Crowdfunding has quickly become everyone’s favourite way to turn an idea into reality. Much is now written about alternative finance channels, how much to ask for, how to write the perfect pitch and how to get it out there but what about the boring things you don't always think about when you're in the throes of excitement about your new idea?
1. Check out the fees
"You'll wanna think about fees," says Jessica Ratty from Crowdfunder, as some sites charge fees on each pledge, "for example, what does Paypal charge? What does Stripe charge? Look into the platform you are using. You'll want to plan for those aspects and wrap in into your target," she says.
2. Think about who you want as a brand ambassador
Yes the money is important, but, says Seedrs' senior campaigns associate, Tom Horbye, "it is a very public way of raising capital so if your business isn’t interested in benefitting from having hundreds and thousands of investors acting as brand ambassadors and evangelist of the business, or the market exposure you can get from doing a crowd raise, then this financing route might not be best for the business."
3. Read a grammar book
Ensuring you sound professional and reliable at all times is really important. Says Horbye "Make sure everything is proofread, from the written campaign to the answers in the Q&A section. It is really easy to type things up on your phone when you’re on the go or in a rush, but make sure it all looks and sounds slick before pressing post as those little mistakes can be damaging to an investor's trust."
4. Get a legal eagle on side
It might feel like something you don’t need to think about until your idea has a million backers but getting good legal advice up front is crucial. A good legal eye won’t just advise on what type of crowdfunding and platform is appropriate, as well as ensuring your corporate structure is sound, advising on current and future shareholder relationships, protecting IP (intellectual property) and advising on potential employment issues.
5. Remember the big tickets
"Even if you bring a third or more of your investment target before you launch on the platform, you as the founder(s) still need to bring in further big tickets after going live for the crowd to properly engage," says Maya Kumar, founder of Get Smooth, the vetted barber marketplace, which has launched its first campaign on Crowdcube. "The crowd is encouraged by these large investments as they demonstrate confidence in the idea. This network effect is more likely to be triggered if you hit your target, not before. Founders who bring in those big tickets after going live and hit their target with still a few days or even weeks left on the platform, will often draw a greater swell from the crowd and see over funding."
6. Think about the humans behind the platform
"Tap up the team behind the platform, you'll never know how they can help you unless you ask," says Ratty, "Yeah crowdfunding is a tech-solution to raising funds and awareness, but all platforms have humans behind them."
7. Firm up your supply chain
The campaign itself might be thrilling but there are plenty of things that need to be lined up before you start. Make sure you have ecommerce, supply chain and distribution ready to go to fulfil the orders you might suddenly have to ship.