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Crowdfunding your startup takes some work

posted Jul 1, 2014, 2:53 PM by Siamak Ebarhimi

One of the most commonly asked questions by clients of our SCORE mentors is “How do I get financing when the banks won’t talk to me as a startup?”

Entrepreneurs who don’t have that rich aunt now can look to the Internet for funding and investors.

Crowdfunding on sites like Kickstarter and RocketHub offers the ability to raise capital without giving up equity or accumulating debt, by allowing entrepreneurs to raise capital from the public in exchange for tangible rewards.CrowdFunding advertizing

According to Marco Carbajo, a guest blogger for SCORE and CEO of the Business Credit Insiders Circle, it’s not as simple as creating a campaign, clicking the submit button and waiting for an idea to go viral.crowdfunding websites

This “set it and forget it” attitude is the number one reason why crowdfunding campaigns fail, Carbajo says. But it’s one of the best ways to attract investors, he says, offering several steps before launch:

  • Perfect your pitch. Let your passion shine through! Write your preliminary draft, include pictures, a video explaining your vision, the offer and why you someone should invest in your business. Send it to family and friends to get feedback and make improvements.CrowdFunding marketing
  • Identify key backers. Once you’ve perfected the pitch, start locating initial backers before launching your campaign.
  • Test your rewards. Start by testing your reward ideas with your personal network, make adjustments so it is unique and memorable.
  • Get prepledges. Obtain commitments from those people who fully support your business idea and will be there to invest when you launch. Secure 20-30 percent of your funding from initial backers as it helps build campaign momentum.Kickstarter Marketing
  • Find the right crowdfunding site. Forbes lists their 10 best sites.
  • Once you perfect the pitch, test your rewards, get prepledges and choose a reputable crowdfunding site, establish a marketing strategy to reach your target audience so you can advance the momentum of your campaign once you go live.Indiegogo Marketing

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By David Khorram