Need More Green for Your Green Business? Here Are Some Smart Crowdfunding Solutions.
How to choose the best financial fit for your startup.
Opinions expressed by Entrepreneur contributors are their own.
From energy-saving cookware and smart bikes to home energy storage systems and efficient composting, many green startups are increasingly looking for capital to launch their business.
But with the forecast for global venture funding continuing to look bleak for early to mid-2023, green entrepreneurs may need to turn to alternative sources to score the cash they need to go to market.
For many startups, crowdfunding platforms have become a popular, more democratic means to secure funding. Rather than leave a business' fate to venture capitalists, crowdfunding enables entrepreneurs to pitch directly to consumers, including family, friends, and a built-in base of early adopters and sustainability champions who want to be a part of growing a business from the ground floor.
The expansion of crowdfunding platforms in recent years comes at an ideal time as the labor market continues to feel the impact of the Great Resignation, with as many as four million people quitting in the month of October, according to U.S. Bureau of Labor Statistics (BLS) Job Openings and Labor Turnover Survey program. Dissatisfied with their jobs during and after the pandemic hit, thousands of people either landed new positions, left the job market, or started their own businesses.
How to choose the right crowdfunding platform
Trusted crowdfunding platforms, such as Indiegogo, StartEngine, or GoFundMe, are good places to start if you want to raise funds.
Indiegogo's crowdfunding platform, known for its selection of tech, hardware, and innovative products, has a community of 950,000 founders who can tap into more than 13.5 million backers. The platform has raised more than $78 million for sustainable products and continues to see green tech as one of the most popular categories for fundraising over the last two years.
StartEngine boasts a community of 900,000+ founders. Launched in 2015, StartEngine is an equity crowdfunding platform that enables backers to take some ownership of a company in exchange for financial investments. The business recently reached a sizable investor community totaling one million.
Similar to Indiegogo, StartEngine doesn't discriminate when it comes to the kinds of businesses that can use the platform for fundraising and welcomes businesses across diverse verticals.
One of the more universally known crowdfunding platforms, GoFundMe, touts a global community of more than 100 million people with more than 17 billion raised for various community causes, including environmental charities.
No matter which platform you choose, here are three essential tips to follow that will help attract interest in a worthy campaign:
Tell a compelling story
Entrepreneurs can't sell units or build a community of backers unless they have a meaningful way to talk about their product or service. It is essential to develop a compelling mission and messaging that explains what a product is, how it works, and why people should care. Be sure to layer in rich content, including professional photography and video, which gives backers the confidence the product will perform as expected.
Tap into services that help build a fan base
Many crowdfunding platforms offer services and advice that help entrepreneurs build strong campaigns. For example, Indiegogo has a resource center where entrepreneurs can access videos and other rich content on topics such as how to convert followers to backers, how to test messages, how to provide customer support, and marketing best practices. For additional advice, entrepreneurs can visit StartEngine's blog, one of which encourages startups to market the raise by running incentives, perks, and ads.
Listen, learn, tweak
Browse other crowdfunding campaigns in similar and dissimilar industries to understand what campaigns are doing the best. Take note of how companies position their product or services, whether or not the company used a video, and what kind of messaging was shared on the video to understand what and how the product is resonating with an audience. Incorporate those insights into the materials being developed for your campaign to help draw a big community. When the campaign is ready to launch, be prepared to listen to customer feedback, make tweaks as necessary, and come back with a product that's ready for prime time.
A success story
BLUETTI AC500 & B300S, a home backup power station, was originally set up to raise $1,000,000 on Indiegogo and raised more than $11.5 million through 4,507 backers in its crowdfunding campaign. BLUETTI has since increased its raise to more than $12 million by using the platform's InDemand tool, which helps businesses extend its campaign to support e-commerce activities. LaunchBoom helped GoSun, a company that promotes solar-powered tech products, launch four different products, including GoSun Chill, the business' original solar cooler, in 2019 with a raise of more than $700,000.
The time is now for green entrepreneurs to take advantage of the green market momentum for what could be the difference between a lucrative launch or just a pipe dream.