Crowdfunding has really grown in popularity over the years as an innovative way to help people find the money they need – from hundreds of pounds to hundreds of thousands of pounds – to start up and grow their business.
Before we talk about the different types of crowdfunding options available to you, it’s useful for you as a woman business-owner to know that other women really like crowdfunding. It’s a simple and effective way for them to support other women in business, especially if you are developing a product that they as women really understand.
Research shows that women are more likely to get funded than men through crowdfunding because women are considered more trustworthy – a positive side to gender bias for a change!
How does Crowdfunding work?
Crowdfunding works a bit like what a Scottish granny used to say: “Mony a mickle maks a muckle!” Lots of small amounts of money from many different people add up to quite a lot. Have a look at some our case-studies here to see how women just like you raised tens of thousands of pounds to start up and grow their businesses.
There are lots of different types of crowdfunding, but they all work in broadly the same way. You create a fundraising campaign with a target amount to raise on an online platform and this platform enables you to showcase your idea to people over a set period, usually around a month.
During this time people invest or donate money and if you reach your target of say £10,000 within the set timescale, that money is then sent to you (after some fees are deducted) for you to develop your business.
In return for the money you either give a reward to people (rewards-based crowdfunding) or people have an equity stake in your company i.e. they are a ‘shareholder’ (equity-based crowdfunding) or you have a loan to repay (peer-to-peer crowdfunding). For donations-only crowdfunding you don’t need to give your backers anything – except a heartfelt thank-you!
Depending on the platform used, if you don’t meet your fundraising target you might not get any of the money, so it’s important to think carefully about setting an achievable target and choose the platform that’s right for you. With the WBC crowdfunding platform you get to keep all the money you raise, whether or not you meet your target – you will have put a lot of work into your campaign so it’s only fair that you are appropriately rewarded for that!
See here for more information on the different types of crowdfunding platforms.
The benefits of Crowdfunding
Aside from raising much-needed money, other benefits of crowdfunding include being able test your idea and get customer feedback before you launch, creating a group of supportive customers that give you a ready-made community you can sell to and generally making your product and company much more visible to a wide group of people outside of your friends, family and colleagues. It can be a real confidence-booster! And all for free…although it does takes quite a bit of hard work and you do need to be organised and plan ahead.
Crowdfunding is not just for businesses developing new products – you can crowdfund for service companies too. And it’s not just for new companies – you can use it to grow your established business and can do as many crowdfunding campaigns as you need to over time.
Crowdfunding tips
There’s lots of guidance and tips available throughout the Women’s Business Centre to help you with your crowdfunding campaign. And for women raising funding through the WBC platform, we provide a woman-friendly safe-space support system, including weekly group and one on one mentoring sessions. There is no need to feel alone or daunted by crowdfunding – we are with you every step of the way.
But as you start thinking about crowdfunding, here’s some general top-line tips to help you get going:
- Take time to look through other campaigns to see what has worked for others and how you can adapt that for your campaign.
- Give yourself plenty time (about a month) to plan your campaign before you launch
- Build up a contact list of key people and organisations you want to contact early on to get you up and running quickly with donations – ideally you want to have 25-30% of your campaign pledges pre-approved and paid in the first week.
- Get some really good images and videos of your team and your product and set up your social media channels before you launch your campaign.
- Make sure you let your story shine through, people are interested in you as people and how they can help make your dreams come true. Trust, authenticity, purpose and passion are crucial for building your community of supporters.
- Make sure you allocate time for regular campaign updates, at least once a week and preferably more. Your supporters like to feel involved in your journey and will become your long-term advocates.
- You really need to work at crowdfunding – the more work you put in the more you get out – so make sure you manage your time and your expectations.
At WBC we genuinely believe that any woman who wants to start her own business, large or small, can do it. There is no better feeling in business than being in charge of your own destiny…apart from the time when your first hold in your hands a product that you yourself have conceived and developed! Maybe crowdfunding will help you experience those wonderful feelings?
Sign up for news and updates about Crowdfunding here.
