Crowdfunding is one of the fastest growing sources of funds for any new venture. It is a method of funding a venture or project through the collective efforts of family, friends, customers and individual investors. There are many online crowdfunding platforms or websites that investors can use for crowdfunding. The idea is to raise a significant amount of money through small contributions from individuals. Crowdfunding is a particularly well-suited idea for any green business.
Crowdfunding might be the best option for your green business if:
- You have an intriguing and clear story
- You can tell people why they should contribute money to your green business
- You can explain what you are trying to achieve for society and the environment and how much funding is necessary.
The success of any crowdfunding initiative depends on the business idea or proposition. As more people become mindful of environmental issues, they tend to show more interest in supporting green businesses.
Benefits of Crowdfunding
Aside from the obvious importancce of funding, there are several other benefits to a crowdfunding approach. For example, it gives your new enterprise exposure to wider investor pools, as well as helping to validate the business concept through crowdfunding support. Crowdfunding can also be a major platform for promotion, marketing and product improvement.
Crowdfunding can be a great way to validate the concept of your green business through the aggregate response of individual investors. As well, you might receive helpful comments and ideas from them. People who are interested in funding your green business might want to mention how your business can do a thing or two differently to improve its offering.
Types of Crowdfunding
The three most common types include donation-based crowdfunding, reward-based crowdfunding, and equity-based crowdfunding. In donation-based crowdfunding, there is no financial benefit to contributors or investors. In reward-based crowdfunding, individual contributors receive some form of product or service as a reward for their contribution. Finally, in equity-based crowdfunding, contributors become part-owners of the business by trading capital for equity shares.
It’s the nature of your business that will determine what kind of crowdfunding works best for your business idea. If your green business idea relates to a non-profit business, a donation-based crowdfunding approach may succeed. Otherwise, you will be better served to explore the other two options. If the required amount to start the business is big, equity-based crowdfunding is the best choice. There many instances of raising $50,000 to $10 million through equity-based crowdfunding.
Major Crowdfunding Platforms for Green Businesses
There are about 500 crowdfunding platforms online. Following are some of the best online crowdfunding platforms for green businesses:
- Indiegogo: Indiegogo is one of the largest crowdfunding platforms online. While it covers every industry, it has a section called Environment. So, if your green business idea is something to do with environment awareness and protection, you can go for this platform. Normally the fee is 4 percent of the funds collected. Lots of green initiatives are raising funds using this platform.
- Fundly: Being one of the largest platforms for crowdfunding, Fundly has many different categories of projects. It has a section called Non-Profit and Charity. You will find a vast number of social and environmental projects getting funded from this platform. It charges 4.9 percent plus credit card processing fees.
- GoGetFunding: This one too is another popular and large platform with several different categories. For green businesses, it has a grouping called Charity and Non-Profits. If your business is in the non-profit industry, this platform can be a good idea. It’s a global platform. You will find projects from around the world raising funds using it. It charges a flat 4 percent of funds raised as fees.
- StartSomeGood: This is a large crowdfunding website that has a section called Environment. It is perfect for both profit and non-profit businesses. It is free to submit a project on StartSomeGood. And once a project reaches its goal, the platform charges 5 percent of raised money as fees.
- EquityNet: This platform has a section called Energy and Utility. So, if your business proposition is about solar energy or any other green energy, you can try this out.
- FirstGiving: A significant subsection of this platform is fundraising for non-profits. Fees for projects are not more than 5 percent.
- Mosaic: Mosaic is a crowdfunding platform for solar energy-related businesses.
- Sunfunder: Just like Mosaic, Sunfunder is a platform for solar fundraising.
- WorthWild: “Funding the environment” is the tagline of WorthWild. So, clearly, you can consider using this platform to finance your green business. But it is not as popular as most other platforms mentioned above.
Unfortunately, many large crowdfunding platforms like Kickstarter do not have a section for non-profit and green businesses. But make sure you check those sites from time to time in case they add a relevant section.
Keys to Success
Don’t assume that your crowdfunding success is guaranteed. It will take your best efforts to succeed. Here are some important tips you must apply to be successful in your crowdfunding venture:
- Know How It Works: First and foremost, you need to know how crowdfunding works. You need to do your research about different platforms and their policies. Also, read case studies of successful projects.
- Have a Clear and Intriguing Proposition: This is the most important part. If you fail to explain why people should contribute to your green business, you can’t expect people to open their hearts and wallets in support of your concept. Work hard on your idea, consult family, friends, and experts, learn how other people feel about your idea and come up with something exceptional. You must explain how your business is going to make a unique difference for the environment or society.
- Be Active Online: Interested contributors will have questions about your project. They may want to be sure about the credibility and transparency of your business before contributing. So, you have to be online as much as you can. Promote your idea in social media platforms and interact with interested people.
- Promote as Much as You Can: No matter how good your idea is, you need to promote it well. Make an informative video explaining your idea, try to cover all the basics of your business in the video and share on social media.
- Have a Team: If everything is done by a single person, the challenge can become daunting. Consider raising a team of people who will work together to promote your crowdfunding campaign.
Successful Crowdfunding Examples of Green Businesses
With the right idea, entrepreneurs have reason to be optimistic. E-Car Club successfully £100,000 on a crowdfunding platform called Crowdcube, the first totally electric car sharing club in the UK. Powervault used successive crowdfunding campaigns to raise £150,000 and £700,000 respectively for its domestic electricity storage device project. There are many other examples of successful crowdfunding campaigns for green businesses.
Harnessing the support of the crowd can help ensure your vision for a better business and a better world.