Crowdfunding for Social Enterprise: The CEO of StartSomeGood Answers Your Questions
Q&A with Tom Dawkins, CEO of crowdfunding platform, StartSomeGood, for advice on raising capital to fund your social enterprise with crowdfunding.
March 28, 2019
According to Startups.com, worldwide crowdfunding raised $2.1 billion USD from 2014 to 2016.
This equates to over $119,000 raised.
We recruited Tom Dawkins, CEO and co-founder of social impact crowdfunding platform StartSomeGood, to share his best advice for crowdfunding to raise capital for your social impact project.
JUMP TO QUESTIONS:
1. At what stage in my organization's growth does crowdfunding make the most sense?
You can succeed at crowdfunding at any stage so long as you approach it right and execute well. We’ve seen it work for brand new ideas, to support the exploration for great ideas, or even for organizations like NPR and 100 year-old community newspapers.
The sweet spot for crowdfunding is when you have made some progress: you've demonstrated your capacity, validated your idea, and now you’re ready to grow.
The best crowdfunding campaigns are always where the crowd’s funding, the money, is the last piece needed to move your initiative forward.
2. How should I select my campaign funding goal?
For you as the fundraiser, the second model probably sounds much more enticing. I mean, who doesn't want to keep what they raise? But it's not really a question of keeping what you raise or not keeping what you raise.
The real question is: “Which model is going to make it easier or harder to raise the funds in the first place?”
3. What resources do I need to plan and execute a successful crowdfunding campaign?
An outreach strategy is only as good as your ability to identify your target community.
If you don't know who you're trying to reach, you can't possibly create an effective plan to reach them.
Be thoughtful about the community you're trying to build. Then put the time into researching and identifying key channels and opportunities to communicate your story to them. Once you launch, you can do the hard work of getting your story out there and sharing it with people.
The key “job” of crowdfunding is not creating the page itself - it's doing the outreach and community building around your idea.
I strongly advise that you focus on planning pre-launch. You want a rock-solid plan that outlines what you're doing every single day of your campaign. Then, when your campaign launches you have everything you need to execute efficiently.
4. What's the most common crowdfunding mistake and how can I avoid it?
Another mistake is not researching which platform can provide the most support or has the highest success rate. Many people simply use whatever platform their friends used, even if it’s not right for their project. A lot of people have launched campaigns without knowing the difference between “All or Nothing” or “Keep What You Raise” approaches. Some do not make a strategic decision around which model is best for them, not realizing how much harder “Keep What You Raise” (also called “flexible funding”) approaches can make it - especially when you’re introducing a new idea or product.
If you take it seriously and you invest time and effort in planning, then you're already halfway to success.
5. Are various campaign rewards typically more or less successful?
For example, if you're launching an ethical food business, providing tote bags to your supporters is great because when they take the bags to the farmer's market, they're advertising your business to your perfect target audience. If you're doing an activist campaign or a social change movement, providing t-shirts with slogans is great. People love t-shirts so they will be more likely to contribute. They're now promoting your message more broadly when they wear them.
The very best rewards do what we call "double duty". They make your supporters feel rewarded but they also help you achieve your wider goals.
Ask yourself: What are the rewards that will help your supporters spread your message, get more involved, experience the good you’re creating, or feel more deeply connected?
6. I'm part of a nonprofit that currently relies on corporate fundraising but we would like to diversify. Is crowdfunding a good starting point for nonprofits?
Organizing a gala or making 100 t-shirts to sell has huge upfront expenses. While you need to invest in the effort of planning, creating and running it, a crowdfunding campaign doesn't necessarily need to cost anything up-front.
My advise for nonprofits looking to diversify funding sources: start relatively small.
7. How can crowdfunding help me to build community around my organization?
The funds you raise are an output of the community you've built. People go wrong with crowdfunding when they think of it purely in transaction terms.
Crowdfunding is relational: it's building a tribe around your idea, startup, organization, or project.
You wouldn't crowdfund if you didn't need the money, but the long-term asset, which is still there long after the money’s gone, is an empowered community with a sense of ownership around what you do. That's ultimately what can carry you forward and help you achieve great impact.
8. How much relationship building do I need to do before I start crowdfunding?
Crowdfunding is all about relationships. Every transaction represents a relationship, new or old.
The best way to acquire new supporters is through existing supporters and peer-to-peer sharing.
9. How is crowdfunding connected to credit development?
Because SEFA wants to support the sector, they're willing to experiment and be innovative. What we've come up with is exactly what you're describing - using reward-based crowdfunding in our platform as a qualifying instrument for debt investment from them. We hope to see more of this in the future; often there's a lot of power when we combine different types of fundraising, or assets, in order to find the best mix to support the growth of the sector.
10. What role does crowdfunding play in the disruption of the current economic structure?
11. What's the difference between traditional crowdfunding and equity crowdfunding?
Equity crowdfunding is when you buy a share in the company through the crowdfunding campaign.
Rather than pre-purchasing products or donating to good work, you invest in the company in the way of an early-stage angel investor.