Crowdfunding, especially for small businesses who lack large amounts of capital, has exploded in popularity. Many startup entrepreneurs employ crowdfunding because it helps to share their brand and establish a loyal following in addition to securing funding. Getting personal with audiences and sharing your mission is imperative in crowdfunding as it runs on trust to some extent. However, there are several types of crowdfunding platforms that may not be right for every small business or startup. Therefore, finding the right platform is a crucial first step. As a crowdfunding investor, it’s important to know the advantages and disadvantages of various crowdfunding campaign styles. Read on to discover campaign ideas for crowdfunding for small business startups.
Equity-based crowdfunding is one campaign idea for small business startups. Using this method, donors will receive shares in your startup. The amount of their contribution determines their number of shares. Contributors choose to invest only in companies they believe will be successful. The success of your startup will directly influence the return on the donors’ investments. This makes equity based crowdfunding great for small businesses with established plans for growth. However, you will have investors in your company, which can result in bumps in the road, such as increased regulator scrutiny. Surely, equity-based crowdfunding is great campaign idea for crowdfunding small business startups.
Donation-based crowdfunding is another campaign idea for small business startups. These are great for local businesses and to manage non-profit organizations, as there are no fees or anything to repay. Campaigns of this type run simply on donations with no obligation of any return to your donors. All you need to do is set up a campaign and ask for donations, but this alone will net you few donors. For this campaign idea to really work, it needs to be supplemented with a stellar marketing plan in order to solicit more donations. Absolutely, donation based campaigns are an amazing crowdfunding idea for small business startups.
Subscription-based crowdfunding works very well for more niche business ideas, such as freelancers. It’s an incredible way for creators of various projects to build an audience as well as income. Projects can include photography, music, writing, comics, podcasts, animation, and more. Individuals who stumble upon these projects can become donors by giving however much they see fit. In this way, these donors will be directly supporting the business endeavors of these creators. Subscription based campaigns will not immediately earn massive investments. However, creators get to keep the donations they receive minus a small, usually 5%, fee. In addition, you can run this campaign indefinitely to continue earning supplemental income. Of course, subscription-based crowdfunding is great for small business startups.
Reward-based crowdfunding is probably what most people think of when considering crowdfunding, as it’s the most widespread campaign type. Backers are offered a reward for their investment, and what that reward is depends on your business and mission. Examples include product discounts, early access, or even their names on bricks used in your building. You can also make business t-shirts online to use for your rewards. Look at other small businesses and startups using this model for more reward ideas, as well as common investment amounts. Indubitably, rewards-based crowdfunding is an awesome campaign idea for small business startups.
Debt-based crowdfunding is the final campaign type for small business startups. It works very similarly to traditional business loans in that money raised must be paid back. One benefit of this campaign type is that donors use different criteria to evaluate and qualify borrowers than regular banks. Your industry, length of time you’ve been in it, and your risk level matter more than your credit score and history. However, note that you will need to meet higher qualifications for larger loans. Certainly, debt-based crowdfunding is an incredible campaign type for small business startups.
There are many types and sources of crowdfunding campaigns with various levels of efficiency for small businesses and startups. One such campaign is equity based, with donors owning shares of your company. Another is donation based, with no obligations to reimburse donors. Third is subscription based, allowing donors to directly fund creators they engage with. Rewards based campaigns also offer a lot of freedom in how donors are repaid. Finally, debt-based crowdfunding allows you to receive loans of sorts without traditional requirements. When considering the best campaign ideas for crowdfunding small business startups, think of the points above.