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Friday, July 12, 2013

Those winning crowdfounders, crowdfunders, and businesses.

“Crowdfunding” isn’t really a novel idea, it is just a lost idea. It is a rediscovery of the power of the individual and of the people to push projects forward rather than relying on businesses or banks for the capital for progress. Rather than waiting for the lucky break, crowdfunding allows founders to get thousands of honest breaks, from friends, family, and perhaps more importantly, from inspired strangers.

Like a barn-raising, it allows people to invest in a better future for the community without much personal risk. Like a well-run bake sale it turns a profit not just because people pitch in, but because the future products or equity are just as enticing as the underlying cause.

So what is success in crowdfunding?

It is based on quality.
It is based on reach.
It is based on local interest.
It is based on good business and honesty.

How businesses founders crowdfund is seen as a reflection of the soul of their business.

Generally founders want (1) money on small or large scales (2) to demonstrate demand or fail quickly, or (3) to get marketing.

Yet a winning business doesn’t focus on what founders want, but what funders want.

Funders have mixed interests. In return for funding, they expect a relationship that results in their: (1) patronage without direct return except for social good, (2) giving a loan with the expectation of some rate of return, (3) getting a reward or benefit like input or “pre-selling”, or (4) investing with equity stakes or similar consideration.

Yet this relationship is only part of the equation. Funders want great ideas backed by practical plans, and confidence in a founder's ability to follow through with an informed plan.

Thus studies find that successful founders learn from their failures by failing big and quickly, and succeed by asking for what they will actually need. successful founders look for big amounts of money, because their plans have impact and push for a better future by bites, not nibbles. They demonstrate they are prepared in their plans. They show where the money goes in the final product by well-made products and advertising, as well as an actual practical plan. They spread the word, tell everyone, and show they will succeed. They find the market and play to it. They show that their products are driven and their people are resourceful. They know their market. People still live in reality and markets are bound by geography and personal interest. People care about their money. Successful repeat founders make a promise and deliver on time showing that the trust that was given to them was well placed. People who believe in founders then invest as funders.

So let us find the lost idea of focused inspiration together, and make those good ideas raise themselves to be smart honest businesses when they grow up. It is what both founders and funders want - a winning business and well placed trust.

Love and Yeggy loves well run businesses and happy employees, let's talk.