There’s a new trend in the startup ecosystem and it’s called crowdfunding.
To understand this trend, that means you need to know what the meaning of crowdfunding really is.
What is crowdfunding?
In a simpler version,
Crowdfunding is basically an online fundraising technique that makes use of the power of social networks and the internet to raise money for projects, businesses, or ideas.
That wouldn’t have been funded otherwise.
Interestingly, there’s something you should know better.
Do you know how crowdfunding works?
I’ll explain.
…Crowdfunding works by connecting investors(called “funders”) with prospective project owners(called “creators”).
In this case, funders only invest their money if they feel confident that they can see a good return on their investment.
Creators, on the other hand, are given money in exchange for equity or future earnings, on those earnings in effect, they sell shares of their company.
In other words, crowdfunding is a way to fund your business or project through small investments from a lot of people.
Take a look at this.
Here’s what statista said,
- Transaction value in the crowdfunding segment is projected to reach $1.74m in 2022
- The average funding per campaign in the crowdfunding segment amounts to $1.03m in 2022
- Transaction value is expected to show an annual growth rate of 5.68% resulting in a projected total amount of $2.30m by 2027
Eystone team did a fantastic job stating that 12% of small businesses are headed looking forward to crowdfunding to raise funds to launch their startups into a large-scale firms.
The question is:
So, why crowdfunding in Nigeria?
As you know.
Starting a business is challenging and risky.
The more interesting fact is that starting a business with little capital, little knowledge of the industry, and a limited local network is even riskier.
However, that hasn’t stopped Nigerians from launching businesses.
According to the world bank report, as of 2012, Nigerians are among the top 10 individuals investing in startups outside their home country.
In fact, Nigerians-led technology companies have collectively raised over $200 million in venture capital funding in the last decade.
Do you know that?
With the rise of social media, crowdfunding investment has become extremely popular over the past few years.
In fact:
Nigerians are starting to embrace this trend and use it to raise funds for a range of projects.
Whether you are looking to fund your company or launch a new product, crowdfunding investment could be an excellent option for you.
How do I know?
Well, you can use various crowdfunding platforms, such as:
- Kickstarter
- Gofundme
- MicroVentures
- Indiegogo
Heck, to grow your business, create awareness about your brand and drive sales in the process.
In other words, here are some tips on how you can kickstart your crowdfunding investment or campaign in Nigeria.
5 Tips that can help you get started in crowdfunding in Nigeria:
- Research and identify your audience
- Build a solid product with a strong team and a good strategy
- Build a great crowdfunding pitch and story
- Select the right platform for your crowdfunding campaign
- Benefits to expect from crowdfunding investment
First of all,
What is the advantage of this campaign?
Well.
…Crowdfunding has a number of advantages, including the fact that it is completely free to set up and operate.
In addition, it’s also an easy and convenient way to raise money online.
You won’t have to get on a plane and fly to other countries to try to get investors.
Plus, you can keep your business private while crowdfunding.
The sweet thing is…
It’s also a great way to get your product out there.
In addition, you can use crowdfunding as a way to test your product and get feedback from customers.
If you choose to go with a crowdfunding platform that accepts equity investment, you’ll also be able to raise money without giving up a percentage of ownership.
And with equity crowdfunding, you’ll be able to raise money from people who might be investing in your business.
In case you don’t know…
We have four major types of crowdfunding investment:
- Donation-based crowdfunding
- Debt
- Reward-based
- Equity
Research and identify your audience
The first step to kickstart your crowdfunding campaign is to understand your audience.
And then decide how to reach out to them.
There are a number of ways you can do this.
You create a Facebook or Instagram page and build a following there.
This is a great way to reach out to your audience because you’ll be able to share updates about your campaign and what you’re working on.
A plus, you can also create a Youtube channel and share videos about your product and crowdfunding campaign there.
Another incredible way to reach out to your audience is to post on online forums and blogs related to your product or industry.
According to Easyship,
The success of a crowdfunding campaign depends largely on two major factors:
- How well the campaign is presented
- How many people does it reach?
If you want to kill two birds with one stone, then you’re going to need a solid social media strategy for Facebook, LinkedIn, Instagram, Twitter – anyplace your audience hangs out.
Your social media accounts can be used to create targeted advertising and branding to spread the word about your campaign.
Research has shown that when you share with more people on a social media platform, your probability of success increases, too. For example, if you share to 10, 100, or 1,000 Facebook friends, the probability of success increases by 9%, 20%, and 40% respectively.
Another thing is that.
You can also create an online community where people can join and participate in discussions about the product and how it can be used.
The more you can get your crowdfunding campaign out there, the better your chances of success will be.
Build a solid product with a strong team and a good strategy
Before you think of starting your crowdfunding campaign.
You need to make sure that you have a solid product that people will want to buy.
As well as a talented team to back up the product and help make it successful.
By the way, you also need a solid crowdfunding business strategy that outlines how you plan to make money and profit from the product.
Once you have these things squared away, you can create a Kickstarter or Indiegogo campaign as well as a Gofundme campaign.
Not just that.
You can also set up a Luminald campaign and find a platform for equity crowdfunding.
Build a great crowdfunding pitch and story
The key to a successful crowdfunding business in Nigeria is having a great pitch and story behind it.
This is the thing that will convince people to actually donate or pre-order your product.
You have to be able to tell them they should buy it.
Here’s an example:
According to blogfundly, the image of Angie is a powerful one, since it is focused on just her face and shows some of the hair loss that was a result of her treatments.
The image tugs on donors’ heartstrings and reminds them of why they should donate.
Not just that.
The descriptive update puts the fundraiser into perspective and explains why the campaign was set up in the first place.
The language is also very loving and family-oriented, helping to make this a successful crowdfunding campaign.
That’s why your pitch should be compelling, interesting, and easy to understand.
It should have a hook that gets people interested in your product and makes them want to support it.
In other words, your pitch should be short and to the point.
You also need to think about the story behind your product, such as:
- Why did you make it?
- What inspired you to create it?
- Why do you think it’s going to be successful?
You need to be able to convey all of these things in your crowdfunding pitch so that people are motivated to give money and pre-order your product.
Select the right platform
Depending on the type of product you are crowdfunding and what you hope to raise, you can choose between various types of platforms.
For example, if you are raising money for a creative project, a platform like Kickstarter or Indiegogo will work best for you.
In case you are looking to raise money for a start-up business, you can use a platform like Gofundme that allows you to raise money in exchange for equity in your company.
If you are not sure which platform is right for you, you can visit the crowdfunding websites and look through the FAQ section.
In order to find information on the features and benefits of each platform.
Another thing is that:
You can also subscribe to their email list to receive updates and notices about new campaigns as well as tips and advice on how to make your campaign a success.
Benefits to expect from crowdfunding in Nigeria
Crowdfunding is one of the most efficient ways to get your project or business off the ground.
You can create a profile on a crowdfunding platform or website, tell people about your product, and ask for donations or pre-orders.
By doing this, you’ll receive funding from other people who are interested in your project or business.
Some of the most popular websites in Nigeria is Gofundme.
If you are successful, the money you raise will help you fund your project or business and get it off the ground without taking on debt or having to depend on an outside investor.
Sweet, right?
This can be great if you don’t have a lot of money to kickstart your business.
And/or you are unable to get a loan from a bank.
Conclusion
Crowdfunding is a great way to raise money for your product, project, or start-up business.
It’s easy to set up and use and can be done from anywhere in the world.
You can also use it to test the product and get feedback from potential customers.
The more money you raise through crowdfunding, the better.
In return, you can use it as proof that there is interest in your product and that people want to buy it.
Now that you have read about the process of getting started in crowdfunding in Nigeria.
You can also do well and invest in real estate.
Kindly get in touch with us here. I want to invest