This is a practical guide for successful diaspora crowdfunding campaign. How to have a successful online fundraising campaign through diaspora crowdfunding.
The article looks at things you need to be aware of, in order to have a successful money raising campaign online. Especially if you are targeting those in the diaspora.
Crowdfunding began as an online means of financing by friends and family. Communities also pooled money to fund members with business ideas.
Diaspora crowdfunding means raising money online from a large number of people living in the diaspora.
That is, raising money for your venture or idea through a diaspora community.
African entrepreneurs have been slow in adopting crowdfunding because of technological and regulatory challenges.
Despite the slow adoption, crowdfunding has been heralded as an opportunity to expand access to capital for entrepreneurs in developing economies.
In spite of the hurdles, African entrepreneurs are utilising innovative strategies to overcome the challenges they face when raising money online for their businesses.
Therefore, this article offers tips based on lessons learned from the first adopters of crowdfunding in Africa.
How you can successfully raise money online using a diaspora crowdfunding campaign.
These tips are meant to help you anticipate what to expect and to be well prepared.
They will also help you to carefully consider the opportunity costs of running a successful online fundraising campaign, compared to other available sources of capital.
The insights given here are from practical experiences of early adopters of crowdfunding campaigns.
The information will serve as a guide as you consider when, why and how to launch your own diaspora crowdfunding campaign.
If you are an entrepreneur in Africa and other emerging markets. And you are interested in raising money online from the diaspora through a crowdfunding campaign.
Here are the things you should know:
Running a successful diaspora crowdfunding campaign is not easy.
Raising money online from the diaspora is much more difficult than most entrepreneurs anticipate.
Although opportunity costs abound, is not for everyone.
Firstly, you need to start by researching other crowdfunding campaigns in similar sector or geographic areas.
Secondly, in order to run a successful diaspora crowdfunding campaign, you need significant human and financial resources.
Thirdly, a diaspora crowdfunding campaign can take months to prepare. You will need to spend hours conducting online and offline communications.
For example, you would need to dedicate long hours during each day of the campaign.
Those hours would include those spent on extensive outreaches. You may also need to take time to directly thank donors, give media interviews etc.
Determine the opportunity cost by comparing the total time you will spend on diaspora crowdfunding with the estimated time needed to raise other types of capital.
Let the needs of your business dictate your platform choice.
As an entrepreneur, you need to realistically assess how much capital that can be raised from the crowdfunding platforms that serve your geographic area.
In order to better anticipate the time commitment, you need to engage with entrepreneurs who had run similar diaspora crowdfunding campaigns.
Visit crowdfunding platforms and contact crowdfunders via their profiles.
Those willing to reflect on their experience will help you in deciding, if the needs of your business will be met using that platform.
If the needs of your business include raising capital and/or well networked mentors.
Then, an equity platform may be used to engage diaspora angel investors and other prominent members of the diaspora community.
However, debt and equity platforms that tend to enable larger amounts of funding are often not available in many emerging markets due to regulations.
If yours is a project with a significant social good component, that offers rewards in return for the charitable contributions of diaspora donors. Then, you need a donations platform.
A peer-to-peer lending platform is what you need to access debt if your business needs a significant amount of capital to leverage its cash flow.
Let the requirements and guidelines listed on these platforms to guide your decisions.
The payment system is important in determining the platform choice.
Each crowdfunding platform has a unique payment processors and payment guidelines.
This means that the payment requirements of a platform will greatly impact who can receive and contribute to a campaign.
As an emerging market entrepreneur, make sure you consider platform restrictions.
This will help you decide whether a particular crowdfunding platform will enable the raising of money from your online networks.
Leading international crowdfunding platforms often set restrictions on who can launch campaigns and use their payment systems.
They often bar contributions from contributors from the developing world.
However, you may also need to explore whether the restrictions would still apply in international crowdfunding platforms. Since much of diaspora contributions would be coming from the developed countries.
Otherwise, local-based platforms are better suited to engage the developing world, but have a much smaller pool of potential contributors.
Quality and quantity of contributor networks are key if you want to have a successful diaspora crowdfunding campaign.
Assess the diaspora fundraising potential of your online social networks before starting your campaign.
Take time to build your contact base in the diaspora. These are the people who will contribute the capital and promote the campaign.
In addition, entrepreneurs who can raise funds from their existing networks before a campaign goes live, stand a better chance of meeting their fundraising goals.
For example, an entrepreneur who had a Kickstarter campaign discovered that almost 60 percent of the funds came directly from people within their social network (Facebook, Twitter, and Google).
Even though they had marketing outreach from third party media outlets and on Kickstarter’s homepage itself.
Seek resources to assist you in achieving a successful diaspora crowdfunding campaign.
If you do not have access to literature about best practices, that will increase the chances of success of your crowdfunding campaign.
In addition, if both qualitative and quantitative data are unavailable.
Business support organisations and mentors can be essential sources of information.
They provide support for first-time crowdfunders with locally relevant information and crowdfunding experiences.
Also, they can connect you with local service providers (e.g. videographers, marketing professionals, mentors, etc.) who have prior crowdfunding experience and can support your campaign.
You can make use of online resources such as instructional manuals, data sets and testimonials from platforms that have them.
In addition, entrepreneurs should also utilise resources available through the African Crowdfunding Association (ACfA).
Benefits of diaspora crowdfunding campaign.
In addition to capital, diaspora crowdfunding can help to increase the credibility and market awareness of your business outside the country.
Sometimes, you can also benefit from new partnerships, sales or investment.
The feedback from contributors can also help you refine your products or business models.
The exposure you get from the diaspira campaign can help you foster and build new foreign and strategic partnerships.
For example, an entrepreneur who did a fundraising campaign, received calls from everyone, from recruitment agencies to equity partners.
Although he did not reach the set fundraising goal, as a result of the campaign. His company signed a contract worth $120,000 with one of its partners.
While the six lessons above should serve as a practical guide to a successful diaspora fundraising campaign.
Especially for small business owners or entrepreneurs looking to utilise diaspora crowdfunding successfully.
The lessons also indicate a number of potential actions for improving crowdfunding platforms.
Beyond monetary gains, crowdfunding can help an entrepreneur to increase the visibility and transparency of their business.
As a result, it also helps to increase the perceived trustworthiness of you and your business with customers, investors and partners.