Seven tips for crowdfunding your business

Esther Shaw / 26 March 2015

Crowdfunding is a way to raise funds for a new business by asking lots of people to invest smaller amounts of money into the venture. Esther Shaw shares her top seven tips for crowdfunding a new business.

If you are looking to start up your own business, you may be exploring different ways of raising capital.

Crowdfunding is a fast-growing sector, and one that you may be keen to tap into.

But if you do decide to go down this route, you need to proceed very carefully, as there will be a lot of other new ventures competing for the attention of potential investors.

Here are a few tips to help you crowdfund effectively.

Not sure crowfunding is for you? Read our eight ways to raise money for a new business. 

1. Stand out from the crowd

When trying to raise money from the “crowd”, you need to hone your pitch so that it has widespread appeal.

While investors will like the idea of supporting a growing business, they will be comparing lots of different ventures online so you need to make your idea stand out from the crowd.

Whatever you do, don’t use jargon. Explain things as simply and clearly as you can, and use plain English at all times.

2. Put in the hours

The worst mistake you can make is thinking that raising money will be easy.

It is real work and requires hours of hard graft.

Be prepared to put in the time needed to doing your research so that you become an expert. That way, you can fully engage the investor community and get them to buy in to your idea.

Try to come up with informed answers to the questions you could potentially get asked, and expect to interact with potential funders on an almost daily basis.

3. Show some personality

Bear in mind that investors are more likely to buy into a personality, so try and be interesting and engaging.

Develop a narrative so that you have a story to tell – and do your best to be original.

4. Be passionate

Show lots of passion for your idea, as this will help investors get passionate about it too.

Harness this enthusiasm, as like-minded followers may even be able to provide advice and open doors – and this could be invaluable.

But how does crowdfunding actually work? Read our guide. 

5. Transparency is key

Don’t try and pull the wool over the eyes of your investor community. Transparency is key to the crowdfunding process.

6. Get family and friends involved

Talk to family and friends and get them to help you kick-start the funding process.

If potential investors see that other people are showing an interest, this will make them more likely to jump on the bandwagon.

Equally, if your nearest and dearest are reluctant to invest, think carefully about whether your new venture really is as good as you think it is.

7. Make use of feedback

Potential funders will rake over your idea in great detail during the crowdfunding process, and are likely to tell you exactly what they think.

While it may be hard to take criticism, you should take all this feedback on board, and try to see this as a positive.

After all, comments and thoughts from investors should help you make your business even better in the long run.

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.