One of the biggest questions we hear from entrepreneurs using our Success with Crowdfunding program is “How do I know what type of crowdfunding is right for my kind of company?” The importance of this question cannot be understated. If you fail to select the right kind of crowdfunding model (eg: donation, rewards, debt or equity) for your campaign you might very well never hit your funding target.
To assist answering this complex question we created the Crowdfunding Selection MatrixTM. It is a 3 dimensional way of helping you determine what type of crowdfunding is right for you. It is meant to be a guide more so than a definitive choice for you but it is based on the deep analysis our firm has done into where campaigns have been most successful based on the type of individuals backing the campaigns.
Here’s how you use it. Answer the following questions to the best of your abilities. The answers do not necessarily have to be all or nothing. They could be in-between (this is why the matrix is 3 dimensional).
- What kind of business do you have? Is it a service or a product?
- What stage of your business do you have? Is it an idea or it is established with customers and sales?
- What is the growth potential for your business? Are you a Main Street type of business that will have slow or moderate growth or are you a tech company that has great growth potential?
- Are the people that are going to be backing you risk takers? Or are they conservative?
Now on each axis plot the answers to your questions. Then connect the dots. The point of intersection should give you an idea of the type of campaign that is right for your type of business. You can see that each cube is color coded and numbered for the type of crowdfunding model.
We looked at a lot of campaigns and have dropped some of our findings in there. The colored circles with the small letters tell you which types of campaigns seem to work best for these kinds of businesses.
Remember, this is a tool that is meant to guide you. It doesn’t have to be this way. However the best way to confirm your findings on this matrix is to answer the questions, plot your findings, find your result and then ask someone whom you think would be a backer of your campaign if they agree? If not, talk about where they would plot you on the axes and have a discussion.