The Hidden Benefits of Crowdfunding

Posted: Mon, 20 February 2012 by Michelle

The beauty of crowdfunding is that it delivers far more than just hard cash.

Obviously the money you raise is important, why else would you launch a crowdfunding campaign?

But crowdfunding is about much more than just the funds you raise, and we’re going to reveal the hidden benefits.

If you work your campaign effectively, you could benefit in a number of other ways, all vital to help you grow your business or indeed support your community or social enterprise in the future.

Firstly, you’re able to do market research about your product or service. By asking people to give money in return for your reward, you can establish whether or not there is a market appetite. If people are willing to give you money so you can create a product they want, then you’re on to a winner. You’re able to demonstrate proof of concept when you reach out to raise additional funding later on.

You also build an engaged community of customers, people not only willing to pay you to start your business but happy to tell their friends about you also. Building testimonials from this super-supportive crowd when your project is successful means you start your business with some really positive and powerful case studies to underpin your marketing efforts.

Often the reward is the produce or service the money will be used to develop, so in effect you are pre-selling, generating a healthy order book to launch your business. Not many businesses can boast that they started out with a full order book.

The fact that crowdfunding is based on the use of social media (often free but always inexpensive compared to traditional PR) means word of mouth PR and the buzz around what you’re doing might also provide some newsworthy media coverage for your business or social enterprise.

All of these benefits stack up into a significant opportunity for when you take your business to the next stage and need to raise additional funding, maybe from banks, Angel investors or VCs. You are in a much stronger position to negotiate, having already provided the answers to many of the questions they will ask.

But remember, your crowdfunding campaign is not just a one off activity. Once your project succeeds (and even if it doesn’t) what you’ve started leads straight into the next stage of your business or social enterprise. You continue to engage with your customers, build on the support they’ve given you to aspire to more and there’s no reason why you can’t crowdfund again.

In fact, once you’ve experienced the “hidden benefits” we’ll be surprised if you don’t.