Did you try but fail to raise money through crowdfunding? While crowdfunding is a great idea in theory, in execution, only 35 percent of Kickstarter projects earn the requested amount of money.
If your campaign is unsuccessful the first time around, you still have plenty of great options to raise the money that your startup needs. Here are five other funding options to explore when your crowdfunding campaign fails.
Flexible funding
Which crowdfunding site did you use? This answer is more important than you may think. The rules for the various crowdfunding platforms are all different, and you may already have access to some money.
Several major crowdfunding groups like Indiegogo and RocketHub have flexible funding rules in place. Flexible funding means that while you didn’t reach your goal, you did earn some donations, and you can use this money for your project.
Flexible funding rules vary by site. For example, Indiegogo charges 5 percent for both fixed funding and flexible funding. They will keep $5 out of every $100 that you earn through the site. Indiegogo also charges service fees at a cost of 3 percent for each credit card transaction. Your seemingly failed crowdfunding project could pay you 92 percent of the amount that you raised.
By choosing flexible funding, you receive a portion of the funds, and something is better than nothing when your business needs money. The catch is that you must enable flexible funding when you start the project, not after.
Related: How to Make a Killer Crowdfunding Campaign Video [Book Excerpt]
Try crowdfunding again
The old adage is that if you don’t succeed at first, you should try again. That’s particularly true of crowdfunding given the above discussion about flexible funding. If you didn’t crowdfund with that option enabled, you missed out on potential money. You had some support for your project, right? You should make another attempt, learning from your past mistake.
The first step is obviously to choose flexible funding as an option. This might help you reach your goals, and hopefully you will make enough money to sustain your business. Of course, you want to make as much as possible. That’s why you should lower your fundraising goal. After the failed attempt, you have a good idea of how much support you have. Base your new goal off of this information.
Finally, try to market your crowdfunding attempt better this time. The money you invest in advertising right now is money that you’ll get back when people donate to your project.
Get a factoring loan
When you need money now, one of your best options is a factoring loan. This type of money exchange isn’t a loan or a line of credit. You should think of it as an exchange of cash. You get money from a trusted factoring loan vendor, and in exchange, the financial institution will receive your accounts receivable.
The factoring loan is a way for both parties to skip the middle man. You need money, but you don’t have time to wait for your customers to pay you. A financial institution wants to use its resources to make the most money possible. The company will get a solid return on its investment thanks to the money from one of your assets: invoices.
This cash flow option is particularly good for certain businesses. For example, if you work in the fashion industry, you’ll face a long delay between the purchase of your materials and the release of your products. A factoring loan gives you plenty of time to design your goods. You won’t feel rushed to release them into the marketplace since you don’t need the cash. You can use this extra time to make the best products possible. That’s great for the reputation of your business. A factoring loan can help you enhance your reputation in your profession.
Try a different site
Kickstarter gets most of the headlines, but it’s far from a monopoly. You have your choice of dozens of popular crowdfunding sites. If popularity isn’t a huge issue to you, that number increases to 2,000! With so many great options available, you shouldn’t feel locked into any single crowdfunding site. Instead, you should take the philosophy that success is all that matters. If a crowdfunding site fails to meet your needs, dump it.
When you choose a new crowdfunding site, first evaluate your goals. Who is your startup’s target audience? These things matter as much in your crowdfunding as they do with your regular daily work. You are trying to sell a product or service, after all. You want to attract investors to your company.
Some crowdfunding sites may fit your needs better than others. Are you targeting a specific niche? You may want to skip the major sites. Places like Kickstarter offer general crowdfunding options. Sites like Fundly, Bolstr and Localstake target small businesses. The investors who frequent these places are looking for companies with crowdfunding projects like yours.
You also know now that you should rule out any site that lacks flexible funding. It’s the most important factor for shaky crowdfunding attempts that might not vest fully.
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Try the old way
The fifth option after a failed crowdfunding campaign is to ignore the internet. Rather than asking random strangers on a crowdfunding site to invest in your idea, take some initiative.
Make a list of the people that you know who might have the money and inclination to invest in your startup. Contact them directly and explain your situation. Let them know that you’re willing to make a favorable deal in exchange for some fast cash. Make sure to offer either a decent interest rate or a future business discount as an incentive. As long as you make the investment worth the other party’s efforts, you can raise your own funds.
A failed first attempt at crowdfunding doesn’t spell the end of your business. Instead, you can follow the five suggestions above to find other solutions to your cash flow problems.
