As most of you know, Selkie Patterns was founded with the help of a crowdfunding campaign. Crowdfunding means the public invests in your idea in return for a reward. You can crowd fund for a community space, a product, the publishing of a book, the making of a music album, etc. Some campaigns raise funds for a single product, whereas others (like ours) get funded with the intention of becoming a business with the received funding. There are different platforms available and some are more suitable for creative ideas and some are more suitable for, say, social enterprises. They all have a similar structure of a reward in return for a financial pledge. The rewards system makes crowdfunding different from simply donating money towards a cause.
We loved our experience with planning and running a campaign, and in fact we are speaking at a workshop later this month because we want to share it with more people. Crowdfunding is a great alternative to traditional methods of raising funds for your business idea, and one that you should definitely consider if you have time and energy to invest, but no money of your own to invest.
The main reason we wanted to do crowdfunding was to build a community we could introduce our products to, and to test the waters with this community. We started at absolutely zero and built everything ourselves and we wanted people to get involved to see whether this idea, that we loved so much, was something that others could get passionate about too. It turns out that was the case and in October 2018 we finished a very successful campaign.
Here are our top three reasons why crowdfunding builds community, which is such an important thing if you are an online business and therefore don’t have a physical community. We live in highly decentralised times where many have lost a sense of community or lost a sense of belonging in their daily lives. Community building can be done online too, but you have to know where to find your people. Crowdfunding can help!
1. Testing your product
If you are using a crowdfunding campaign to raise funds for an idea that you would like to turn into a longterm plan, like a product range or a cafe or an online business, it’s a great way to test whether there is an interest out there for your product or idea. We approached crowdfunding as a form of pre-order: how many people would buy our product? Which idea is getting the most attention? What is people’s response? What are people looking for with a product like ours? Crowdfunding is a bit like marketing research executed in real life, not in a hypothetical way. “Would you buy this?” is turned into “You can buy this here and now.” Testing your product in this way can connect you to people out there who are your ideal customer.
2. Building an audience
You can interact with your backers and your audience during your campaign and really see what part of the campaign gets people excited. In an ideal situation, a portion of your crowdfunding backers will become loyal customers once you’re set up. And that’s why the campaign is such a great opportunity to already establish those connections, find your people, and build your tribe with whom you will continue to grow when you continue as a business after the campaign. Once you set up your business with your crowdfunded money, you already have a customer pool. A challenging part of setting up any type of business is finding your customers. With a crowdfunding campaign, you can find some of them before you have even started. Keep them close, treat them well, and you can grow together as your business grows up. For customers it’s a very special feeling knowing that they were part of the creation of the business they are now a customer of, and this can create a powerful sense of community between customer and business that is worth cherishing.
3. Getting help with investment when you have none
Having no savings to invest into your business idea shouldn’t keep you from chasing your goals. Traditional methods to get a business off the ground aren’t for everyone: business loans usually come with contracts, interest rates and risks for you if you don’t succeed. For two working women in the creative industries like ourselves it wasn’t an option to tie ourselves into a business loan, and neither did we want to get business investment and be obliged to report and comply to investors’ wishes or demands. We wanted to start a business, we wanted to do it off the back of the strength of our business idea, and we wanted to be in control of how we spent the money and how we took the company forward, were we to be successful. Which, luckily we were! It was very powerful to see over 300 strangers invest in our business idea and help us build our funds penny by penny. It was a team effort almost similar to a sports match: you feel invested into people you don’t even know, and you feel like you all did it together. And that is what crowdfunding can do, that no other form of investment or funding can do: it creates a sense of community from day one, which to us made the biggest difference in our business journey.
Crowdfunding allows anyone to receive investment, regardless of your personal financial situation, which is a great thing: if you have a great idea, then a lack of personal finances shouldn’t hold you back. There is no way we would be a company like we are today without a crowdfunding campaign.
We hope you feel inspired to maybe take the leap yourself, or advise someone you know to consider crowdfunding for their business. If you would like an in-depth workshop, you can find tickets to our event here.