Every day while most Nigerians complain about our problems and challenges, more and more people are praying for more problems. This is because within those problems, lie the power to transform it, you only need to be calm and see the possibilities and persevere. This difference in perceptions is the reason why as more and more people are running way from Nigeria, foreigners are seeing the profitable possibilities are rushing in, facing and tackling the challenges and are making in-roads in several industries in the nation.
While many people have creative and innovative ideas, the question of funding has always been the number one limitation for many entrepreneurs and innovators alike. However the concept of crowdfunding is an innovative way to raise funds for ideas and more and more people are embracing it as a concept since the questions of souring funds from venture capitalists and banks is highly competitive and may pose a huge challenges to many businesses.
Maybe the story of Tomato Jos will inspire you a little. It is no news, Nigerians love fresh tomatoes and tomato paste. However in a country with massive arable land, over sixty-percent of tomatoes produced in Nigeria never get to the market. They are wasted spoilt and rotten before it reaches the market because of a massive shortage of storage and processing facilities. Since we lack the resource to process and store tomatoes locally, Nigeria remains one of the largest importers of tomato paste in the world and reportedly spending almost $500 million each year. While this may also be a viable business idea to the agropreneur, getting banks and investors to invest in the risky and ever unpredictable agriculture industry can be a very daunting task.
Enter the story of Mira Mehta and Shane Kiernan. Last year, the two ex-Harvard Americans successfully raised $54,000 for their startup, Tomato Jos after their crowdfunding campaign on Kickstarter lasted about 30 days. While the funding raised from the public on Kickstarter will hardly ever solve the massive challenges within Nigeria’s agric tomato paste production sector in Nigeria, they have taken a bold step and other people needing the right kind of funding , investment and support can learn a lot from them.
So whatever is Crowdfunding?
Crowdfunding is the practice of funding a business idea, project or venture by raising monetary contributions from a large number of people via the internet. Traditional financing used to be about asking people and banks for money. Crowdfunding is an innovative way to fund ideas, businesses and projects especially when you need to escape the bureaucracy of documentations, collaterals and financial bias. It essentially allows to reach the public or consumers directly effectively making it look like you are sourcing for funds by sharing envelops but this time digitally.
Some of the most common platforms include Kickstarter, Indiegogo, Fundable, GoFundMe, FundedbyMe, Razoo, Pozible, Crowdtivate, MedStartr and 234Give. Some can be industry specific and involve ideas in medical, agriculture, app developers, service businesses and not for profit organizations. Kickstarter is the most popular of all crowdfunding platforms and can boast of 9,000 active campaigns at any moment, and till date claims to have raised over $1.26 billion dollars in funding.
Crowdfunding platforms also have their own way of functioning and it is not only donations without partnership and responsibility.
There’s the Rewards based crowdfunding, where contributors get no financial return for their donation. Instead, they are offered thank-yous, perks, or even an early version of the product/service being funded. This is the most common and offers the project owners seed funding required to get the business idea beyond its present level and project owners do not need to repay the donations. However equity based crowdfunding requires that the donations made are actually investments. This essentially means that crowdfunding platform will operate like you are selling shareholding in your company.
How can you succeed with crowdfunding campaign?
Kickstarter admits that only 44 percent of its crowdfunding campaigns are successful. However it is not always the fault of the platforms but can be the challenge with your business idea, value proposition and positioning. How can you ace a crowdfunding campaign?
Be clear about the problem your business is solving
Most businesses succeed with their crowdfunding campaign because they are solving a problem. It is important for to identify the challenge you are trying to solve because people will connect with your dreams and aspirations easily. People who understand what you are trying to do are also more likely to invest in your ideas. Clearly identifying the problem you are solving also helps you immediately identify the solutions you need to begin to consider as a business.
Storytelling: Communicate propositions clearly
Just as you are able to identify the problem, you need to communicate the propositions clearly and articulately. Using clearly established digital tools and platforms such as social and digital media communications, infographics and videos. Building a story into your value propositions helps you communicate depth, connect deeply and emotionally with your target audience and to build an established brand.
It’s a pitch build it
Crowdfunding is an option to begin to begin to consider if you want to choose the largely unthreaded road of disrupting the market, beat the existing loopholes and don’t forget to tell you story. I will love to hear the story of your startup next.