Bringing People Together: Tips for Building a Community Around Your Crowdfunding Platform

Sourcing the funds you need for a business, personal, or charitable endeavor can be challenging. Most people think of the traditional methods, from applying for bank loans to getting funding from venture capitalists. But one way to get the financial resources while getting a whole community involved is through crowdfunding.

What is Crowdfunding?

Crowdfunding is the method of raising money for a project or venture. Instead of large sums of money from a few investors, crowdfunding collects smaller amounts from many individual backers or a "crowd."

Many sectors can benefit from crowdfunding, from retail and local governments to entertainment and education. Project leads from such sectors can fund their ideas without relying solely on traditional funding sources like bank loans or venture capitalists.

Four Types of Crowdfunding

If you're interested in building your own crowdfunding platform, here are the four types you can make use of:

Donation

With donation-based crowdfunding, fundraisers do not offer any return on investment or rewards. In the simplest terms, individuals donate their money out of the kindness of their hearts and expect nothing in return.

This crowdfunding approach is typically used for charitable causes, including disaster-relief efforts and local community projects. However, it can also be used for other projects like political campaigns, support for small businesses, and artists' projects.

Debt

Debt-based crowdfunding is much like a lending program. The money pledged by donors needs to be repaid within a pre-determined deadline. It's a good option for businesses and investors alike. Business owners can borrow money at a relatively lower interest rate. At the same time, investors get a return on their money with interest. This is to assume, of course, that the project does not go bankrupt.

Rewards

Another way to encourage financial backers to donate to your cause is by offering up rewards. Reward-based crowdfunding allows businesses or organizations to source funds from investors in exchange for non-monetary rewards.

Aside from supporting an excellent idea or cause, investors also get to enjoy perks. Crowdfunding rewards include something as simple as gift bags and certificates of recognition. When applicable, they can also come in the form of product pre-orders or discounted services.

Equity

Equity funding involves providing financial investors with shares of the business. This crowdfunding approach is more applicable for start-ups or small businesses looking to get the funds to kickstart or expand their business.

Depending on the amount of funding you are looking to get and the type of project, you can decide which crowdfunding approach best fits your requirements.

Tips for Building a Community Around Your Crowdfunding Platform

Building a community is key to a successful crowdfunding effort. These individuals are more than just numbers in an account; they are people that will help you see your project or business goals through.

Be Clear About Your Crowdfunding Goals

Before throwing yourself headfirst into raising money, it's best to set clear goals. These goals should include how much money you intend to raise and the time needed to reach that amount. Having clear goals will also help you with the next steps of the process, such as deciding on the type of crowdfunding you will use.

Get to Know Your Target Audience

Understanding your target audience is crucial for a successful crowdfunding campaign. You need to know who are the people who are most likely to be interested in your project or campaign and how to get them to pledge. Getting data on their demographics (age, income bracket, location, etc.) and psychographics (interests, values, and so on) can also help you decide on the best communication channels to reach your target audience.

Set Up an Accessible, User-Friendly Platform

Once people have already decided that your cause or vision is worth their time and money, they'll donate through your preferred crowdfunding platform. Even when you've convinced them, you still need to make it easier to seal the deal. This means setting up a crowdfunding platform that is easy to navigate, allows various payment options, and is transparent.

You can effectively raise money for your cause by setting up a user-friendly crowdfunding platform. Plus, you're making it easier for individuals to feel a sense of accomplishment that they've extended support to something they believe in.

Strengthen the Community Bond Using Social Media

Social media is a popular communication tool across the world. It will help widen your reach and attract potential investors to join your community. Additionally, you can use social media to stay connected with those who've already entered your crowdfunding community.

One of its great features is that getting started on social media platforms is essentially free. Staying active on social media is an excellent option if you want to keep your costs down but want to continue engaging with your crowdfunding community.

Bring People Together Through Community Events

A community-centric event is a good space to express gratitude to your community through small tokens, from giving away swag bags to providing free food. Don't forget to provide healthy snack options to make the event more enjoyable for those with food restrictions.

Hosting community events, whether online or offline, is also a great way to bring like-minded people together. These events foster a sense of togetherness and forge stronger connections among your crowdfunding platform users.

Crowdfunding is more than just asking people for a portion of their finances. It's also about building a community that bets on the success of your vision. If you want your crowdfunding efforts to be successful, you must invest your time and energy in creating a solid connection with the people helping your vision come to life.