How crowdfunding can prove your startup is a great idea
Sophie Mackintosh from the Virgin StartUp team talks us through how crowdfunding can work as a vital tool to validate your business idea before you apply for a Virgin Start Up Loan.
When you’re starting up, it’s vital to ensure that your business is actually a good idea. Your business is your baby, your treasured project – to you it’s the world. But to your potential customers and investors, it’s just another idea floating around in a sea of cool ideas. How can you make people sit up and take notice? Through proving it’s a great one.
One of the most important parts of a Virgin StartUp loan application is the business plan; and a big part of this is proving that you’ve done some research into the demand for your product. So we’re thrilled to be teaming up with Crowdfunder to find and nurture startups. Get the ball rolling with a successful crowdfunding campaign, prove the viability of your business to us – and we’ll match the amount raised with a startup loan. How’s that for validation?
Here are some more reasons that crowdfunding is a great way to prove your business idea.
Taps into an audience
Let’s start with the obvious; if a crowd of friends and strangers alike are willing to back your idea, and pledge actual money towards it, then you know you’re onto a winner. Going around asking people if they like an idea will probably get you plenty of yeses; but getting people to put their money where their mouth is for something that doesn’t even exist is a bigger yes. It proves off the bat that it’s a concept that engages people, and also gives you an insight into who your future audience is – and how large it might be.
Gets you feedback
The interactive nature of crowdfunding allows people to comment on your campaign, and for people to get in touch with you directly if you’re happy for this — meaning that people can get in touch with questions, suggestions, and more. This can help you refine your idea further, and give you insight into what’s working and what’s not.
Makes you think logistics
So you might have an awesome concept, but how do the practical elements stack up? Crowdfunding forces you to evaluate how it will logistically work. How much money do you need? Where’s it going to go? Is that a realistic amount to raise in the timescale? How much will fulfilling your pledges cost you? What are the practical elements you need to sort out in order to fulfil your pledges and get the ball rolling? Hey presto, you’ve suddenly translated your idea into a business plan outlining the viability of getting your business off the ground, proving it can be done.
Proves it to others too
You want to know that your idea will work – and so do investors, buyers, banks and more. Having the support of your backers will help prove to others that you’ve got a solid audience ready for your product, making you a more attractive prospect, even if this raising investment or additional funds isn’t something you’re considering for a while yet.
Gives you perspective
Perhaps you’re completely in love with your idea, but the response to your campaign is more lacklustre than you anticipated. Nobody likes to see this, but knowing that there’s something that’s just not clicking with your target audience can give you some perspective, and trigger some soul-searching. Are you targeting the wrong audience? Is it a really competitive space, and perhaps you’re not quite different enough? Crowdfunding can help you look at it with fresh eyes.
Are you ready to crowdfund your idea before applying for a Virgin Start Up Loan? Get started today.