Even as most Nigerians complain about the
challenges facing the country, more people are praying for more
problems. This is because within those problems lies the power to
transform the country. You only need to be calm and persevere to see the
possibilities.
The difference in perception is the
reason why many people are running away from Nigeria. Foreigners who see
the possibilities are rushing in, facing and tackling the challenges.
And they are making in-roads in several industries in the country.
While many people have creative and
innovative ideas, the question of funding has always been the number one
limitation facing many entrepreneurs and innovators.
However, the concept of crowd funding is
an innovative way to raise funds for ideas. Many people are embracing it
as a concept since sourcing for funds from venture capitalists and
banks is highly competitive and currently poses a huge challenge to many
businesses.
Maybe, the story of tomato juice will
inspire you a little. It is no news that Nigerians love fresh tomatoes
and tomato paste. Yet, in a country with plenty of arable land, over 60
per cent of tomatoes produced never get to the market. They get rotten
before reaching the market because of the shortage of storage and
processing facilities in the country.
Since we lack the resources to process
and store tomatoes locally, Nigeria remains one of the largest importers
of tomato paste in the world. It reportedly wastes almost $500m
annually on imported tomato paste.
While this is sometimes considered to be a
viable business idea to ‘agropreneurs’, getting banks and investors to
invest in the risky and unpredictable agriculture industry can be a
daunting task.
Enter the story of Mira Mehta and Shane
Kiernan. Last year, the two Harvard- educated Americans successfully
raised $54,000 for their start up of tomato juice after their crowd
funding campaign on Kickstarter that lasted about 30 days.
While the funding raised from the public
on Kickstarter will hardly solve the many challenges within the
country’s tomato paste production sector, they have taken a bold step
and other people needing the right kind of funding , investment and
support can learn a lot from them.
What is crowd funding?
It is the practice of funding a business
idea, project or venture by raising monetary contributions from a large
number of people via the Internet. Traditional financing used to be
about asking people and banks for money. Crowd funding is an innovative
way to fund ideas, businesses and projects, especially when you need to
escape the problems of documentations and collaterals. It essentially
allows you to reach the public or consumers directly, making it look
like you are sourcing for funds by sharing envelops but this time
digitally.
Some of the most common crowd funding
platforms include Kickstarter, Indiegogo, Fundable, GoFundMe,
FundedbyMe, Razoo, Pozible, Crowdtivate, MedStartr and 234Give.
Some can be industry-specific and involve
ideas in medical, agriculture, application development, service sector
and not-for-profit organisations.
Kickstarter is the most popular of all
crowd funding platforms and can boast of 9,000 active campaigns at any
moment. Till date, there are claims that it has raised over $1.26
billion dollars in funding.
Crowd funding platforms also have a
peculiar way of functioning and it is not only donations without
partnership and responsibility.
There is the reward-based crowd funding
where contributors get no financial returns for their donations.
Instead, they are offered thank-you perks or even an early version of
the product/service being funded.
This is the most common and offers a
project owner requires to get a business idea beyond its present level.
And project owners do not need to repay the donations.
However, equity-based crowd funding
requires that the donations made are actually investments. This
essentially means that crowd funding platform will operate like you are
selling shareholding in your company.
How can you succeed with crowd funding campaign?
Kickstarter admits that only 44 per cent
of its crowd funding campaigns are successful. However, it is not always
the fault of the platforms but challenges are traceable to the business
idea, value proposition and positioning. How can you ace a crowdfunding
campaign?
Be clear about the problem your business is solving
Most businesses succeed with their crowd
funding campaign because they are solving a problem. It is important to
identify the challenge you are trying to solve because people will
connect with your dreams and aspirations easily. People who understand
what you are trying to do are also more likely to invest in your ideas.
Clearly identifying the problem you are solving also helps you immediately identify the solutions you need.
Communicate propositions clearly
You need to communicate the propositions
clearly and articulately. Using clearly-established digital tools and
platforms such as social and digital media communications, infographics
and videos is important. Building a story into your value propositions
helps you communicate depth, connect deeply and emotionally with your
target audience and build an established brand.
It is a pitch, build it
Crowd funding is an option to begin to
consider if you want to choose the largely un-charted road of disrupting
the market, beat the existing loopholes