Ray Kinsella, a character in the movie Field of Dreams, hears a voice in his cornfield tell him, “If you build it, he will come.” The voice was telling Ray to sacrifice his time and money to build a baseball field in his corn field. Ray listened to the voice and built the baseball field despite being on the brink of financial disaster.
The advice worked for Ray, resulting in the arrival of Shoeless Joe Jackson and a team of forgotten baseball players from a bygone era. Luckily for Ray, the ball players that appeared in his corn field provided Ray with an attraction that generated the revenues necessary to keep his farm and his home.
In the business of crowdfunding, however, there is no Field of Dreams. In fact, listening to this type of advice when orchestrating a crowdfunding raise is the worst possible advice an entrepreneur can accept. Just because you create a campaign does not guarantee that anyone will take part. In most launching a crowdfunding campaign without first setting up the proper foundation will result in a complete failure.
In our conversations with entrepreneurs we find that too many of them have bought into the crowdfunding hype and believe that their success in raising the money needed to launch their business is dependent merely on setting up a crowdfunding account, telling a good story and creating a good video. In too many entrepreneurs’ minds that is all that it takes to get the money to begin flowing.
Through our radio show and on our Two Men In Your Business YouTube channel we had the opportunity to meet and interview a great number of entrepreneurs that used crowdfunding in an attempt to launch their businesses. Some were successful, others were not. Regardless of the outcome, the great takeaway we have acquired has been that it takes a lot of work to successfully close a crowdfunding raise. In fact, through our observation and inquiry it seems that assuming the Field of Dreams philosophy is a sure way to ensure failure.
The biggest fallacy is the expectation that the crowdfunding platform will find your investors. While it is true that platforms have accumulated large lists of investors with whom they communicate on an ongoing basis about new and relevant investments, the reality is that the number of crowdfunding campaigns launched daily is so large that it all becomes noise. Investors must generally believe in you personally or your product. Most investors are not sitting around with an itch in their pocket and the need to empty out their wallets.
While an occasional investor may materialize through the crowdfunding site, successful entrepreneurs find, cultivate and direct investors to their specific campaign. Expecting the platform to do the work for you turns your crowdfunding campaign into one more investment opportunity that gets missed or ignored.
Successful entrepreneurs let potential investors learn about the players and the product well before a single dollar is contributed. Successful crowdfunding campaigns have built relationships with potential funders many months before the campaign goes live. Creating a relationship with potential funders ensures investment and encourages funders to share their experience and your product within their social network.
This chapter is focused on providing you with the information needed to set a proper foundation well before going live with a crowdfunding campaign. This chapter will guide you through the steps you should take to ensure that you give your raise the best chance of success. While there are no guarantees or silver bullets in crowdfunding, there are certain practices that improve the odds of success.
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