The Scientific Approach to Crowdfunding, part 2/8: Use Your Friends & Family


Plan


Today, Symbid presents the second part of an 8-week online series on how to crowdfund your idea. What's so special? It's based on scientific research by Laurs, Leeuwen & Loggies from the Erasmus University of Rotterdam (The Netherlands).



Today we present part 2 (out of 8): "Use Your Friends & Family".


 



When running a crowdfunding campaign the first people who are probably eager to invest in your project or company will be your friends and family. These are the people you have been telling for months about your new start-up idea, these are the people who were highly involved in the start-up phase of your company, and these are the people who like your project just because of you. This looks like an easy way of getting funds, as your friends and family are probably highly willing to support you by making a donation.



However, an important thing to know, is that this isn’t as easy as it seems, and even more important to know is that the financial support of your friends and family can almost be considered to be a requirement to make the crowdfunding campaign a success.



The term ‘requirement’ might sound a bit strange, but Tetsuro Miyazaki from KRNWTR states “if not even your friends and family will invest, who is then going to invest in your company?”. So before you open up your crowdfunding campaign to the public, you should demonstrate the people in your direct network why your project or company is so amazing after which they should be persuaded to financially support you during the campaign.



As indicated by Ordanini et al. (2011), the first phase of a crowdfunding process is characterized by a quick and significant flow of investments by family and friends, which reaches approximately half of the target capital. After this first share of target capital is obtained, people outside your direct network see that others believe in your project and will actually consider to financially support you as well. This is confirmed by Robin Slakhorst from Symbid, who argues that 20-50% of the final capital is collected through direct relations.



Because this financial support from friends and family is so important, platform Geldvoorelkaar actually stimulates crowdfunding entrepreneurs to involve friends and family in the campaign. Symbid goes one step further and even requires the first percentage of the target capital to be invested by friends and family.



It is important to identify what type of investors are potentially willing to invest in your project in order coordinate your campaign, to pick attractive rewards, and to communicate at the right tone of voice. Next week we will focus on the importance of identifying the right audience.



 



What has been discussed and what's coming up next?



Introduction

Lesson 1: Use Your Friends & Family

Lesson 2: Clarify Your Target Audience

Lesson 3: Reward Your Investors! 

Lesson 4: Select The Right Type Of Platform

Lesson 5: Promotion Is Key!

Lesson 6: Keep Communicating

Lesson 7: Make A Masterplan!


 



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Posted over 6 years ago