Got Crickets to Crowd Fund? Alex Drysdale is the founder of Crik Nutrition , a company that sells made with crickets protein powder (yes, the insect!). If Drysdale his company launched in 2014 to life, he was planning to get a loan to finance start-up costs. However, since he had a unique product, he chose instead crowdfunding.
Drysdale launched a crowdfunding campaign on Indiegogo.com and ended $ 16.428 by 191 supporters in 22 countries raising.
The support of so many people from such different places showed Drysdale that he had a viable product. The money allowed him his first inventory to free up finance of debt. Most of his donors receive protein powder sample packs or tubs of protein powder in exchange for their contributions.
Have to collect money, want to with crowdfunding? In this manual, the following:
- How Crowdfunding Works: Reward crowdfunding, equity crowdfunding, and debt crowdfunding
- How Crowd Fund successfully
- Best crowdfunding Sites
How crowdfunding Works
[1945002eineProdukteinführungzufinanziereneinInventarKaufodereinanderesProjekt] crowdfunding is when many people small amounts of money to help your business. According to Huffington Post, there are more than 2,000 crowdfunding platforms worldwide. The data from Eligible, one of these platforms shows that the average small business $ 7,000 raised through crowdfunding, and the average length of a crowdfunding campaign is 9 weeks.
When you visit a crowdfunding website, write a campaign people a little about your business to say, try to project that you are to be funded, and how much money you try to increase. People can change your campaign, and if they want to make contributions display.
crowdfunding platforms to make money a fee by charging when you raise money. This may be a small percentage (5% usually) be the agent that you increase or a monthly fee. There is also the processing fees credit card of 3-5%, which are charged when the people in to you with a credit or debit card. When you have finished collecting money, the money is transferred to your account
There are three main types of crowdfunding for business for charitable .:
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reward crowdfunding (Learn more)
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equity crowdfunding (Learn more)
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Debt crowdfunding (Learn more)
These distinctions on the what you give to people who contribute money for your business (we do not cover donation crowdfunding in this article, because it primarily for charitable purposes, personal causes and nonprofit )
crowdfunding Reward
who it's best for: Early companies that want less increase than $ 100K within a few months
Examples :. Kickstarter, Indiegogo, RocketHub, Eligible
Alex Drysdale, founder of Crik Nutrition, raised over $ 16,000 from on Indiegogo crowdfunding.
reward crowdfunding is the most common type of crowdfunding. In this type of crowdfunding, visit the crowdfunding website and list a website contains information about your company, the project that you are to be financed, and let your financial goal. Most anyone 18 years old and lives in the US can be a reward crowdfunding website.
The people who donate money for your business, are classified as "advisers." In return, you give money to your sponsors a reward. Typically, the higher a backer contribution, the better the reward that he or she gets.
For example, Drysdale of Crik diet started by simply offering thanks to its smallest donors. However, it rewards people who were more with sample packages of his product, company brand clothing, and even full-size products.
startups that sell consumer products and visually appealing products are usually the most successful with reward crowdfunding. Campaigns can take up to 60 days on most platforms, but those that last 30-39 days or less are the most successful in the rule.
Pros of reward crowdfunding:
- Allows you money for your business debt-free [toincrease
- profits your company by , which will hopefully stay with you as your business grows. The same advisers can assist in future crowdfunding campaigns.
- Produces Marketing and PR for your business [1945010[
- for all companies not working - B2C companies with a product that are visually appealing most successful. Think tech gadgets, clothing, crafts, and food and beverage products. Calculate
- Crowdfunding sites charges (usually 5% of the amount you increase and 3-5% processing fees credit card)
- most crowdfunding sites, with the exception of a few like Indiegogo and RocketHub are all-or-nothing . This means that if you do not your funding to achieve target, you need to keep any money you raise.
- you need How much money to increase?
- As the full evaluation of your company 'not compare? For example, if your company worth $ 500,000 and you have to raise $ 300,000 investors will own 60% of the business. That's a big part of the property, so that the investor can exercise a high degree of control over the day-to-day operation of the company. The review is the estimated value of your company at the time of investment. Click here for a good guide on how to value a small business.
- How fast do you want to raise money? For more regulation, equity crowdfunding usually takes a little longer than reward crowdfunding. Equity crowdfunding campaigns usually last 1-3 months.
- You can large amounts of capital [1945002erhöhen] , up to millions of dollars
- works well for B2C and B2B company
- investors means that you must some control ad about how your business is running
- There are several laws you must follow.
- Some sites are all-or-nothing , so that you may not be able to keep any money if you not meet your financial goal.
- can be obtained by large amounts of capital , up to $ 500K.
- to quickly get money , usually within 1-2 weeks.
- works well for B2C and B2B companies [1945010[
- the interest rates can be high , generally from 5 to 30% depending on your credit rating.
- In addition, calculate the interest, debt crowdfunding sites charges or other fees. could be [1945025Originationkann] you have a personal guarantee and lien put on your business assets , to sign. This means the crowdfunding platform can come to the assets if the loan is not repaid on time.
disadvantages of reward crowdfunding :
equity crowdfunding
Who it's best for :. startups and established companies that want to raise more than $ 100,000 over 2-3 months
Examples : Eligible (also does reward crowdfunding) , Indiegogo (also does reward crowdfunding) SeedInvest, Angel list, CircleUp
Evelo employees with their bikes. Evelo raised over $ 750,000 through equity crowdfunding site SeedInvest.
With equity crowdfunding, you not only give a small reward to your donors. Give them ownership interest in your company. Your donors are investors in your business.
Until recently, only accredited investors (those with at least $ 1 million net worth or income of more than $ 0K / year) could invest in companies through equity crowdfunding platforms. However, Title III of the JOBS Act, which comes into force on May 16, 2016, allows anyone to invest in a business through equity crowdfunding. This may be a big game changer , because it expands the pool of potential investors for your business.
reward Compared crowdfunding, are more rules and regulations that you must follow with equity crowdfunding, to ensure that you will violate any punishment or any laws. The crowdfunding platforms you are with some of these help, but you should also know the rules safely. For example, you have to be a company to be eligible and must meet certain financial data to the Securities and Exchange Commission and to investors disclose before you can raise money. Here is a good Article with more details on the rules you must follow in crowd fund equity your business. Although not required, you will also have a good pitch cover (similar to a business plan) have to share with the investors.
One question that small businesses often ask what terms should I offer investors? Here are some things that have to decide:
Ultimately, the terms are too vary based on the type of business you have. Jonah Bliss, Director of Marketing & Communications at Evelo , an electric bicycle company that raised $ 750,000 through crowdfunding website SeedInvest says that his company " wanted to provide an adequate amount to our community, so it felt really bought in." at the same time, they did not lose the ability "to control the company or raise more money than we really needed or could use wisely. We ended up doing a 2.5X multiple of our sales at the time of the review, and finally, 15% of the company offered. "
startups are best suited for equity crowdfunding generally. However, if you have an established business, you can still equity crowdfunding try if you have problems, money had to increase by venture capital firms or other conventional routes.
Pros of equity crowdfunding:
Cons of equity crowdfunding:
Debt crowdfunding
Who it's best for: Established businesses have owned on average credit but want a loan quickly or have had difficulty qualifying for a bank loan had
Examples : many different people lending money to your business lending Club, Prosper finance district
with debt crowdfunding. You need the loan with interest within a specified period, usually 1 to 5 years to repay. Debt crowdfunding is sometimes called Peer2Peer credit Peer2Business credit.
On most platforms only entrepreneurs with good credit are eligible. This means that you should have a credit score of at least 620 (check for free at Nav your credit score). Good credit is usually all you need if you just want a personal loan of up to $ 35K.
If you want a larger loan or a business loan, those are usually only open to companies that have been for at least 2 years in use. You should also have good credit and a minimum $ 75,000 annual business revenue.
The interest rates on loans Crowdfunded is usually anywhere from 5% for those with excellent credit for those 30% with an average credit. Debt crowdfunding is actually the fastest way from all types of crowdfunding capital for your business-just to get to answer a few questions about your business, and if you have permission, you can use the funding in 1-2 weeks.
Fit Small Business has to get a lot of resources for entrepreneurs interested in loans. Start here for an overview of options loan business
Pros of debt crowdfunding .:
disadvantages of debt crowdfunding:
How Crowd Fund successfully
Crowdfunding can be a great way to raise money for your business, but it does not work for everyone , In fact, to reach only around 35-40% of crowdfunding campaign on Kickstarter, the largest crowdfunding sites, their funding goal. These are some tips on how to successfully crowd fund:
1 time to your campaign strategically.
Before you can begin to collect money must, the crowdfunding platform approve your campaign. This may take a few days, so if you have a product launch have come or want to increase your money at any given time, factor that in when deciding if your campaign to the list.
Having your campaign list, you will need to decide how long to keep your campaign openly. There are different data, but in general, reward crowdfunding campaigns that take the most successful of less than 40 days . Equity crowdfunding campaigns can take longer because more paperwork and money involved. On debt crowdfunding sites the platform will determine initial eligibility and list your loan for 1-2 weeks. During this period, investors can see your loan application and loan money.
If your campaign is successfully funded, can take up to 2 weeks to process all your advisers "payments and transfer them over to your bank account. Again, make sure that you in this time factor, if you have a start to come.
2. Send us your "crowd" About your crowdfunding campaign.
There is not enough to start only a crowdfunding campaign and sit back and wait. spreading the successful crowdfunding campaign through word-of-mouth. Let your family members and friends, Facebook friends, Twitter followers and LinkedIn connections on your crowdfunding campaign before it goes live, and as soon as it is at home. Sometimes the local media to publish stories about local crowdfunding campaigns. This is free marketing and PR for your business.
There are even companies like Kick Booster , which can be word-of-mouth referrals maximize. You can use them to your network, you pay people increase the word about your crowdfunding part of the funds that will help you campaign.
3. Tell a compelling story about your business.
Crowdfunding has a very personal human element. While this is easy to forget, because all the work is carried out on a computer, these real people who are currently out of their busy schedule, take to give the money.
to convince them to support you, says Bliss, " It is important to have a product that people are passionate about. You need something that they want to feel that they make a part of their lives, something that make the world better, or something that they can not live. But it should also be something achievable and realistic. "
It helps to inject a personal element in your pitch. For example, here is a Kickstarter campaign for flatev , a company that sells a tortilla maker. They raised $ 75,000 (about $ 50K their goal) from 355 backers:
“Founder and CEO Carlos was born and grew up in Guadalajara, Mexico eat his mother fresh tortillas. After high school, he had the opportunity to travel to Canada to learn English, backpacking through Europe to discover new cultures, and went in Switzerland to school. During his travels, Carlos could not find authentic Mexican food, either in restaurants or in supermarkets.
Good tortillas are the foundation (literally and figuratively) of Mexican cuisine. But outside of Mexico, good tortillas are very hard to find. When Carlos tried tortillas with his mother recipe from scratch to make new on, everything he did was a mess. Carlos got frustrated, and he understood why so few people to make tortillas from scratch. "
The company then goes on to describe how flatev solve that frustration.
4. Invest in Professional photos and / or videos.
Yes, we know. looks should not matter. But on crowdfunding platforms, looks matter a lot.
now invest in professional photos or videos of your product or service, some money will help your story teach and show potential lenders that you are a credible business.
This Indiegogo campaign SpeedX Leopard , a road bike with technical control, thinking is a good example of how good imagery can improve a crowdfunding campaign. SpeedX raised over $ 2,000,000 Indiegogo. remember, even if It will fail your crowdfunding campaign, you can view the photos and videos on your website. So the money will not go to waste.
5. Know how much you raise money you need.
This may seem like a no-brainer. You can not crowd fund without knowing to how much money you raise. However, your crowdfunding goal setting be difficult. You need to consider to make the cost of it increases, market, sell and ship your product.
If you are using reward crowdfunding, you also need to take the rewards you take into account and the amount of money are offering it will take to ship them their rewards. Alex Drysdale, who used crowdfunding money for his cricket protein powder to increase business, said: "Before crowdfunding, I spent time with various camps to talk and get them to appreciate dozens of broadcasts, so I knew what would this cost. "
6. If you are crowdfunding rewarding offer good rewards and communicating with Backers
James Fayal, founder of Zest Tea, a manufacturer of high-caffeine products. Zest Tea raised over $ 10K to reward crowdfunding site RocketHub.
If you are a rewards platform like Kickstarter crowdfunding are, of course you should offer rewards attractive to increase the chances of a successful increase. Many times, potential donors comment on your record, and you can ideas about what you should offer. The reward scale according to the amount of support. Someone who contributes $ 500 your business should be a greater reward than someone who contributes only $ 50.
Even if they are successful in obtaining money, communicate regularly with your funders. This is especially important if your product launches later than expected, because it may be delayed if donors receive their rewards. Backers are understood quite generally, if your schedule changes, as long as you communicate well.
A well run crowdfunding campaign can reap rewards for a long time after the campaign ended. James Fayal, CEO of Zest Tea a company that produces high-caffeine makes tea product and the increase over $ 10,000 on RocketHub, says: " used Means were finance our first batch of production, but the biggest benefit we received from the campaign, the enthusiastic customer base our first donors many times had created it. repurchased and referred new customers, revenue has performed the initial funding totaling. "
7. When you have equity crowdfunding, the rules get right.
equity crowdfunding sometimes small businesses get into trouble for not following SEC rules and regulations. Stay in the clear by understanding and complying with all SEC rules . Contact an attorney if you are unsure.
8. If debt crowdfunding, your credit score increase.
on debt crowdfunding platforms, your credit score is very important. It determines whether you are also entitled to raise money and the interest rate that you receive. For example, the difference between a 650 credit score and a 750 credit score, the difference between a 30% and 10% interest rate. You can store thousands of dollars over the course of time. Check your credit score for free at Nav if you are not sure what it is.
Best Crowdfunding Sites
As mentioned above, there are more than 2,000 crowdfunding sites. However, a lot of sales happening with crowdfunding platforms. They join relatively quickly if it does not happen enough activity and funding on the website. The following 7 companies are relatively stable players and are a good choice crowdfunding to give a chance:
Best Reward Crowdfunding Pages
Kickstarter : is a kickstarter of the largest global reward crowdfunding sites. It is open to almost all individuals over 18 years old in the US and some European countries. Kickstarter, a self ", a platform for creative projects" is raise a good way for design, technology, film, games, crafts, music and similar companies as money. It is an all-or-nothing-platform, so you need to reach your financial goal to get money. When a project is successfully funded Kickstarter takes a 5% cut in the fees due. There is also an additional payment processing fee of 3-5%
RocketHub . RocketHub is another great reward crowdfunding website. As Kickstarter, most anyone who can 18 years old is a list campaign on RocketHub. Its circumference is a bit wider than Kickstarter. While they do fit to creative professions, there are also many other types of businesses on RocketHub. RocketHub says their average contribution per Backer is $ 75.
RocketHub is one of the few crowdfunding sites (along with Indiegogo, see below) that is not all or nothing. However, you have to pay a higher fee if you do not reach your goal. Companies hit their target, pay a fee of 4% and a 4% credit card processing fee. Companies below to pay an 8% fee plus 4% credit card processing fee.
Best Reward & Equity Crowdfunding Sites
Indiegogo Indiegogo is currently the largest site global crowdfunding for creative and entrepreneurial projects. Most people over 18 years old on Indiegogo crowd fund can. It provides both equity and reward crowdfunding. Indiegogo has some useful tools for fundraisers. For example, they will help you fill orders through their association with Amazon.
You can also choose an all-or-nothing or flexible fundraising model. If you choose flexible, you can keep what money you raise even if it does not exceed your goal. Very few other platforms allow you to keep money if you do not your funding to achieve target. The cost of Indiegogo is the same as kick starter. Indiegogo takes a 5% reduction in funds that you gather, and there is an additional payment processing fee
Eligible .: Eligible, as Indiegogo allows both reward and equity crowdfunding. It is an all-or-nothing model, and it is specifically for businesses. Eligible must not cut from funds you collect. Instead, they demand a flat monthly rate of $ 179 plus credit card processing fees. This makes them more budget-friendly for small businesses seeking to raise a significant amount of money.
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