You will need money when you are asking for money and this is one of the realities you will soon come across with when managing your crowdfunding campaign. It seems a little paradoxical and contradicts the very essence of social funding. This is because people troop to the platform to raise the money they need for a specific purpose.
You might think that this is similar to how traditional lenders talk to borrowers because, with banks, you need to prove that you can pay back the money you are borrowing. The dilemma in this is that there are people, especially startups borrowing money because they need it to start a business and make more money.
It is not in the same breadth with crowdfunding but you still need a considerate amount of funds to get started with your crowdfunding campaign. You will need to bootstrap your way into your initial expenses because you need to put together a project for people to support. You cannot just throw out ideas and theories to people.
Early crowdfunding expenses
If you are planning on putting up your own social funding project, here are a few things you need to consider so you can manage your expectations especially with early expenses on the campaign.
- Business papers and documents. You need to keep everything legal and the only route you need to take is to register the business and have all the permits and documentations you need for the business. This can vary from one country to the other but the basic tenet applies – there are government agencies that oversees these types of business requirements and it is one of the first few steps you need to focus on to get started.
- Developing the beta product. If you are putting out a campaign for investors to rally behind a specific product, you need to have a working sample of your idea to begin with. This is something you need to fund yourself at the beginning to show potential investors that it is doable. You would need to pay for the initial production, talk to suppliers, and work on it yourself. This also gives you the chance to identify problem areas in the production that you can rectify as soon as you go mainstream with your business.
- Producing marketing collaterals. You also get to use the beta product to come up with your marketing materials which you can present to backers. You can use the beta product for the photoshoot and even video shoot for the product video presentation. This can help you drum up excitement for the campaign and get investors to notice your project.
There will be a few expenses at the start of the campaign that you need to shoulder in order for your project to move forward. It will be challenging to ask people to put in funds to a project that has yet to be completed. You get to increase your chances of attracting more donors when you have a fully working prototype bannered in your crowdfunding campaign.
This article is written by the Crowdfunders Editorial Team. In Asia, Crowdfunders.Asia is a leading portal on providing news related to crowdfunding, start-up, property and business. It is operated by CoAssets.com. CoAssets is South East Asia’s first listed and largest real estate crowdfunding platform. If you have any Crowdfunding news or stories to share, please email [email protected]