Crowdfunding Marketing

A Guide to Crowdfunding Marketing: Problems & Solutions

Crowdfunding marketing is the practice to drag the attention of investors to ventures. As the name itself suggests, it not only attracts one or two major investors but also points to a crowd. You need to do this process before, during, and after launching the project. The right investors will understand the scope of investing in your business and give you money to fuel the operations. An effective crowdfunding marketing campaign works toward attracting only the right venture capitalists, surpassing the possible challenges. In this article, we have tried to include all the issues and solutions associated with making a crowdfunding marketing campaign. But before that, let’s know what are the major types of crowdfunding.

Types of Crowdfunding

Finding a stockholder to back up your business in order to run the operations smoothly in the market, there are four major ways for investors to grab the opportunity. They are as follows:

Reward Crowdfunding:

In reward crowdfunding, investors do not expect a share in the business or any kind of return in monetary value. They anticipate future returns in the form of goods or services. The company seeking funds provides investors with some special benefits of their premium services or products. There are some features you need to know if you are doing reward-based crowdfunding, such as:

  • You are not required to return the funds; simply provide the services you promised.
  • You are bound to deliver the rewards on time.
  • Reward crowdfunding is good for startups because it helps launch their products at an early stage.

Donation Crowdfunding:

Donation crowdfunding is a boon for startups looking for funding to stay in business and make significant moves. In this type of crowdfunding, the investors voluntarily put their money into a business without expecting anything in return. Wow! Such a philanthropic thing, isn’t it? Usually, it is a small amount of money, but if a bunch of investors gather and donate, it can be much more beneficial. Here are some features of donation-based crowdfunding:

  • It works by reaching out to large numbers of investors to donate small amounts of funds.
  • There is no burden to repay the returns, so the firm can focus only on its growth.
  • It is the best option to raise funds even after banks have rejected your request for a loan.

Equity Crowdfunding:

In contrast to donation and reward-based crowdfunding, equity crowdfunding allows investors to expect some ownership of the venture. It becomes easier for fund-seeking companies to raise capital from investors because there is financial security associated with it. There are various dedicated online platforms to make this transaction happen. Indiegogo, Patreon, and StartEngine are great examples of such specialised platforms. Some features of equity crowdfunding are:

  • Because the online platform is a medium, it keeps the process smooth for both parties.
  • Online equity crowdfunding platforms can accumulate funds and turn them into a single investment.

Debt Crowdfunding:

Crowdlending is another term sometimes used in place of debt crowdfunding. In this type of crowdfunding, startups raise capital for their operations by paying interest on the acquired funds. Lenders go for debt-based crowdfunding keeping the possible gains and losses aside. This type of funding can have low interest, high interest, or even no interest at all. You can include the following features:

  • Investors get the opportunity to keep a fair amount as a return, which comes in the form of interest.
  • The process is easier in comparison to bank loans and other types of crowdfunding.
  • It is a fast, easy, and secure way to raise capital for any venture.

Challenges in Crowdfunding Marketing with Solutions

No matter how many better opportunities you get, there are always some barriers that you have to face. There is always a risk associated with every decision. If you receive loan approval from a bank, you must repay the loan within a certain time frame or they will charge you with bankruptcy. If you talk about angel investors, you may lose dominance over your business. So there can be a lot of issues while running a crowdfunding campaign. Let’s discuss it in detail and see the solutions.

Building Trust:

Trust is the major issue in crowdfunding as it involves risks and chances of losing investors’ money. Your crowdfunding marketing can be effective, but if it is not able to build trust among investors, then all your efforts will be in vain. There are various factors you can consider if you want to seem credible in front of investors. These are:

  • Make sure your product is easy to market and feasible.
  • Explain your unstated crowdfunding goal.
  • Build communication with investors and tell them every benefit they are going to receive.
  • Tell them how you are going to bring efficiency to the work and meet the deadlines.
  • All the above factors can help you establish trust in the market if you are authentic.

Choosing the Right Platform:

Choosing the right platform is as crucial as choosing the best crowdfunding marketing plan. Without any bad or good experience, it is not possible to know which is the right platform for your campaign. From a distance, all of the platforms appear to be built similarly. But the right platform can do more for your business. Therefore, it is a giant task to decide on the perfect platform. Some solutions will help you choose the one that goes along with your goals.

  • Conduct a study to determine how successful each platform is.
  • Check which platform got the most visitors. The more visitors they have, the more credible they are.
  • Measure how much it costs and how much potential it has to produce results.

Achieving Goals and Deadlines:

Investors want to make sure that the company can meet all the targets and deadlines before giving them their hard-earned money. Here, expecting a fair amount from investors is quite challenging. It is better to think realistically about how much your firm requires. Experts suggest doing the crowdfunding in separate phases. Ask for funding when you achieve the target amounts after each phase. This helps keep the target amount realistic or attainable. If each phase of the project takes longer, it will be easier for you to update capitalists.

Giving Promised Rewards:

Delivering the promised returns to investors is the most common challenge in crowdfunding. Investors will start expecting their rewards even before the campaign ends. There may be two scenarios: first, if the crowdfunding campaign runs well, you may need to give the fund back to more of them. Two, if the target was to receive as much as the funds collected, there is the possibility of not having enough money to give back the promised amount. Even in the best-case scenario, there is no certainty that the situation will remain the same. With some unfortunate events like manufacturing or parts issues and shipping problems. To overcome all of these potential issues, a fund seeker must set realistic deadlines and rewards. 

Communication Issues:

It is essential to instil your message clearly in the minds of the audience during the campaign. It will be a major setback if you are unable to do this. Your presentation of crowdfunding is better, and people are much more interested in investing in your venture. You should be available to communicate with them. Sometimes what happens is that investors are trying to reach out to you but do not receive a prompt response. They may put their comments and opinions on any social media post or advertisement. You need to involve yourself in such conversations. To overcome the communication gap, you can employ a dedicated team that can look after the queries, and posts, and build engagement with the audience.

Why Do You Need a Crowdfunding Marketing Strategy?

Up until now, you must have understood how crowdfunding can enhance your fundraising campaign effectively. From gathering the required amount to managing all the expectations of the investors, it will need a strategy to move forward. But what are the reasons that compel you to go for crowdfunding? Here are a few examples: 

  • Addressing a large audience is the primary reason for using a crowdfunding marketing strategy, as it increases the chances of receiving funds in a short time.
  • A successful crowdfunding marketing campaign will undoubtedly help you establish a strong market presence and gain a favourable reputation among your target audience.
  • Working toward such an effective campaign can offer you several opportunities, like engaging with communities that trust you. It will give you the confidence to survive and meet deadlines.

Therefore, to maximise your crowdfunding campaign’s success crowdfunding marketing is a prerequisite. For that, we can use several ways such as social media, email marketing, and other marketing channels. Let’s see some of the popular strategies to beat the competition for raising funds for your venture.

Also Read: Top 11 Easy-to-Start Online Crowdfunding Platforms For a Startup in 2023

How to Run a Successful Crowdfunding Marketing Campaign?

There are fund seeker startups emerging every day and coming in line to give you competition. You need to be unique to win the race and it can be done with a perfect crowdfunding marketing strategy.

Build Your Target Audience:

Having an audience is a prerequisite for making any marketing campaign successful. Find some people and develop an interest in them so you don’t have to look elsewhere. Start making them aware of your domain, and it should be done in the first place. For this, you can create an account on various social media platforms. Have no shame in showcasing your agenda wherever you find people.

Draw a Timeline for the Promotion:

You cannot simply believe that the team is on track to successfully run the crowdfunding marketing campaign. You need to create a timeline to execute each task. A perfect timeline may include audience building, campaign launch measurement, and even tracking updates after the campaign launch. 

Design an Attractive Landing Page on the Platform:

A landing page on the platform can have an immense effect. It is the first point of interaction a visitor or audience will have with your services. The page should be engaging and have the potential to compel visitors to take action. Landing pages can assist you in building a large email list of your target audience. Here are the common elements you should have on the platform’s landing page:

  • Call to action
  • High-quality content to bind visitors and it can be in the form of a video or text
  • clear, concise, and persuasive copy
  • Responsive design

Keep Creating High-Quality Content for Audiences:

There is a popular phrase in marketing: “content is king,” so why ignore this important thing? It can be in any form, be it a text message or a long form of informative blog content. You can use it as an ultimate weapon. Content has the potential to change people’s opinions and influence their decisions.

Make a Proper Use of Social Media Channels:

Nothing can work better for your crowdfunding marketing campaign than social media. It is the most sustainable way to reach the maximum number of people who are ready to consume your content. Pick the right platform and start posting something about your campaign.

Implement Email Marketing Strategies:

Email marketing is also known as one of the cheapest marketing strategies. Through email, you can directly target your interested people and present the opportunity. Apply the few tips stated below to nail your email marketing campaign for crowdfunding.

  • Create attention-grabbing content for the main body part of the email.
  • Don’t forget to include links to your presence all over the internet.
  • Provide them with a powerful CTA button to take the desired action.

A perfect crowdfunding strategy that includes all the solutions for upcoming challenges is responsible for making it successful. SAG IPL does exactly what it says it does. An experienced team of marketers is well-equipped with all the expertise. Crowdfunding marketing is the core strength of SAG IPL, you should rest assured about the campaign. If you want to run a crowdfunding campaign to reach the maximum number of people, you need not waste time reaching out to us.

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