Crowdfunding continues to gain popularity and grow into the most well-known and successful alternative finance tool. This means there are an increasing number of platforms entrepreneurs can choose from – a report by the International Monetary Platform (IMF) estimates the crowdfunding industry will be worth between $90 – $96 billion.
Each platform has its own unique set-up and style, making it a time-consuming process to narrow your choice down and make a final selection. One way to help reduce your options in one fell-swoop is to decide between a platform with global reach or a specialist, local one.
What a global platform can offer
When you’re pitching for funding for your start-up, most of the time you want to cast your net as wide as possible. New ideas often get rejected on numerous occasions before the right person sees the potential in them.
A global crowdfunding platform has the ability to reach millions of potential investors, increasing the opportunity of reaching your funding target. Those millions potential investors will each have their own:
- unique background
- set of values
- investment comfort level
By choosing a platform with the ability to tap into potential investors all over the world, you’re much more likely to reach investors who will find your project interesting enough to commit financial support.
A global crowdfunding platform will also do a lot of the hard work for you with regards to ensuring your pitch and start-up adhere to the different rules and regulations for each different country.
As an entrepreneur this might make your initial pitch submission more time consuming. However, it should also mean that you have provided all the required information in one hit, allowing your pitch to be seen and invested in by a much larger pool of interested investors.
Online investing is a growing sector and the ability to tap into this appetite on a global scale can reap huge rewards for entrepreneurs who choose this route.
Localised platforms have benefits too
Of course, while global crowdfunding platforms have a wide reach into a truly global investor landscape, there is also a place for localised, niche platforms too.
Localised platforms can work well for start-ups who:
- Are solving a problem which is prevalent in one region
- Use local ingredients or materials to create the product
- Understand the local demographic well enough to know their business will be successful
If you’re confident that potential investors in one place will believe in your start-up because of the unique problem its solving, then go local.
But, if there is global appeal to your product, going local might mean your potential investor pool runs dry too quickly. That will make it harder to secure the investment you need for a second funding round for your next launch phase. Your only option here would be to submit a completely new pitch on a completely new platform with a whole host of new requirements.
Of course you will always need to submit a new pitch for a new funding target, but when you switch between platforms you’re in unfamiliar territory. This can create a lot of extra work for yourself and while it will likely be worth it, you could have saved some valuable time by making a different initial platform decision.
Even if you want to target a local audience first you can still make good use of a global platform by:
- Making your roll out plan clear
- Explain why you want to roll out in phases and start with your local audience
- Pin point for potential investors when you plan to start phases 2, 3 and beyond
By laying out a clear plan for growth to a global investor audience you will be less likely to run out of financial support. It’s also a good way of keeping your plan clear for yourself.
Take your time
With so many crowdfunding platform options it really does pay to do your research. By doing your best to select the right platform for your business from the start, your chances for success will increase.
While this won’t always be one with a global reach, for many entrepreneurs it probably will be.
- IMF study: http://www.infodev.org/infodev-files/infodev_crowdfunding_study_0.pdf
- 2015 NESTA report: http://www.nesta.org.uk/blog/competition-between-global-local-and-niche-crowdfunding-sites