how fundraising work

How Fundraising Works

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Table of Contents

What is Fundraising?

Fundraising occurs when entrepreneurs and companies want to raise capital for their brilliant ideas. It is turning ideas into reality through receiving funds. A successful crowdfunding campaign is more about money—it is for a cause.

The Fundraising Process

Pre-Launch and Research

Fundraising should always start with the pre-launch which one of the most important pieces to in laying down a solid foundation. Therefore, it is an essential part of the fundraising process. Sufficient amount of time should be allocated towards conducting enough research to write a business plan, because it will show the world that your company has what it takes to succeed. If pre-launch is done right, there is even a possibility of not having to spend a single penny for your business. A pre-launch should be created to allow people to keep their eye on you and allows you to collect email addresses from people interested in learning more. Create buzz and make people excited for your crowdfunding campaign!
To do this, you must have an online presence, design a logo, choose a brand persona, and put together a business plan. Posting on a blog once a week for a couple of months before your campaign launch can make a difference and improves the chances that people will find you when searching on Google.

Identifying

Next, you should find your sources of capital. Not every source of capital is suitable for every business so you must identify one that is the right fit for your business. A business’ capital structure, or the way it is funded is either done through debts (loans) or equity (shares sold to investors).
Some of the top ways to raise capital are through angel investors, venture capitalists, government grants, and small business loans. Angel investors provide capital from personal assets and often look for startups that look like they have growth potential. Venture capitalists provide capital through an organization they have established and they are known to sponsor startups that show a promise and are reliable. Small business loans also help startups with their businesses and help them get their foot in the door. Government grants do not need to be repaid and are offered to entrepreneurs who have research-related businesses.
Other methods include credit cards or invoice financing, but should be used in cautious because there are risks involved. Credit cards can be used to finance immediate expenses without paying anything up front. However, credit cards can increase your debt with high annual percentage.

Pitching

Once the best sources of capital for your business is identified, you should present your campaign and make sure you adapt it to who you are speaking to and where you are. You should always keep your target market in mind.

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