Marvin raised over $120,000 on Honeycomb to open up his brewery, Swedesboro Brewing Company.
It takes skill, strategy, and a great business idea to raise over $100,000 on a crowdfunding platform. Luckily at Honeycomb, we've got the first two covered - all we need is your superstar business. Read on to find out a bit more about how to successfully raise a good chunk of cash to grow your business!
Pick your crowdfunding tool wisely
When picking a platform to crowdfund on, it’s important to consider the kind of crowdfunding you want to do, because it will definitely have an impact on how much you’re able to raise.
Crowdfunding can be broken down into two main categories, which each have their own distinct subcategories.
First, you want to break it down into whether you want to do donation crowdfunding or regulation crowdfunding. The question here is, do you want to pay your customers back with your crowdfunding campaign?
Donation crowdfunding can be broken down into gift and reward crowdfunding. Gift crowdfunding usually involves a charitable bent and is seen in platforms like GoFundMe. Reward crowdfunding, like Kickstarter or IndieGoGo, is when you raise money without the expectation of paying anyone back, but you offer “rewards” like t-shirts or free meals to incentivize people to give to your campaign.
Regulation crowdfunding, Reg CF for short, is crowdfunding that’s watched over by the Securities and Exchange Commission (SEC). It allows you to crowdfund by offering securities, which you will pay back to people who invest in you.
When you’re trying to raise in the triple digits and more, it’s preferable that you do some kind of regulation crowdfunding. Why? Well, by giving your customers a financial incentive to contribute to your crowdfunding campaign, you’re more likely to get more people to invest, and more people to invest larger amounts of money in your campaign. After all, why would you kick $100 to a campaign in exchange for a t-shirt, when you could get that $100 back, plus interest?
Regulation crowdfunding can be even further divided into equity crowdfunding and debt crowdfunding. Equity crowdfunding is when you offer percentages of your profits to investors, and debt crowdfunding is when you take out a loan from your investors, which you pay back with interest.
Debt crowdfunding is great, because it is a finite payback - once you pay off your loan, that’s it! You’ve got your growth project managed, you’ve got your customer’s goodwill, but you don’t need to pay them your profits into perpetuity like you might have to with an equity campaign.
The final distinction you need to make is what platform you want to use, because they’re not all the same. With most platforms, you’re kind of on your own with setting up your campaign and promoting it. They also probably won’t do any legwork on promoting your campaign, unless you do really well on your own. Honeycomb, however, pairs you with a coach who helps you at every step of the way (more on that later), and we promote all of our campaigns equally.
Set up a compelling campaign page
One of the most important aspects of your crowdfunding campaign is going to be your campaign page. For many investors, this is going to be their first impression of you!
The best campaign pages tell your story in a compelling way, but also shows that you mean business. This is where you talk about your history, your plans for your business’s future, and how you intend to get there with your crowdfunding campaign.
Having photos on your page is imperative, because people are visually drawn to good-looking pictures. A video is even better. With each Honeycomb campaign, you get a free professionally-shot video to promote your campaign.
Also, once you’ve crafted that perfect campaign page, don’t let it gather dust! Be sure to share it everywhere, and we mean EVERYWHERE.
Listen to your coach
One of the most unique aspects of Honeycomb, and the reason why our success rate is 83%, compared to the industry average of 22%, is that we pair up every business who crowdfunds with us with an expert coach.
Your crowdfunding coach is your strategist, lifeline, and best friend throughout the process of running your campaign. They’ll provide you with a customized playbook with all sorts of tactics on how to best run your campaign.
Working with Honeycomb also allows you opportunities to use our resources to promote your campaign. We’ve hosted pitch events both online and in-person for businesses to invite the public to see what they’re about and ask questions about their campaign. We’ve also done panels in the past where current campaigns and Honeycomb alumni get the chance to talk candidly about their experiences as a business owner and to promote their businesses.
We can’t emphasize enough how unique this is for a crowdfunding platform, and how integral having a coach is to the success of your campaign. They are your crowdfunding sensei, so listen to them, even when they tell you to wax-on, wax-off - there’s a reason!
Promote your campaign on every channel!
It’s time for a bit of shameless self-promotion around here. Promoting your campaign as widely and as frequently as you can is one of the biggest factors of success to a crowdfunding campaign.
There are so many outlets you can use to promote your campaign: social media and email are two of the most common, as crowdfunding is propelled by the Internet. However, having physical collateral, as well as signs up in your place of business (if applicable) are all really, really effective ways of getting eyes on your campaign.
Going to the press is also a great way to promote your campaign. Regulation crowdfunding is still such a new way of investing, that not many people even know about it. Often, local papers will see this and pick up the story, especially if no one in your area has run a crowdfunding campaign like it before. (This is also just great, in general, for marketing your business - crowdfunding campaign aside!)
Some of the most effective crowdfunding campaigns we’ve seen are those where business owners make themselves available to answer questions and talk with people interested in investing.
You could participate in a panel or pitch event like we suggested earlier, or you could include a calendar link on your campaign page for investors to schedule a time to talk to you about the campaign. Rachel Regula, owner of Little Spark Refill Shop in Cleveland, did this and raised enough to open up her shop’s second location!
Don’t give up - we mean it!
The downfall of so many crowdfunding campaigns is that they either don’t follow the advice given to them, or they give up after days of seeing no contributions. This is the biggest mistake a business owner running a crowdfunding campaign can make.
We get it, life is tough for a business owner. You’ve got so many responsibilities to attend to, and running a crowdfunding campaign might seem not worth your energy. However, it’s a lot of up-front effort for a long-term benefit.
It’s so important at this stage to not give up, and if it feels like it’s not working, to double down on the advice from your crowdfunding coach.
Raising $100,000? No problem.
We’ve done it before and we’ll do it again with the winning combination of your incredible small business and our expertise in loan crowdfunding. Find out more about how a Honeycomb crowdfunding campaign can help you reach your business’s financial goals and more by filling out the form below!