Startups could make more use of alternative funding, entrepreneur urges exploration
Is crowdfunding a big thing for business startups in Leicester? “No, it’s very small”, says Constantina Muston. “And that’s the problem”.
Dr Muston is a former academic and an entrepreneur with an interest in innovative businesses and growth acceleration. She’s convinced that startups are missing out if they fail to consider crowdfunding as an option.
A campaign, as crowdfunding projects are known, is a way to fund startups or business growth by tapping into the resources of the online community. People who like the innovation, or support the enthusiasm and energy of the innovators, offer cash, usually as donations or loans. It can be a practical alternative to traditional forms of startup funding.
Investors do not generally buy shares in the business. Equity crowdfunding is rarer and more complicated legally. More likely their motivation is to support a venture they would like to see succeed, incentivised by non-financial rewards, such as free or cheap access to services or products.
For the entrepreneur it’s not just about the cash pledges. Planning the campaign sharpens your thinking, forces you to examine your proposal with the eyes of a sceptical outsider. You get to interact with potential customers who can offer insights that you’d never thought of.
“It’s a way to pre-sell your product,” says Dr Muston. “You find out if you have customers.” She’s such an advocate for crowdfunding that she’s curated an authoritative set of resources, documents and weblinks, all designed to get people up to speed on how crowdfunding can work.
The resources explain different forms of crowdfunding, the merits of various crowdfunding platforms,the philosophy, the pros and cons, and down-and-dirty tips for doing it.
Advice comes from serial entrepreneurs who’ve walked the talk, the European Commission and academic papers. Experts stress that crowdfunding is not an easy option. It’s hard work and an emotional roller coaster. One downside is that there is no stealth mode in the development process. Everyone, including competitors, can see what you are doing and why.
Without minimising the challenges, Dr Muston is convinced of crowdfunding’s significance. “It’s a way to change the world”, she says.
For access to her resources, tweet a request to Constantina Muston @startdoms. She’ll send a link and a password. It’s free.