In just a few short years crowdfunding has helped hundreds of businesses raise millions of dollars, even tens of millions of dollars to help finance the start-up of their small business. From mobile apps to crib mobiles, restaurants to breweries, crowdfunding has helped so many different companies get their start. In every one of these businesses there were universal lessons learned that apply to every potential business looking to jump aboard the crowdfunding train.
Fundable, Indiegogo and Kickstarter are just a few of the crowdfunding sites available in today’s market. Each has enjoyed tremendous success, which they wish for every client. Here are just a few of their success stories:
Grapevine Craft Brewery
In just the last year craft breweries have sprouted like wild mushrooms. With a 15% growth rate, backers and investors flock to get in on this new business trend. Grapevine Craft Brewery, located in Grapevine, TX seized their chance and had such a successful crowdfunding campaign that they broke a record with the $61,673 in pledges that they took in.
Grapevine’s success story starts right in their own community. They set out with a mission: serve Texas beer made with Texas pride, and add a touch of community philanthropy. Grapevine brought their community together, and together they rally around the new business.
While Grapevine is thrilled to create a classic, local brew that satisfies most of its thirstiest customers, they also are happy to be giving back to their community. Right from the start, the founder of Grapevine, Gary Humble, made a commitment to donate 5% of their quarterly profits to a local non-profit called GRACE. GRACE helps families and children who are in crisis, offering support and guidance as they strive towards self-sufficiency. Grapevine is so dedicated to helping GRACE that they asked other companies and organizations throughout the city to offer GRACE matching grants if Grapevine could reach their lofty goal of $50,000 in pledges. Over 200 locals decided Grapevine Craft Brewery was a sound investment, and it didn’t take long for the company to reach, and exceed their goal. The local businesses made good on their offers.
The lesson learned: Reach out to your family, friends and community.
Most people are not risk takers, they wait around for other people to jump on a new idea before they dive in. However, once investors see everyone jumping on a particular bandwagon, whether through great coverage in the press, lots of pre-orders, or for whatever reason there may be, they, too, feel happy to climb aboard. When people see your business as a safe bet, they are more than willing to invest in it. The best thing about this sort of traction is that it usually snowballs once it starts. The more investors, backers, press coverage or pre-orders you have, the faster the masses will want in on your business or product idea.
This is exactly what happened to Ube out of Austin, TX. Ube came up with a very simple, but very powerful idea: let people monitor and control their electric usage through their smartphone, and allow them to do so from anywhere in the world. Ube offers a line of Wi-Fi enabled Smart Outlets, Smart Plugs and Smart Dimmers to help their customers easily control any light or appliance in their home or office. All these options come at a very affordable price.
Ube launched their crowdfunding campaign in March 2013; in a few short months they had $380,000 in pre-orders, selling well over 5,000 smart power units to businesses and homeowners in the United States. Connected World says that Ube has a million-dollar idea. GigaOm, TechCrunch and VentureBeat have all labeled Ube’s idea as brilliant. Ube’s idea for their electrical control system was so well received that it was given the 2012 Demo Startup People’s Choice Award. A new business could not ask for a better recommendation.
The lesson learned: The first backers and advocates of your business will set the pace for whatever fundraising follows.
DecisionDesk amassed 1.25 million dollars when they created their crowdfunding page on Fundable in April 2013. DecisionDesk offers their customers an application tracking system that gives them a much simpler way to handle recruitment processes and the more complicated admissions. This gives recruiters an easier way to access a global pool of talent, review all application data, send it to internal reviewers and make an informed decision based on reporting and analytics. DecisionDesk offers these organizations all the tools needed in order to maker wiser and faster choices in recruiting the best of the best.
The Innovation Ohio Fund gave DecisionDesk a $750,000 loan while DecisionDesk was busy with their Fundable campaign. John Knific, the founder of DecisionDesk, said that it is important to determine exactly what loan administrators and investors are seeking in an investment, and tailor your business approach to fit those needs.
Knific also knows that every group has their own set of criteria. The loan from the Innovation Ohio Fund was due to the fact that they were specifically looking to invest in companies that do business in Ohio, are at break-even, and that offer a high-growth technology. DecisionDesk fit all their criteria. This loan is a great fit for DecisionDesk because over a third of their operating expenses are used exclusively for software development.
Knific believes that anyone looking to start a business should not only think about any state funding that may be available, but also raise funds through equity crowdfunding. Figure out who will be an investor or customer and learn who they are and what they really want from your business. It helps tremendously if you tailor your campaign rewards to this group of people. Make your sales pitch fit their needs. And finally, look for other ways to raise funds to grow a business that investors and customers want to stand behind. Remember, investors come in all shapes and sizes – gather your needed capital from as many sources as you possibly can.
The lesson learned: Know your customers and investors and direct your marketing sales pitch directly to their needs.