Crowdfunding For Sustainable Entrepreneurship And Innovation

What Is Crowdfunding?

Crowdfunding is the practice of funding a project or enterprise by collecting small amounts of money from numerous people, typically via online platforms. In the past two decades the market of crowdfunding has been growing quickly; crowdfunding has become a new way to finance, for example, start-up companies, projects in the visual arts and music, technological innovation, scientific research, and community projects.

What Is Sustainable Entrepreneurship?

You’ve put together a business plan, invested all your savings, and have been working on your idea as a side hustle for a few months. Finally, you feel like it’s the right time to take the leap and raise some real capital. Does this sound familiar?

Luckily, the bank isn’t your only option to fund your business venture these days. There are crowdfunding sites abound on the internet, and I’ve rounded up a few of the best in this post. Whether you’re funding the next hottest Entrepreneurs, a creative endeavor, or a caused-based organization, you’ll find a crowdfunding site below that’ll help you hit your goal quickly.

Crowdfunding is a way for small businesses or Entrepreneurs to raise money in exchange for equity, rewards, debt, or nothing at all. Business crowdfunding can provide you with fast access to cash, but it requires a strong promotional strategy, transparency, and possibly giving up some equity in the business.

What Is The Difference Between Crowdfunding And Traditional Financing?

Crowdfunding In the business world, crowdfunding has evolved as one of the fastest growing industry, which aimed at changing the way in which entrepreneurs raise money and also the mindset of people to invest their money in established companies only.

Traditional fundraising for a business project or venture encompasses pitching a few investors, banks or venture capitalists for a hefty sum. But in crowdfunding, the ‘crowd’ funds the idea or project, through an online platform, i.e. internet is used to communicate with people who can contribute in relatively small amounts in the business idea, project or venture, to help it get off the ground.

Pros and cons are associated with both crowdfunding and traditional fundraising, which we have discussed in the article below, along with the differences.

What Are The Benefits Of Crowdfunding For Sustainable Entrepreneurship?

Entrepreneurs and SMEs hold a crucial role in reaching a sustainable future by promoting decent work, innovation-driven development, and thus inequality reduction, which all fall into the UN Sustainable Development Goals. In hydrocarbon-based rentier states, however, large enterprises are drivers of economic growth by controlling the large sums of revenue from extracting, processing, and exporting oil and natural gas. Therefore, entrepreneurship in such countries encounters various obstacles, and thus, their number is very limited to foster sustainable development. Therefore, it is paramount to identify the factors that hinder entrepreneurs’ and SMEs’ growth. The literature shows that the fundamental barriers to financing entrepreneurship in developing countries are the lack of accessible and affordable funds, mentor support, and female participation. However, the Gulf states, particularly Qatar, are rich countries that should not experience financial deficits for entrepreneurs, and there should be underlying other reasons for discouraging entrepreneurship in those countries. This paper first identifies the fundamental problems in mobilizing domestic capital in Qatar, particularly providing funds to domestic entrepreneurs, through in-depth interviews with all the stakeholders.

Second, according to the needs, we proposes a crowdfunding platform including crowdsourcing, Entrepreneurship Majlis, to facilitate sustainable entrepreneurship by (i) exchanging ideas, (ii) providing mentorship, (iii) raising affordable funds, and (iv) supporting female entrepreneurs and investors. This platform will be easily accessible to everyone and tailored to India’s country-specific features, such as demography, culture, and religion. Last, the platform is validated after the second round of in-depth interviews with the stakeholders.

What Are The Risks Of Crowdfunding For Sustainable Entrepreneurship?

Crowdfunding campaigns: Six common and serious risks for Sustainable Entrepreneurship

Risk #1: Launching the crowdfunding campaign too early

Entrepreneurs must get to know their market before launching a crowdfunding campaign. Specifically, they must understand who their target market is, what motivates this market to engage with their product/brand and how to best communicate and engage with them. Even though some crowdfunding platforms may bring funders beyond the Entrepreneurs own network to the campaign, Entrepreneurs should plan on having to bring all the backers needed themselves for the campaign to succeed. This means that a solid social network should be built before launching. Crowdfunding veterans frequently cite network benchmarks as requiring at least 1,000 named targets, with 30% having committed their support before the campaign launch. Getting to those numbers may take longer than anticipated. In general, we recommend that Entrepreneurs not launch their campaigns until they meet these benchmarks.

Risk #2: Underestimating the work and time required to manage a fundraising campaign

Anyone who has run a crowdfunding campaign will tell you this: once you launch the campaign, it is all-consuming. The work involves generating momentum by tweaking and launching new perks, responding to questions and suggestions from supporters, keeping social media activities running and trying to win mainstream press coverage. Until your campaign target is within reach, the pressure is on constantly to do more of everything.

Risk #3: Missing the price point

For Entrepreneurs planning a pre-sales campaign, missing the price point that will generate the most sales is a significant risk. Put the price too high, and you risk selling less than required to reach the campaign target. Put the price too low and you “leave money on the table,” while risking not being able to cover the cost of fulfilling the order. The best way to avoid charging the wrong amount is to vigorously pursue the 30% pre-campaign support as mentioned in Risk #1. This direct customer engagement will allow you to repeatedly test and obtain feedback on your price points and revenue model.

Risk #4: Underestimating the cost of fulfillment

Without reliable and accurate cost estimates, it is impossible to set the right price for your pre-sales campaign. In your cost estimates, include contingency plans for replacing key suppliers or components in case your supply chain fails to deliver. Evaluate whether your estimates cover your costs in a worst-case scenario. If you run a successful campaign, failing to deliver on the promises you make to campaign backers can ultimately lead to a class-action lawsuit and bankruptcy.

Risk #5: Selling a product that is a poor fit for crowdfunding

Not every product or service is a good fit for crowdfunding. Ultimately, a key objective for any crowdfunding campaign is to create support and engagement from an enthusiastic network of supporters. However, certain types of products and services hold less appeal in a crowdfunding campaign than others. In general, products and services that are intended for business use have a harder time getting crowdfunded than consumer-facing campaigns.

The average contribution for most crowdfunding campaign is roughly $70. For every dollar above $70 that you solicit, fewer people will consider supporting your campaign. Many campaigns mitigate this problem by offering less costly tokens of appreciation for smaller contributions. A pre-sales campaign for items priced at $5,000 or more risks facing significant headwinds because the cost lies beyond the comfort zone of many funders. That said, numerous campaigns have been able to solicit individual contributions of $10,000 and more by assembling creative perks. This goes to show that nothing is impossible in the quickly evolving world of crowdfunding.

Risk #6: Running afoul of the crowdfunding platform rules

Campaigns that run afoul of the fundraising terms and conditions of their crowdfunding platform may have their campaign suspended. Or they may face difficulties in accessing their funds, even if the campaign meets its targets. Either scenario is obviously adverse, so before launching your campaign, ensure your team reviews its plan against the platform’s rules. Doing so can help Entrepreneurs avoid this type of monetary and reputational distress.

How Can I Make My Crowdfunding Campaign Successful?

Want to succeed with your fundraising?! Then you need to pick the right ideas!

-Doing charitable work is available to all, so don’t be put off by the fact that you are unable to do some of the suggestions on this list. Some of the biggest fundraising drives have been those that take very little effort (the ice bucket challenge is a great example) but are fun and can be done by anyone regardless of physical ability.

1. Choose an online crowdfunding platform:

A crowdfunding campaign is directed by a goal. Therefore, it is important to pick a donation based crowdfunding platform that aligns with your goals. To make your campaign a success, your donors should trust the platform you are choosing. Most importantly, a reliable crowdfunding platform guarantees that your crowdfunding efforts are paid off. Social For Action aims to empower individuals and organizations with its platform. We believe in putting your needs first. Driven by a mission to be the voice of those who are unheard of, Social For Action efforts are focused on driving success to your campaign without any compromise. Social For Action ensures that your donors are updated about the status of the crowdfunding campaign they have volunteered for.

2. Invite them to an offline crowdfunding event:

Social media is an effective tool for crowdfunding campaigns. However, it is often not enough to drive donations. The attention span of a person scrolling through an app is limited. Therefore, it is critical to supplement your crowdfunding efforts with an offline campaign. In fact, most donors prefer interacting with individuals behind the scene before making any donations. This not only adds to your crowdfunding effort but may also be a great way to find important connections who share your mission. The easiest way to boost a slow crowdfunding campaign is to connect it with a local social event. This will allow your donors to engage with the community at large as well as contribute to your cause.

Let’s look at a common example – Say your charitable trust is running a crowdfunding campaign for health. You can collaborate with the event organizers of a local walkathon scheduled the following month. You can show your support in various manners by participating as a walker or by sharing the event in your network. A strategic alliance like this would help your donors understand the work you are doing and will improve the chances of their participation.

3. Go social:

Get the word out about your mission using social media. You may need to pick up some skills, but social media channels are the fastest ways to get eyeballs. You can use some of these techniques to drive the audience to your initiative:

Gifts or goodies: Adding a small gift, eg. a keychain or t-shirt is a great way to engage donors. In fact, in a few clicks, you can set up virtual gifts like stamps or badges using social media platforms like Facebook.

Share your work: Your donors use social media to keep themselves updated. Therefore, remember to share loads of photos and videos to promote your crowdfunding effort. A hashtag dedicated to your crowdfunding effort is also a great way to drive traffic.

4. Offer multiple donation channels:

To make the most of your mission, you will need to offer donors the choice to donate via a channel they prefer. This channel must be simple to use and share. Typically, most organizations prefer to accept donations on their not-for-profit’s site. However, you can consider alternate modes like digital payment, mobile wallets, merchandise, etc.

Mobile Wallets: With transactions moving digital, a great way to boost your donation based crowdfunding campaign is by using mobile wallets and other payment apps.

Merchandise: Merchandising is a great way to grab the attention of a potential donor. But merchandise also helps you connect with your donor as they serve as a constant reminder of their contribution to your organization and goals.

5. Stay in touch with your donors:

It is always a good idea to check on your donors and keep them updated about the progress they have contributed to (no matter how small!). You can use texts or emails to share important milestones or success stories. Newsletters are a great way to build a community of contributors to your mission. You can also include updates about ongoing projects, scheduled events, or a simple thank you note for their kind gesture!

6. Tell a story

The first step in engaging with your online community is telling your story. Every nonprofit has a vision, and you want to communicate yours in the best way possible. Whether this is through your website or social media pages, you should tell a compelling story using high-quality content.

Things to keep in mind as you tell your story include:

Who you’re impacting. Talk about the group of people you’re impacting and how you’ve made a difference, such as the animals for an animal charity or patients for breast cancer research.

Different types of media. Use a variety of media to convey your message, such as videos that explain the good your organization does and photos that highlight the impact you’ve made.

Your goals. Talk about where you want to go from here. What are your ultimate goals and how can you get there with your community’s help? Be ambitious but as specific as possible, too.

Telling a meaningful story that accurately portrays your mission is key to evoking empathy from others. Without offering a compelling reason to care about a cause, you’re less likely to receive contributions.

What Are Some Of The Best Crowdfunding Platforms For Sustainable Entrepreneurship?

While the stats aren’t well-documented in India, the industry has been on a steady rise with the success of crowdfunding giants like Ketto and Milaap. People in rural India have benefitted from these too. A lot of social activists have also started social service projects through crowdfunding.

1. Ketto

Founded in 2012, Mumbai-based startup Ketto is one of the most popular crowdfunding platforms in India. The platform has been endorsed by several celebrities and ministers alike. It was co-founded by Zaheer Adenwala, Kunal Kapoor, and Varun Seth. It features three major categories: community/social projects, creative arts, and personal development. The three categories include various campaigns like sports, health, women empowerment, animal welfare, education, movies, music, fashion, charity, and more. NGOs can also use Ketto as an eCommerce platform. Fundraisers get a cash pickup facility, helping even those without a bank account.

Depending upon your campaign, Ketto takes 5-8% of the fund raised along with payment gateway charges. The crowdfunding platform is pretty user-friendly with easy navigation.

• How to start the fundraiser on this platform?
• Take 2 minutes to set up your campaign
• Start sharing after approval with no processing fee
• Withdraw your money once you reach a milestone

2. Social For Action

Sakal has stewarded several social initiatives over the past several decades with many of the initiatives going beyond Sakal’s own regional markets, addressing needs across the country. Social impact and social change remains the core of the Sakal’s beliefs even today and with this Sakal is introducing its own Crowdfunding platform – Social For Action. We belief that the role of media today has changed from being an advocate of social causes to being the facilitator or the agent of social change itself.

SFA addresses the many challenges of giving (such as difficulty in discovering the right causes, trust deficit, and overall donor apathy). We share stories of (pre-qualified) individuals and groups with a network of its trusted community and partners, who either specialize in providing and supporting the local communities by promoting products or can connect with the cause to help with a donation.

3. Wishberry

Founded by Anshulika Dubey and Priyanka Agarwal, Wishberry is solely dedicated to creative projects and artists. It voluntarily assists them by assigning a Campaign Coach who is a Wishberry advisor.

The adviser will help you design a campaign, write an effective pitch, make a compelling video, and choose rewards. The coach will also guide you through the effective distribution of rewards. To date, they have helped deliver project creators a remarkable success rate of 70%.

The platform has completed over 325 projects, raising around $1.3m worldwide. Having operated in over 60 countries, Wishberry is now a trusted name among creative startups. There’s also something for the contributors, like tickets to movie premiers, merchandise, name in credit roll, and more. Wishberry charges a one-time fee and 10% of the total commission only when the funding goal is achieved. You can also avail their digital marketing services.

• How to start a fundraiser on this platform?
• Submit a form on the website with your details
• A Wishberry consultant will help you with funding after approval
• You get up to 45 days to reach your goal

4. Kickstarter

One of India’s oldest fundraising platforms, Kickstarter is also popular for funding creative projects and startups. The platform has had much success in crowdfunding for innovation, research, music, books, and films, among other creative art forms. Kickstarter supports unique initiatives like a photographic series on Indian deities, edible cutlery photography, and more.

The platform also offers various rewards to the donors, depending upon the project. The Sweet Requiem campaign is one of the most successful campaigns on this platform in India. It raised funds for a film based on Tibetan women’s struggles in Tibet and how they’re living in India. Over 300 people contributed to the project, raising over $33,000.

The Edible Cutlery was another such successful campaign. It raised nearly $3,00,000 from over 9000 donors. The platform supports creativity and merchandising and is a delight for aspiring artists and creative startups.

• How to Start a Fundraiser on this Platform?
• Check out their criteria on the website to see if you’re eligible
• Learn about structuring your project with their Kickstarter resources compendium on the website
• Submit your campaign and start marketing it around

5. FuelADream

Fueladream-crowdfunding-platform

A fairly recent startup by Ranganathan Thota in 2016, FuelADream is another reward-based crowdfunding platform in India. The platform focuses on supporting charities, social causes, and creative projects by collecting donations. You can choose between All or Nothing or Keep What You Get campaigns.

If you don’t reach the All or Nothing campaign’s target, you won’t get anything, and all the money would be returned to the senders. The company has an in-house content and marketing team that designs campaigns and online pitches and creates compelling reward systems for every campaign. In both kinds of campaigns, the company would charge a total of 9% of the amount raised exclusive of taxes.

FuelADream takes up only 20 projects a month. They choose projects wisely, going for quality over quantity. Battery-powered bikes and a canal to irrigate arid farmlands were some of the platform’s most successful campaigns. It supports campaigns in multiple languages to appeal to local and regional audiences.

• How to Start a Fundraiser on this Platform?
• Sign up on the website
• Add story details
• Add rewards
• Add team members
• List team members
• Send campaigns for approval

What Are Some Tips For Sustainable Entrepreneurship Crowdfunding Success?

1. Inspire giving by truthfully telling your story

As the saying goes, honesty is the best policy. People want to trust that their donations are going toward a legitimate cause. Be honest in telling your story to reassure those who are looking to help. If a donor connects with your story they will be more willing to donate. Encourage potential donors to visit your fundraiser page to get more details—and to become part of your journey with their donation. To learn more about storytelling, take a look at our guide on crafting a compelling campaign story.

2. Tailor your message to who you’re asking

The best way to receive a positive response—and a donation—is to appeal to each potential donor’s individual interests. If you know someone who would respond better to a warm, lighthearted request, keep your wording to ask for donations informal and bright. For someone such as a colleague who may respond better to a formal approach, deliver your message accordingly.

You might be nervous about asking for help. It’s good to know that even people who regularly organize fundraisers still get nervous. Requesting donations online can be made easier by using a mental checklist and practicing your approach. Here are a few tips on how to ask for donations.

PERSONALIZE YOUR REQUEST

When you ask for donations, focus on more than just the need. Also think about the types of donors you’re asking, and what their understanding and needs might be. When approaching a potential donor, ask yourself:

Why does this person care? There is a reason you reached out to him or her for donations. Keep that reason in mind, and communicate it when you approach each potential donor.

What relationship does this person have with the beneficiary? Maybe an individual is a family member of the beneficiary. A tip for how to ask for money from family is to bring up this relationship when asking for donations. This is to create more personal, intimate communication and boost your chances of getting a donation. Touching on the relationship is important to do with anyone you ask, whether they’re a childhood friend or neighbor.

Why would they have reservations? Keep in mind reasons someone might not want to donate, and try to address them. For example, some people may worry they can’t afford to make a large enough donation to make a difference. By addressing this concern and listing specific expenses that can be paid with small donations, you can get more people to contribute.

TRY A FUNDRAISING LETTER

Sending a personal fundraising letter to potential donors can increase the number of donations you receive. This may sound time consuming, but it’s effective. It separates your message from the dozens of spam requests a person might receive. It also shows that your request is about more than money—it’s about the relationship.

3. Create a sense of urgency

It’s important to convey a sense of urgency when sharing your fundraiser. Without that urgency, your potential donors may consider waiting to donate—requiring you to ask them again down the line. Explain what will happen if you don’t raise the money in a certain amount of time, and you’ll likely see a spike in donations. Keep in mind that even negative consequences can still be framed in a positive light. Our blog on the psychology of giving is a good resource to reference for similar tips.

4. Use email to your advantage

One major strength of email: You can ask friends and family to forward the non-personalized portion of the message to their own circle. Consider crafting a block of text they can easily use for that purpose, and calling it out as such in your email. Additionally, email is great for online fundraising without social media since it’s efficient, low cost, and easy to track your progress. Successfully reach your fundraising goals by taking advantage of these fundraising email templates.

5. Make it easy to donate

While this is obvious, it can be easy to forget: Make it easy for people to make a donation. Include the link to your donation page in your ask, and don’t be afraid to point out exactly where the donation button is located on your fundraiser.

6. Be specific in your ask

Providing people with specific information is a strong way to grab their attention. Give potential donors clear-cut reasons why they should donate to your cause. In your ask, be sure to break down these three things:

Your current situation.

The reason why you’re fundraising.

Your desired outcome.

7. List Additional Expenses

Be specific in your list of expenses as well. Some ways to be specific include using numbers, making a checklist, and listing additional costs. It can also be effective to get specific with the requested amounts. For example, “A 1250/- donation will allow Jahan to fill one month’s prescriptions.”

Some successful fundraisers itemize every expense—not just a big-ticket item like a surgery or funeral, but the gas money needed for rides to the doctor, transportation fees for a hearse or van, and other, smaller expenses. Potential donors will appreciate transparency. Visit Social For Action Causes to see more examples of how certain donation amounts can help.

The Bottom Line

When there are countless people who could empathize with your situation, asking for help doesn’t have to be shameful. Whether you need help with bills, burial expenses, or student loan debt, crowdfunding can be a lifeline. Social For Action offers pricing and powerful fundraising. In the US, there’s no fee to start or manage your fundraiser on Social For Action. However, there is one small transaction fee per donation that covers all your fundraising needs. Everything else goes directly to your cause, because that’s what matters most. This means you can keep even more of the funds you raise and meet your fundraising goals faster. Start your fundraiser and begin finding financial relief today.

Overcome your fear of asking for financial help and raise money on Social For Action, today!