What Is Go Fund Me?
Go Fund Me is becoming increasingly popular amongst innovative startups who do not have access to conventional investment forms but are looking to scale a business.
But what is Go Fund Me exactly, and is it a viable choice for your business?
Go Fund Me is a crowdfunding website that allows anybody to collect donations for pretty much anything, whether it’s a birthday party, life-saving medical treatment, or a brilliant business idea.
Let’s dive into the world of crowdfunding and its pros and cons.
Can I Use Go Fund Me To Raise My Business’s Finance?
Yes! Go Fund Me is one of many ways you can leverage crowdfunding to inject capital into your business. But there are a ton of pros and cons.
The first thing to clarify is that Go Fund Me is for-profit, so you’re going to pay a 2.9% processing fee, plus $0.30 for every contribution.
Say you raise $1,000 in ten donations of $100; your fees will be about $32.
Go Fund Me is one of many crowdfunding platforms. Each one appeals to different ventures, with varying fees and policies of use.
Crowdfunding can be a fantastic way to connect with people worldwide and communicate your passion for an idea.
However, while crowdfunding is popular with inventors and entrepreneurs, there’s no guarantee it will work. Similarly, connecting with business professionals to help you turn your idea into a reality can be challenging too.
Alternative Ways To Raise New Business Investment
If you’re unsure whether crowdfunding is for you, there are other ways to draw capital into your business. Before deciding which route to take, it’s good to consider all your options.
You must know a startup advisor’s responsibilities, as well as those of angel investors and venture capitalists. But not all investment comes with long-term business relationships.
Angel Investors
An angel investor can be worth a great deal more than the cash they offer. Most will provide capital in return for an ownership stake or convertible debt.
Many tech giants today were founded this way - think Google and Yahoo!.
This type of investment can be an exciting opportunity as an experienced investor may offer connections and opportunities to help you get a head start.
Venture Capitalists
Venture capitalists usually invest at the early stages of a startup, like an angel investor.
The difference is that the expected rates of return are higher, and they usually prefer to take an equity stake rather than convertible debt.
Loans And Microloans
Loan financing is a conventional way to raise money for a business expansion project.
It’s less accessible for startups without an established trading structure, but there are specific loans aimed at new companies.
If you’re looking for short-term financing without taking on a long-term investor relationship, a loan could be an attractive option.
US Small Business Administration
The SBA offers a range of grants to small US businesses, entrepreneurs, and community organizations.
They provide funds to help new ventures get started, but the program is very competitive, so you’ll need to have a solid pitch to win a grant.
Another route is SBA lending but be mindful that interest rates are usually slightly higher than with microloans.
Advice On Raising Startup Business Finance
Whichever form of fundraising you choose, due diligence is crucial, so you know:
What terms are attached?
How long is the investment period?
What returns and reporting are you expected to produce?
What are the investor’s expectations?
The best investment route might look different from business to business, so before choosing an investment solution, make sure you review your business’s individual needs. For example, how much are you looking to raise? And why do you need this money?
The key to an excellent funding pitch is to state your value proposition, what impact you’ll make with investors’ money, and how your business idea is unique.
It’s also important to factor in bookkeeping, whether you’re raising a short-term loan or establishing a permanent equity investment structure.
Financial lenders and investors will refer to your filed accounts, forecasts, business plan, and estimates to make any decisions, so you need to have your paperwork in order from the word go.
Finally, never be afraid to project your personality and enthusiasm into your pitch, whether it’s a formal one or a Go Fund Me campaign.
Excited audiences that care about your initiative are far more likely to get involved. So, the more creative you can be and the more flavor you can add to your pitch, the greater your chances of success.