Crowdfunding & Virtual Business Pitches

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  • 0:00 Sources of Business Capital
  • 0:35 Crowdfunding: Platforms
  • 1:26 Video Pitch
  • 3:02 Video Copy
  • 3:47 Incentive List
  • 4:30 Lesson Summary
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Lesson Transcript
Instructor: Ian Lord

Ian has an MBA and is a real estate investor, former health professions educator, and Air Force veteran.

Let's take a look at how entrepreneurs can use crowdfunding platforms to pitch a new product or service to the public over the Internet and finance the business without resorting to taking on debt or selling off equity.

Sources of Business Capital

Tom wants to launch a business that will produce a specialty backpack. He has the idea for a product and has figured out how to get the products manufactured, but doesn't have the capital to get the business ready to launch. Tom doesn't want to borrow money, so bank loans and bonds are out. And there's no way that he wants to give up equity in the company. Crowdfunding is one way to raise the capital needed to start a new business. Crowdfunding is collecting small amounts of money from a large group of individuals through a digital marketing campaign.

Crowdfunding: Platforms

Popular crowdfunding platforms include Kickstarter and Indiegogo. These platforms provide the online space to pitch a product, accept payments, and communicate with other users. The companies keep 5% of what the marketing campaign raises and charge an additional 3%-5% for credit card processing based on the amount charged.

Kickstarter and Indiegogo differ in how they respond to marketing campaigns that fail to raise money. Kickstarter doesn't charge investors and the business isn't committed to completing the project. Indiegogo provides campaign managers with the option to continue crowdfunding even if the campaign doesn't reach its goal. In Tom's case, Kickstarter may be the better choice for a marketing campaign that depends on full funding to bring the backpack to market. Indiegogo may be more appropriate for Tom if he can bring the product to market without fulfilling his crowdfunding objective.

Virtual Pitch

A successful crowdfunding campaign depends on the effectiveness the sales pitch. Best practices include a video pitch that gets people's attention through text, image, and sound. A video pitch is like any other business pitch, aside from the fact that it's designed to appeal to a broader audience, not just a bank or venture capitalist.

A successful video pitch quickly attracts a potential customer's interest. For example, Tom needs to make it clear why his backpack is different from the competition. What makes it awesome? What makes the people who buy it awesome? A successful video pitch accomplishes this in a short period of time. Viewers are unlikely to watch a video that runs longer than three minutes. During those three minutes, the video needs to motivate viewers with a clear call to action.

Successful videos usually have the following components, beginning with the facts. In Tom's case, the video pitch should focus on his product and include a little information about him and his ability to deliver. Crowdfunding campaigns for a cause or an organization should include some basic information about the project.

A video pitch should also be entertaining, which makes it more likely that people will spread the word about the product and increase its exposure. This, in turn, can lead to more contributions The call to action is the crux of the video pitch. The desired action is almost always involves making a financial contribution and sharing the presentation through social media. In terms of technical quality, Tom needs to make sure that all aspects of the video pitch are audible and visible. He must also present himself as honest and passionate about his product.

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