If you are a start-up or a smaller energy access firm looking to raise funds, then energy-targeted crowdfunding may just be for you.
Energy 4 Impact’s latest report, Crowd Power: Success & Failure – The Key to a Winning Campaign, offers crucial advice on how to develop a successful crowdfunding campaign.
The report is the third report in a series of five research papers, which explores the key processes and considerations involved in creating a successful crowdfunding campaign. Read more…
Here are some tips taken from the report:
Choose the right archetype
There are a four archetypes for crowdfunding: donation, reward, debt and equity campaigns.
- Choose donation or reward if you want a small amount of money to build and/or test a product. Donation crowdfunding is where the campaign-maker asks people to give money. Contributors are, therefore, driven by altruistic motives or a personal connection and it is your responsibility to bring the crowd to the platform.
- Choose reward if you are a start-up seeking to raise seed capital. Reward campaigns are similar to donation campaigns in that you have to bring the crowd to the platform. The difference is that contributors get some kind of reward. The rewards are usually symbolic such as a t-shirt with a logo.
- Choose debt if you have a solid business with at least a couple of years of good sales that can pass the due diligence of the platform. Debt crowdfunding platforms undertake a thorough due diligence process before a loan makes it onto the platform. However once a business has been accepted, these platforms have a clear advantage: a well-established, participating lender base. If you can demonstrate the ability to service a loan, this may be the approach for you.
- Choose equity if you have a strong concept, an excellent presentation, and are registered in a country, such as the UK, which allows equity crowdfunding. Other factors which can contribute to success include: having a novel and innovative product, owning your own IP, and having an international management team.
Choose the right platform
Each archetype has its own appropriate platforms. The following table taken from Energy 4 Impact’s report outlines suitable options for each of the four archetype models.
|1||Partnership model||For non-profits wanting to supplement income through recurring campaigns||GlobalGiving
|2||One-off fundraiser||For non-profits/social enterprises raising funds for a specific goal or initiative||StartSomeGood
|3||Personal fundraiser||For individuals raising funds on behalf of a charity or for a personal cause||mycause
|1||Aggregate network contributions||Formalise contributions from family and friends/network||Indiegogo, Pozible, Kickstarter, Generosity (non-profits)|
|2||Mega-campaign||Rare, high profile campaigns, raising funds for development of new technology||Indiegogo, Pozible, Kickstarter|
|1||Microloan debt||Loans to entrepreneurs, typically originated via MFIs – usually around $500 per campaign||Kiva, Zidisha, Milaap|
|2||SME loans||SME loans, typically working capital debt to companies pre-vetted by platform – usually upwards of $50,000 per campaign||Trine, Bettervest, Lendahand, Kiva DSE|
|1||Equity||Raises investment capital from a range of platform members, as well as the company’s network||Crowdcube, FundedByMe, Oneplanetcrowd|
Create strong and engaging supporting materials
Just like everywhere else in life, when it comes to crowdfunding, presentation is key. Successful campaigns depend on strong campaign materials, including a video, that engage and inspire potential funders.
Determine the right outreach channels for your campaign
Some outreach channels work better than others. Think carefully about your campaign’s purpose and target those channels that are most likely to reach a target audience that will find your message appealing. For example, Nairobi-based platform M-Changa recommends utilising Whatsapp and phones calls to encourage contributions, whereas holding events and personal emails may be more suitable for equity campaigns.
Raising capital from the crowd can be a long process. The process of identifying an appropriate platform, passing due diligence, and finally launching and closing a campaign, can often take six months. Be prepared to be in it for the long haul and be patient.
Energy 4 Impact has partnered with ten crowdfunding platforms as part of the Crowd Power programme, funded by UK aid, and has supported 100 crowdfunding campaigns across donation, reward, debt and equity crowdfunding.
To read the report, please visit Energy 4 Impact’s publication page: http://www.energy4impact.org/publications