How will Crowdfunding give your business the right start?

Diagram showing how crowdfunding works, includes title of blog 'How will crowdfunding give your business the right start'

Blog post by Andy Stuart, Consultant at Real Ideas Organisation. Real Ideas Organisation are a delivery partner of the Enhance Social Enterprise Programme.

Money. It is the fuel for business. Right? Well maybe, but it is not the only reason why you should consider crowdfunding for your business.  Along with fundraising, there are a number of other pay-offs to conducting a crowdfund campaign which are likely to benefit your business if you listen to what the crowd is telling you.


One of the biggest challenges a start-up faces is capital. Getting some money to invest into your idea so that it can become a reality is a very important task and many social entrepreneurs look at crowdfunding because it offers a chance to raise money without many of the restrictions that come from grant funding. Grant funding is often a very necessary part of running a social enterprise, but many operations come unstuck in the early stages by focussing too heavily on which providers might want to support them. Mission creep becomes a real possibility as people consider the demands of the funder over the goals they have as a business. This can have a negative effect on both the operational model of the business and the intended benefits to their community.
By looking at raising money from their community directly, a business will be actively reinforcing its need and will justify its future existence. As long as you listen, a crowdfund will provide more than cash. In fact, 82% of successful campaigns result in further engagement from the community (RL – Crowdfunder UK, August 2019) and other, non-financial contributions such as time, expertise and experience. If you are prepared to be courageous and ask the community for input as well as cash, you can shape your enterprise into something that you know is going to resonate with them. If your mission creeps this way, you can be confident it is going to have both business and community benefit.


It may seem self-evident, but by creating a crowdfund campaign, a business will put itself forward before not just its own community, but much wider. Most successful crowdfunds are run by people who not only create a great offer for donors, but also push it out into the digital world through the whole gamut of social media outlets. There are roughly 45 million social media users in the UK (Avocado Social – Feb 12) which represents over two thirds of the population and of these, around 39 million are active on mobile devices. This means your audience need not simply by confined to your own geographic area. By actively sharing details of your enterprise through your own networks, it will find its way to literally millions of people as it gets spread. If your campaign is interesting and engaging enough, many people will not only hear about it and have the opportunity to contribute, but they will also be able to become potential customers for the future.


The consequence of getting your message out into the world in this way also highlights another key fact that an enterprise should really take heed of. Does anyone actually care about what I am doing? Many social enterprises get caught up in the small world they inhabit and assume that the problems they see and are trying to overcome, are also perceived in the same way by everyone. The reality is, the thing you are trying to do, may not be seen as a problem by as many people as you think. By carrying out a crowdfund, you get the chance to test the market for when you actually go live and need customers for your service or product. This is by no means an exact science and certainly not the reason in isolation to do or not do, but you have to consider if you are on the right track if your campaign doesn’t ignite a response.


A crowdfund campaign will really focus the mind. By considering what is at stake in terms of creating a profile, testing the market and generating some seed funding, the process will really test you as an entrepreneur to see if your heart and you more importantly, your head, is really in it. One of the most important things to remember about running a business is that not everyone can do it. It takes determination, resilience and the ability to accept that things won’t always go your way. If any of these traits are not in your make up, then running a business may not be for you. It is a world of waking up and getting going, hitting the phones and constant emails, and of going to bed checking your phone before dreaming about what you need to do tomorrow. In short, it is really hard.
If you pass this test – and be honest with yourself – then the pieces of the puzzle should begin to fall into place. You will have success in raising start-up capital, you will identify and begin to develop your future audience, you will have evidence that you are not a lone voice and you will have shown resolve to do what it takes to make your venture work.
Good luck.

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The Heart of the South West Enhance Social Enterprise Programme is receiving funding from the England European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020.