Cash flow is the lifeblood of any business. Without sufficient capital, it's almost impossible for any enterprise to survive, let alone progress. For startups in the process of developing their products and taking them onto the market, the money required to keep moving forwards often has to come from investment and crowd funding. The tech space is filled with stories of entrepreneurial startups who achieved major funding goals in a matter of weeks. However, this is not the reality for the majority of new businesses and enterprises. Is it possible that 'Kickstarter culture' is in fact giving new startup owners unrealistic expectations about the speed and ease with which they can fund their initiatives?
Deadlines and Headlines
The traditional route of attracting investment used to involve a hard slog of business meetings, pitching, networking and beating down the doors of potential investors. Today, crowd funding platforms like Kickstarter make it possible to bypass all that by simply creating a campaign and waiting for the money to roll in. Many kickstarter campaigns run for periods as short as 30-90 days. Some - either through luck, innovation or superior marketing - manage to hit and surpass their targets within these timeframes. But far many find that convincing people to part with their money in sufficient quantities actually takes a lot longer.
The public nature of crowd funding websites can also represent a double-edged sword. Startups that smash their targets can instantly spin this success into good PR headlines. However, if a campaign falls short, it can cause business owners to lose their nerve, often resulting in rash decisions that can ultimately be harmful for the future prospects of the company.
Success in a crowd funding campaign involves not only having a great product, but telling a complete story with that product that can not only capture the imagination of a potential investor, but also give them confidence that their money is in safe hands. You also need to ensure that your story gets heard - if nobody is talking about your startup, you can't expect people to invest in it. Refining your product, shaping that story and getting it out into the world may well take longer than a couple of months, and tech entrepreneurs need to be aware of this before they pin all their hopes on a single funding drive.
Making it work
Ultimately, there's no surefire guarantee of success when you put a new product or business proposition out into the world, but if you are going to rely on external funding - particularly through platforms like Kickstarter and Gofundme, there are ways to strengthen your chances of emerging from the process in a healthy position.
Timing is one of the most important factors, particularly when you're running a short-term fundraising drive. The holiday season from mid November to mid January is not a time of year when most people have money to burn. The late summer months are also a time when many people are on holiday, so if you're looking at talking to other businesses to secure investment, you should be aware that things may be delayed around this time if your main point of contact is on leave. Simple logistical choices such as these can have a surprising impact on your prospects of success.
Another important quality in a funding run is realism. As exciting as it might sound to take your startup from zero to sixty in 30 days, a failed funding bid can potentially slow things down even further, so it's wise to at least double the amount of time you allot to your funding period. If you hit your target early - great. If you don't, you have more breathing space to promote your campaign and explore other options.
Listening to the market is also a good way to improve your funding prospects. If your funding efforts aren't coming through, ask yourself why. Ideally, extensive market research and networking should be taking place before you go public with a funding bid, but it's never too late to take a learning curve. Too many businesses become so focused on selling that they lose sight of the solutions that are often right in front of them.
Crowdfunding platforms can often have an anonymous feel - there's every chance that you'll never actually meet or even speak to your investors. However, in the wider business world connections are still vital. Attending industry events, directly pitching to potential investors, participating in accelerator programs - all of these forms of networking can open up numerous funding and investment opportunities. The road to achieving your goals may not be easy, but by putting in the hard work at this stage, you can build a framework for a business that could thrive for many years to come.
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