5 Reasons Why Your Small Business is a Good Fit for Crowdfunding
Updated: Jan 10
If you’ve been thinking about crowdfunding your small business’s next steps, you might be wondering whether you’ve got the right characteristics for a successful campaign. While there’s no set formula for a perfect crowdfunding campaign, there are definitely some factors that give businesses an edge.
These are just some reasons why your business might be well-suited for a crowdfunding campaign:
Grow with Confidence, Grow with Community Capital
If you’ve been waiting to take the leap into funding your small business’s growth, now is the time to do it! There are many characteristics that could make you a superstar campaign, not just the ones outlined above.
Learn more about Honeycomb crowdfunded small business loans at www.honeycombcredit.com/grow, and sign up below to receive more information!
1. You’re the first small business of your kind in your neighborhood
People interested in investing in crowdfunding campaigns do so for a variety of reasons - return on investment, interest in community building, and also a desire to be a part of something new and exciting in their neighborhood.
If your business is the first of its kind to move into your area, that’s often a telltale sign that a crowdfunding campaign would work really well, because your neighbors are just as excited about having a new business as you are in building it!
Back Alley Brewing Company in Dormont, Pennsylvania was the first brewery in their neighborhood. It was started by a group of 5 friends passionate about home brewing who wanted to bring a new type of venue to their neighborhood! Back Alley Brewing raised $200,500 from 190 investors, all committed to seeing this new business thrive.
2. You’ve crowdfunded successfully in the past
If you’ve crowdfunded successfully in the past, debt crowdfunding will be a total breeze compared to that! We’ve found that the added incentive to investors of a return on their investment (instead of, say, a t-shirt for chipping in $100) causes them to be more likely to invest in your business.
Once you’ve crowdfunded, you already have an idea of the kind of work that goes into a successful campaign. You know that it takes a bit of self-advocacy, and a bit of work, but it can help you raise money and build stronger community relationships.
However, you also know that with some crowdfunders, you’re kind of all on your own. Not with Honeycomb! Our crowdfunding experts team will work with you every step of the way and advocate for your campaign, contributing to our high success rates - 83% over 22%, the industry average.
Nippitaty Distillery in South Carolina tried out crowdfunding through Kickstarter before turning to Honeycomb. While they found tepid results through Kickstarter, they pulled off an impressive campaign through Honeycomb! They ended up raising $67,377 to fund their taproom’s buildout from 58 investors.
3. You’ve got a great tie to the community
Although crowdfunding with Honeycomb helps you build stronger community relationships with the investor-business connection, it helps if your business already has a great reputation. Investors are more likely to want to be a part of the businesses in their community that they’ve been patronizing for years and have fond memories of.
Square Cafe is something of an icon in the East End of Pittsburgh, and when they decided to upgrade and move to a larger space, investors jumped at the chance to invest in their move! Their campaign was our largest yet - $250,000 raised in record time.
Now, you don’t have to be a Main Street icon to be successful at crowdfunding, but this just shows that having a positive relationship with your community - whether that’s by providing a welcoming space, doing community service, or connecting with others in your neighborhood - goes a very long way when it comes to reaching out to your community for capital.
4. You love collaborating with others
If you’re a star collaborator in your community, logic shows that you’ll be a great contender for crowdfunding. Small business owners who reach out to others, form connections, and support businesses in their network often see great success on the Honeycomb platform.
One such example is Squash the Beef, a Cleveland-based vegan catering company. They are serial collaborators, participating in popups in area bars and coffee shops and partnering even with other Honeycomb alumni like UnBar Cafe! Squash the Beef raised $30,000 to purchase a food buggy, so they could safely take their delicious vegan soul food on the road.
5. You have a tangible project you need capital to tackle
Another key ingredient to crowdfunding success is if your project is something tangible that is easy for the community to gather around. Investors like seeing the fruits of their investment as much as they like seeing the return in their pocket!
Whether you’re opening a new location, purchasing a food truck, building a new addition, or freshening up your space, having something tangible to show for your project will give people something to rally behind, invest in, and look forward to.
Kiin Lao and Thai Eatery is another iconic Pittsburgh restaurant specializing in Lao and Thai food. It originally was known as Bangkok Balcony and was specifically Thai food, but when the owner Norraset Nareedokmai visited Laos, he knew he wanted to bring the relatively unknown cuisine back to the United States with him.
This led to a complete rebranding of his already successful business, including an extensive remodeling of the whole restaurant! Visitors already familiar with the old restaurant could visit and see a totally new venue breathing life into their neighborhood in a tangible way, making it a project people wanted to invest in. Kiin ended up raising $33,658 for this restaurant rebranding project from 30 investors.