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Raising money for a project or a business is never an easy endeavor. I’ve raised money via crowdfunding myself and also advised a number of firms on strategies to support their success. There are now many successful campaigns that have been completed in the region and people who have raised money from the crowd are usually willing to share their lessons learned. Here are 8 things that I have learned about raising money via the crowd and I hope they are useful to you.  

1. Plan, plan, and plan to succeed: If you think that successful campaigns just happen, you are mistaken. Talk with any successful crowdfunder and you will discover that it is not easy to be successful, but if you work hard, you can raise the capital you need.  How will you start your campaign? How will you communicate with contributors each week of the campaign so that the communication is fresh and interesting?  What sorts of rewards or thank you’s will you provide? How will you manufacture and deliver your products to those that have pre-purchased them? Answering these types of questions is important in your planning.

2. Measure your social network: How much money do you need to raise? How many people are in your social network? What is the average amount of money per person do you need to raise if 25% of your social network contributes to your campaign? Thinking through the numbers is important so you know where else you need to grow your network…not only in numbers, but also in influence.

3. Build your social network: The social media expert Gary Vaynerchuk says that you must give to your network 10 times before you ask for something once. Demonstrate you are an engaged member of the online communities you are in (Facebook groups, LinkedIn groups, real world organizations, etc.) before you ask them for contributions/investments.

4. Pre-raise your early contributions: Before you publically launch your campaign online, talk with your family and very close friends. Ask them personally and directly for their help in raising funds. Let them know that any amount they contribute is deeply appreciated and that you really need them to contribute in the 48 hours prior to your public launch. Research has shown that campaigns that reach at least 30% of their funding targets have an 80% chance of reaching their end goal. The faster you can get to 30% the better. If you talk with your family and close friends in advance, hopefully by the time you begin to send communications to the rest of your social network, you are already at 25-30% of your campaign goal.

5. Notify your social network in waves: Think of it in concentric circles; start with your famil, then move to communicating with you close friends…then your friends….then you business colleagues…then your acquaintances…then the wider world. The more success and momentum you can gain, the more likely that those outside of your close circle of friends are to contribute to your campaign. People like to invest in winners.

6. Two words to repeat constantly, “Thank You”: When you go down the path of crowdfunding there will be many people who come out to help. Make sure to thank them along the way. When investors contribute to your campaign, make sure to thank them. Be grateful for every investment pledge you receive, no matter the size. The best way to engage your crowd and build good will is to thank them!

7. Silence is NOT golden; communicate with your investors and contributors: Investors never like to be left in the dark. They understand that you are working diligently on their behalf but they also expect you to communicate what you are doing to them. Come up with a communication plan and leverage the investor/contributor relations tools that your funding portal offers to make sure that you are properly engaging with your investors on a timely basis. Here’s the good news: if you aren’t, they’ll let you know.

8. Engage your investors: Don’t have all the answers? That’s one of the best parts of crowdfund investing. Your crowd comes not only with money but with knowledge, experience and a vast Rolodex. Use it! Your investors have a vested interest in your success and you should form an informal board of advisors and establish subgroups for sales, marketing, public relations, graphics, design, operations, and finance. Ask your investors to join a group and engage them. Also, look for one or two mentors among your investors to guide you. Confused as to where to keep all their valuable information? Use Dropbox or Google Drive to store shared information. Use social media to keep your investors informed. To streamline communication, create an email inbox for questions from your investors.

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More about Jason Best

Jason Best is Co-Founder of Crowdfund Capital Advisors.  He is one of the 3 entrepreneurs who wrote the original crowdfunding regulatory framework that became the crowdfunding language in the JOBS Act.  His firm now provides advisory services to investors, governments,  NGOs and entrepreneurs on crowdfunding strategy and implementation.  You can follow him on Twitter:  @CrowdCapAdvisor or reach him at Jason@theccagroup.com

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