Start-ups find lots of obstacles to access the credit via financial institutions, so they are turning to crowdfunding to connect with the crowd and ask them to support projects in order to make them happen. Over the past number of years, crowdfunding has been considered an effective way to fund and make a reality of creative or innovative projects.
Crowdfunding is the collection of finance from backers (referred to as the “crowd”) to fund an initiative – and it usually occurs on Internet platforms. The concept is not new, but how it is being done over the internet only started in 2003 with the launch of ArtistShare project funding.
Today, some of the top crowdfunding sites are IndieGoGo, KickStarter, RocketHub, gofundme and Invested.In – but there are plenty of others that focus on niche markets and group types. Yes, there are sites that help with developing apps and technology like appbackr and GeekFunder. MoolaHoop is a crowdfunding platform that is specifically geared to helping women with small businesses to grow and succeed.
Many small businesses (and larger ones too) are starting to realize that crowdfunding represents a unique marketing opportunity for forwarding-thinking companies to dramatically strengthen consumer ties with their brand. They are finding that crowdfunding can also be used to drive innovation, and that it is the most effective form of crowd-sourced product information and innovation.
Not only are small businesses using crowdfunding to raise capital and drive innovation, they are also using crowdfunding for market intelligence, especially since the funding of innovation has changed. Even venture funds are monitoring activity on leading crowdfunding platforms and trying to understand how consumers are interacting with product ideas on these platforms. They are looking to see what type of product innovations are receiving funding, and who is participating in the funding campaigns – so that they can gauge what types of innovation they should be funding.
Owners of brands have realized that thousands of focus groups are occurring in real time on these platforms, because people are putting their money into a product or brand they believe in. Businesses of all sizes have realized that crowdfunding can be considered as a great tool in marketing – especially for research, promotion and engagement. Small businesses (old or new, known or unknown) should consider using crowdfunding to reach out to their actual customers (as well as to gain new customers) when considering launching new products and services and asking the crowd to test them.
Crowdfunding is useful to raise money, but it is also useful to market with customers, users or consumers. Crowdfunding actually means much more than just getting your projects funded. It means that you are connecting with users and customers before your products are ready to sell. By engaging with the crowd, you will be learning and discovering if they are going to like (or more importantly buy) your products and services or not.
If there is one thing beyond research, promotion and engagement that your small business can take away from implementing a crowdfunding campaign, it is brand awareness. When people like a project, product or service that they are funding, they will most likely share that information over their social media channels to help make that innovation a reality.