Most minority, veteran, and women owned businesses and entrepreneurs struggle to get the funds they need. Crowdfunding campaigns can be used by women owned companies, Black or Latino businesses, as well as other minorities to either start or grow their existing business. There are even platforms focused on their specific needs, including “Women You Should Fund” and HIPGive (for Latinos) among others. Learn what crowdfunding is, how it works, tips to be successful, find some of the companies and platforms that can help disadvantaged businesses.
Do you have an awesome idea for a business and everything you need except the cash? Struggling as a Black or female owned business to get a loan from a bank or other financing? There is another option you can try – crowdfunding. Learn more below, or find Crowdfunding Platforms for women or minority businesses or start-ups.
If you have heard of Kickstarter or GoFundMe, then you probably already know what crowdfunding is. This method is an effective way to raise money for launching a product, personal business, cause, or project. Since the inception of crowdfunding, it has changed the lives of many minority as well as female entrepreneurs along with small business owners and people who need financial support.
Crowdfunding’s concept is very simple. You give a pitch that people can support (almost always online) through small-dollar contributions. If a lot of people donate, you can reach your target amount. The internet has enabled everyone to launch crowdfunding projects through a wide array of platforms that get their idea across to thousands of backers. Crowdfunding is a multi-billion dollar industry worldwide.
Here are some indispensable things you need to keep in mind before you start your crowdfunding campaign. The suggestions are tailored for disadvantaged business owners. In general, the success rate ranges from 30% to 75%, with Seedinvest reporting about 52% of Black crowdfunding campaigns are successful.
One vital and often overlooked part of crowdfunding campaigns is the required promotion. No matter how good your initiative is, you need to raise awareness. However, be aware of bias that investors have towards minority projects.
You can post details on your social media pages to get the word out to your friends and family, or you can think outside the box and reach out to publications or bloggers. As right now Asian, Hispanic, and Black owned businesses owners rely the most on investments from friends and family according to the Kauffman Foundation. Use that to your advantage. Lets those same friends and family join a crowdfunding program, and leverage their networks of contacts as well for more investors.
Before your campaign launches, you should also build a solid social media presence. Create a Facebook business page and group. Use Linkedin, Instagram, and other networks. This is a cost-effective method to reach many people. Join local networking groups too. There are also hundreds of Meeetup groups focused are crowdfunding, with many of them run by women, Black or Veteran businesses owners or the LGBTQ community.
Have you ever been enamored by a campaign because it’s so well-marketed? Creating images and videos for your crowdfunding initiative will help you stand out. There are loads of campaigns launched each day, and you have to do whatever it takes for potential donors to notice you.
Your videos and marketing should also highlight, and even focus on, what is in it for your investors. How will they benefit from your company or success? What financial rewards, services, return, or products will they get?
People appreciate short yet quality videos, so invest in an engaging video for your page to educate people about your campaign or small business. Tell your story compellingly and memorably. If you are an immigrant starting a business, tell how you came to the United States. If you are a veteran, give the details on your past service. If you are a women or black owned company or start up, talk about the challenges and barriers you have faced and overcome….tell your story.
Your backers will generally be intelligent and business-savvy individuals with money to invest, so make sure to also include detailed business plans. For instance, consider the Coolest Cooler crowdfunding campaign. It had an initial goal of $50,000 but raised more than $13 million. This project became a runaway success because it appealed to the right people and launched at the right time.
Whether you want to push for a crowdfunding campaign to fund your start up company, raise money for an educational cause, help people struck by a typhoon, or your small business, you should do your research. Check out some of the most successful crowdfunding campaigns in the same category.
Whether it’s using videos or photos, adjusting your goal amount, or applying investor perks, examine what top campaigners offer. Do your due diligence on what campaigns worked in the past and what they did.
There has been a lot of campaigns that make the mistake of launching their initiative too late, assuming that people will be clamoring to donate. The longer you wait closer to product launch, or the longer you operate your business without the funding you need, the more challenging it will be to have a successful campaign.
If you promote your idea, product or business early in your startup process, you can position your crowdfunding campaign on the road to success. Nearly half of the funds of campaigns are raised in the final days of its duration. So the earlier you get the word out, the more likely it is for you to reach your goal amount.
You know and understand your network better than anyone else. You have been around your friends and loved ones for a long time. So you can tell early on if they will be receptive to your campaign and your effort to raise money. For example, an aunt who loves surfing would be more likely to contribute to a campaign that wants to raise money for a beach cleanup.
The truth is, not everyone you know will be interested in your project, no matter how good it is. The moment you launch your initiative, make the most of your energy by reaching out to people who are likely to contribute. Communicate with other minority or women owned businesses. Talk to investors who may invest in Black or Latino companies (or whatever your race is). Reach out to the community to take part in your crowdfunding campaign.
Always be specific on what your minority or women business will do with the money. People/investors want to know where their money is going. This is also where a business plan can help you. This is why only a few vague crowdfunding campaigns take off. Being crystal clear about the specifics of fund allocation is important to build transparency. Tell how much you need for product development, building a website for your business, inventory, salaries, or whatever the expense is.
Also be specific about what the Crowdfunding campaign will do for your business or startup company. What type of increase in revenue will it allow? Will it make your business profitable? The more you can be specific about where donations will go, the better your investors will feel.
% of loans rejected per Federal Reserve[/caption]
Since the concept started in 1997, crowdfunding has come a long way. While platforms such as GoFundMe have become a leader in the industry, it is still crucial to look into other backers on platforms such as Crowdrise or Kickstarter depending on your venture. Many platforms also specialize in a particular niche- so do your research. There are also crowdfunding platforms for disadvantaged groups, including Pinkstart for gay or lesbians, fundBLACKfounders for Black startup companies or businesses, and IFundwomen form female companies.
Despite being a competitive market, crowdfunding can change your life if you do it right. Especially since the majority of minority business loan applications are rejected when compared to white owned businesses. And women business owners also face barriers; female run companies only get about 5% of loans per the US Senate Small Business Committee even though about 35% of all businesses are run by women.
However, always remember that at the end of the day, it’s your authenticity, credibility, your cause and compelling story (including as female owned business/startup or minority owned company) that will get people to donate. Crowdfunding can be a great, effective tool to help close the financing gap that women, Latinos, Blacks, Veterans, and other minorities face.
If the first few days are slow, do not be discouraged. Overnight success crowdfunding stories are very rare, but if you find the right platform and marketing strategy, you can reach your goal.
By Jon McNamara