create and manage a successful crowdfunding campaign:

  1. Prepare Thoroughly
    Before launching your campaign, ensure all your materials are in top shape. This includes your business plan, financial projections, and any supporting collateral. Potential investors will scrutinise these details, so they must be well-prepared and professionally presented.
  2. Build a Strong Brand
    Your campaign’s success heavily depends on your branding. Make sure your brand identity is clear, compelling, and consistent across all platforms. This involves creating a professional logo, a compelling tagline, and consistent visual and textual elements.
  3. Develop a Comprehensive Marketing Strategy
    Marketing is crucial for crowdfunding success. Create a detailed marketing plan that includes pre-launch, live campaign, and post-campaign strategies. Use various channels, including social media, email marketing, and content marketing, to reach a broader audience.
  4. Prime Pre-Launch Investors
    One of the most effective ways to build momentum for your campaign is to have investors lined up before the launch. These early investors can help create a buzz and attract more backers once your campaign goes live. Reach out to potential investors early and secure their commitment.
  5. Use Social Media
    Promoting your campaign on social media is essential. Invest in advertising across platforms like Facebook, Instagram, Twitter, and LinkedIn to reach a wider audience. Regularly update your followers with engaging content, progress updates, and calls to action to keep them involved and excited.
  6. Create Engaging Content:
    Content is king when it comes to crowdfunding. Use high-quality videos, images, and written content to tell your story and connect with potential backers. Make sure your campaign page is visually appealing and includes all necessary information about your project.
  7. Engage with Your Community:
    Interacting with your backers and potential investors is key to maintaining interest and trust. Respond to comments and messages promptly, provide updates regularly, and show appreciation for their support. Building a strong community around your campaign can lead to more funding and support.
  8. Set Realistic Goal:
    While it’s tempting to aim high, setting realistic funding goals increases the likelihood of success. Consider the amount you truly need and what you can realistically achieve. Also, plan for what you’ll do if you exceed your goals, as stretch goals can keep momentum going.
  9. Plan for Post-Campaign Success:
    Your work doesn’t end when the campaign does. Plan for how you’ll fulfil your promises to backers, manage the funds you’ve raised, and continue marketing your product or service. Successful fulfilment and continued communication can lead to long-term success and future crowdfunding opportunities.

By following these tips and putting in the necessary effort, you can increase your chances of running a successful crowdfunding campaign that not only meets but exceeds your goals. 

At Around Finance, we believe that every start up is unique, and there is no one-size-fits-all funding solution. If you’re considering start up crowdfunding or exploring other funding options, we encourage you to reach out to us. Our experienced professionals will work closely with you to evaluate your start up’s readiness, assess the viability of crowdfunding, and develop a comprehensive funding strategy that aligns with your vision and maximises your chances of success.

FAQ

Yes! Ireland has a thriving crowdfunding scene with platforms like Spark Crowdfunding and Fundit, plus government initiatives that support it.

Early-stage, consumer-oriented products/services with strong marketing capabilities.

For larger funding needs, established revenue streams, competitive IP concerns.

Reward-based crowdfunding offers backers tangible items or services, while equity crowdfunding offers shares in the start up.

Choose based on your project type, funding needs, market appeal, and whether you’re willing to offer equity or rewards.

Maximise your chances with a compelling story, high-quality visuals, pre-launch marketing, clear rewards or returns, and realistic goals.

Still got questions? Let us know what you’re looking for.

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