Crowdfunding is not just about raising money. Investors who participate in a crowdfunding round have a shared passion for your idea, a vested interest in your company to see it succeed, and thus can help you in many ways non-financially. In a study by Nesta and the University of Cambridge, companies who did equity crowdfunding cited these as the top value-adds from crowdfunding investors:
1. Networking and Connections: Crowdfunding investors can increase your business network by introducing you to contacts within their networks. 74% of the survey respondents from the study said that investors were able to widen their networks through introductions.
2. Marketing and Advocacy: Being big believers in your business idea and your team, crowdfunding investors are often your biggest brand advocates and will help your company to gain visibility among their network. 53% of survey respondents said that their investors helped them in this area.
3. Contributing Expertise: Having a crowd of investors backing your crowdfunding campaign means that you potentially have a large pool of mentors of varying professions that can bring relevant industry knowledge and expertise to your business, whether it’s expertise about how to expand into a certain region, or knowledge about a particular function or industry.
4. Feedback and Market Validation: Your investors can provide you valuable feedback during or after your crowdfunding campaign to help you to refine your product or service offering.
5. Assistance with business/product development: 51% of the survey respondents said that their investors even went so far to contribute their time with project or product development.
6. Help with Follow-on funding: Successful equity crowdfunding campaigns have had a good track record with receiving follow-on funding. According to a study by Crowdfund Capital Advisors, 71% of equity crowdfunded businesses they had sampled had secured follow on funding or were in talks to do so. 39% of survey respondents from Nesta’s survey cited that their crowdfunding investors were able to assist in this area as well.
Companies who did successful rewards based crowdfunding campaigns cited similar benefits, showing that reward based crowdfunding supporters are more than just customers that are pre-ordering your products. If you’re considering doing a crowdfunding campaign, it’s important to realize the added value that you can get out of your supporters or investors and to harness the full power of the crowd for your business.
Now, go out and test out how the crowd will respond to your business before you launch one!