There are a number of ways to raise funds for a startup, such as finding angel investors, taking out a loan, soliciting money from wealthy relatives and so on. But the most popular today is crowdfunding, a method of combining smaller investments from the public into a larger capital pool.

Crowdfunding has become a popular fundraising method in Australia for a lot of reasons. A good reason is that it forces you to set goals and holds you accountable for meeting them.

And even if you don’t successfully raise the money for your business, you will still be able to generated buzz about your idea since people tend to share stories about projects they’ve backed. You will also get to pitch your idea to potential customers and investors.

But of course, you want to be the startup whose success story gets featured by major media outlets. So before you fire up your campaign, check out this guide first.

Crowdfunding Methods

Basically, there are two methods of crowdfunding. The first is equity crowdfunding, where investors pay to own a slice of the company. The current law in Australia, however, limits participation to wholesale investors or those who earn at least $250,000 or have $2.5 million in assets. Nevertheless, the law is expected to change to allow most Australians to participate.

The second one is rewards-based crowdfunding, where people who contribute money to an unbuilt product are guaranteed to be among the first to receive it if the project meets its funding goal. Platforms like Kickstarter and Indiegogo are the most well-known platforms for this.

Creating a Winning Campaign

Here are several ways to make sure you get the most out of your crowdfunding project.

  • Target a real problem.

People back up products that are useful and solve a real problem they have. You need to be able to communicate the essence and benefit of your product right away, or you’ll fail to attract interest from backers.

You don’t have to create a new market for your idea – you can simply improve on what’s already out there. As long as it solves the pain points of its target consumers, it will likely sell. A good example of this is the Flow Hive, a beehive with a tap designed to make the process of collecting honey easy and painless. Stuart and Cedar Anderson, the people behind the idea raised a whopping $US 12.3 million on Indiegogo.

  • Set a realistic funding goal

Figure out how much you will need to get from the idea stage to shipping the final product, but don’t set that as your crowdfunding goal. Crowdfunding shouldn’t be your only source of money. Before launching your campaign, you should already have invested your money to build prototypes or samples.

Your goal should be an amount that you are confident you can reach. If you set that high enough to cover the costs of developing and manufacturing your product, you will more likely meet your goal. What’s more, people love to back winners. So if they see that you have blown past your initial funding goal, they will be keener to contribute.

  • Create a killer pitch

This is your chance to show people the real value of your product as well as your vision. Your pitch will have a huge impact to your campaign’s success. Be as creative as you like – creative a video presentation, an interactive model, etc.

When making your presentation, don’t simply talk about the features but instead focus on how your product can impact people’s lives. But when it comes to the features, make the audience see how distinct your product is from existing ones. Engage your backers and always be positive in your dialogue with the market.

Even if you don’t have a prototype yet, you can pitch your idea using drawings and renderings. The basic goal is to get validation of your idea while building the momentum and audience for your launch.

Last words

Managing a crowdfunding takes a ton of time and effort, but the rewards are well worth it. Make it a full-time project involving everyone in the company and apply the above tips smartly. Who knows, your project could be the next big success story?