Money, Money, Money!
Your initial thought might be, “But I don’t have any money to start a business." The idea of having to raise capital to fund a new venture can be a daunting prospect for many people. The task can feel even more overwhelming and exhausting when you’re not seeking support for a “traditional” business venture.
Thankfully, there has never been a better time to undertake such an endeavor. One of the great advantages of being an activist entrepreneur is that you have more of a range of options to raise money and promote your cause compared to traditional small businesses.
Unless you have personal funds on hand, you will likely need to find investors willing to invest their money into your business. But how do you find those willing to provide financial support to a venture that prioritizes the promotion of social change over mere profit?
It may be easier to attract workers, volunteers, and certain investors if your business concept improves the world, and your reputation is based on honesty and integrity.
As an activist entrepreneur, you already show a propensity to embrace new ideas and to look for creative solutions to today’s often complex problems. Your attempt to secure capital should be handled in the same vein.
Because banks and traditional lenders may be hesitant to provide start-up capital for non-traditional enterprises, it is necessary to explore alternate sources of financing.
Crowdfunding
Crowdfunding is a new means of investing that allows you to reach a broader audience. Historically, setting up a business involved asking a few well-heeled people for large sums of money. This often involved giving away a stake in the business in return for capital investment, which was financially disadvantageous for the business owner.
Crowdfunding reinvents the way people invest. Crowdfunding websites provide you with a platform to communicate with thousands—if not millions—of potential sponsors and/or investors that each contribute a small amount. This lending is done without the expectation of a financial return or any stake in the venture once launched.
Instead, the investor’s reward stems purely from a sense of altruism. These investors are people who, through their economic decision-making (or spending), are consciously trying to support a positive change.
There are several popular crowdfunding sites to help you fund your social enterprise. Kickstarter, GoFundMe, Crowdfunding.com, and YouCare are platforms that connect you with ethical investor sponsors. Funding sites like KissKissBankBank, Kiva, and Indiegogo enable you to articulate your cause and receive funding and feedback on your proposed business venture. In recent years, these websites have completely changed the landscape for entrepreneurs.
Research the various crowdfunding websites available, and then choose which one is best suited for pitching your idea. It’s straightforward to sign up and get going—and, best of all, it’s free!
Crowdfunding platforms offer a viable means for raising capital. You will need to determine what your requirements are and then adequately articulate your needs.
1. Share your Story
Let potential sponsors know who you are and the social goals you aim to achieve with their support by sharing your vision. While providing facts and data is imperative, you can deliver an emotional punch by also sharing personal stories and anecdotes. Investors will be more likely to fund your business if they feel emotionally moved by your cause and business idea.
Remember, fundraising for activist entrepreneurship is unparalleled by any other form of fundraising. You are not pitching a bank or a traditional investor here. Instead, you are passionately sharing your ideas for improving the world.
Your overall idea should be well-ordered and articulated. However, your business plan does not need to promise a return on investment or repayment of a loan.
This is your opportunity to present your vision of a better world— one that others can play an important part in helping to create. Let potential sponsors know that by contributing funds, they're helping to make the world better through practical and sustainable solutions. Paint them a clear picture of what they will gain, other than monetary benefits, by investing in your business.
While you will want to clearly state your fundraising goal, you should do so at the end of your pitch. Discussing finances prematurely will distract potential contributors from your main message.
Let your vision and your passion lead you. If you have a solid idea with a realistic proposal, people will want to support you and your cause, whether your financial needs are large or small.
2. Set a Funding Goal
Now that you have put forth your story and vision, you have hopefully captured the interest of your audience. At this point, you will want to state your funding goal. It is important to be realistic when setting your targets.
When considering which fundraising website or websites to use, you must be aware of how funding models differ from one website to another. Kickstarter, for example, has an “all-or-nothing” funding model. Simply put, if you achieve or exceed your target, you receive the money pledged to your cause. However, if you fail to reach your target, you receive nothing.
Other websites operate in a slightly different manner. Some may allow you to receive anything pledged, whether or not you hit your target. This variation in funding models again shows the importance of thoroughly researching fundraising websites to determine exactly which will best suit your needs.
3. Share Details of Business Needs
In addition to setting your fundraising goal, you should explain in detail the specific needs of your business. Examine whether you will require money for labor, space (land or office), training, and permits. Have the following in mind as you plan and prepare for your business needs:
- If your business idea benefits the world and your reputation is one of decency, you will captivate employees and investors.
- How will you structure the leadership of your social enterprise? Will you have partners and financiers or function as a sole enterprise? There are benefits and hindrances for both.
- Have you considered asking for volunteers to assist with your day-to-day business needs? You can also request donations to bolster your bottom line.
- If you are starting your social enterprise without money or resources, that’s okay. You can still articulate your vision for the future.
4. Promote your Campaign
To spread awareness about your cause, there are various technologies at your disposal.
Here are some simple tips to help you get started:
- Generate Interest: Use social media to inform people about your project. You can create accounts on major social media platforms like Instagram and TikTok and share your vision with thousands of potential viewers. Once you’ve established followers, you can deploy email campaigns to keep people interested and informed.
- Turn Interest into Backing: The goal with promotional content is to convert interest into financial backing. The more you share, and the wider your content reach, the greater your chances are of receiving funding.
5. Update your Backers on a Regular Basis
Business goals and needs are not static. You may encounter new opportunities or obstacles that alter your plans. As such, you will need to keep your investors and supporters apprised of any new developments or issues. When your backers are updated and informed, they are more likely to remain involved with your cause and even encourage others to join your cause. If you don’t share regular updates, you run the risk of losing existing backers’ interest. Furthermore, you may fail to attract as many pledges as you would hope.
Fortunately, crowdfunding platforms generally have built-in tools that allow you to easily update your project backers and send messages to them. Take advantage of these tools and keep everyone engaged.
Hype is unnecessary. Be honest and consistent with your updates. If things aren’t going exactly as you had hoped, be transparent. Backers appreciate candid and truthful communication.
6. Fulfill your Promise
It’s important to understand that a crowdfunding campaign doesn’t end with the achievement of one’s funding goal. Instead, the campaign is completed only when the creator has fulfilled all of the stated promises. This means completing your project, delivering on your goals, and making sure that you’re communicating with supporters every step of the way. Some words of advice: don’t overcommit and stretch yourself too thin. If you do, you risk pushing yourself to an early burnout.