Community Economic Development Fund

Articles and podcasts to help plan and operate your enterprise.

Kickstarter may be your best option to raise capital

By Anthony Price
Founder, Loot Scout

In business, anything is possible, but you need money. I wrote the book “Get the Loot and Run: Find Money for Your Business” to help businesses source funds. After personally seeing success by using crowdfunding to finance this book, I decided to use Kickstarter for my next project.

Many people don’t have time to read 300-page books. Yet, books contain ideas and knowledge that provide accessible and affordable solutions for entrepreneurs. This week, I launched my next Kickstarter campaign to raise money to create mini books: 30 minutes of reading that fits in your pocket for on-the go people.

I choose Kickstarter, the largest reward-based crowdfunding platform, because banks don’t fund these types of projects. Moreover, I didn’t want to spend months courting angel investors. I wanted “patient” (slow) capital on my terms.

Since April 2009, almost $4.8 billion has been pledged on Kickstarter and over 177,000 projects have reached their goals, everything from a smart ring, a documentary about public transportation in New York City, to handmade donuts.

Kickstarter is all or nothing. If you don’t reach your goal within the allotted time—even if you’re only a dollar short—you get nothing, and your backers’ credit cards don’t get charged. The pressure is real, like watching your favorite sports team attempt a comeback while the clock winds down.

A good story and marketing is the key. While Kickstarter has 17.4 million backers, you must persuade your tribe to be the earlier contributors. Successful campaigns get family, friends, friends of friends and the public excited about the projects.

You must spread your message through social media, blogs, vlogs, email, texts and personal telephone calls. I sent a mass email to my newsletter list a few days before launch to show my prelaunch page. On launch day, I sent an email reminder to announce that my campaign was live.

I have only 35 days to reach my goal of $20,000. Visit my campaign to see how I describe the project. In the end, you may learn that Kickstarter is your best option to raise capital on your terms.

Author Anthony Price is founder and CEO of LootScout. He has appeared on CEDF’s Small Business as Usual Podcast. An excerpt of his book Get the Loot and Run: Find Money for Your Business” was published on this site last year. Reach him at anthony@lootscout.com.

 

 

 

 

It's high time you learned SEO basics

Nate Berger of KnockMedia in New Haven provided an excellent introduction to the world of Search Engine Management (SEM) and Search Engine Optimization (SEO) in our recent seminar. I wish all of our clients could have attended because it has been my observation that while almost all of our borrowers have established functional, attractive websites, sadly, many of them are not well tuned-up for best search results.

I think much of this occurs because of a separation in the marketing world between the developers of small business websites, who often have a graphics design background, and the specialists who have experience with the technical settings that improve Google's ability to understand the contents of a website. Once a website is created, the work of improving its technical settings sometimes is forgotten. And often whoever writes the copy for the website, whether someone associated with the business or a marketing company, also fails to consider certain SEO basics.

Small business owners are busy people and can't be expected to master every technical subject and conduct all the adjustments on a do-it-yourself basis, even though in many cases the most essential tweaks would be well within their capability with a little study.

If you're going to run a business, you have to at least understand the principles of marketing, finance and personnel management (to name a few subjects) and know when to reach out for expert assistance. With so much activity running through the internet nowadays, even business owners who don't think they conduct e-commerce, really should try to pick up the fundamentals of SEO. This website provides a great foundation and is worth investing a few hours of reading. The return on the time invested is likely to come back quickly in the form of more customers and sales once the website tune up is accomplished.

-- Frederick Welk
CEDF Business Advisor

It's the leader not the concept

The mythology of American entrepreneurship goes something like this. You research a problem that startlingly nobody has ever noticed. You contrive a solution that your testing demonstrates is attractive and you build a Minimum Viable Product, or MVP. Your value proposition makes your customers an offer they can't refuse, and in no time your swelling sales allow you to raise millions from venture capital, leading to personal fortune and a few magazine covers.

Dileep Rao, a business professor at Florida International University gathered some surprising facts that make it clear that this is, well, a myth. He points out that VCs fund very few ventures, only about 100 out of 100,000 prospective deals. And only 20 of the 100 prove a success, with just one spectacularly so. So, Dr. Rao concludes, venture capital doesn't help 99.98% of the companies. 

His thesis is that there's too much emphasis on product, whether on TV's Shark Tank or in pitch contests or in business schools. What's really important, he contends, is the not the MVP but the MPE, or Maximum Potential Entrepreneur. That is, someone with the right set of skills to be a better leader than his or her competitors. Most rocket-ship type companies succeed because of management not because their core product was so unique, he says. These crucial skills include product development, sales and financial acumen. And not many people have this combination of abilities.

So maybe the unicorns that investors famously hunt for are the founders not the business concepts.

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