The rise of crowdfunding can be attributed to numerous problems with traditional venture capital investment. The VC world can be very exclusive, and is far more active in some areas than others. There are constant issues with VCs pushing early growth in ways that harm businesses’ long-term prospects. And there are also serious problems with diversity in VC funding, despite university studies supporting diversity as a positive factor in startup performance.
Crowdfunding helps to address all of these problems. It is essentially by nature more widely available; it allows entrepreneurs to maintain more autonomy, and grow at their own pace; and it can give minority business leaders a better shot at funding, whereas they are sometimes excluded in the traditional VC arena.
While these are all reasons to consider crowdfunding in general though, there may be an additional reason to do so in 2020. That is that VC investments could be limited coming off of such a turbulent financial year, and may be unusually focused on a few specific areas. Forecasts on 2021 VC activity suggest that biotech and pharma will be soaking up a lot of funding, and a few other sectors like edtech and telecommunications are also expected to be busy. This doesn’t mean VC funding won’t be an option at all for the average startup, but it may be harder to come by than usual.
So, again, crowdfunding is a strategic route to consider for 2021. Though beyond this basic idea, there are a few reasons we’d suggest that there are also specific advantages to pursuing crowdfunding with a coach in the coming year….
Cutting Out Confusion
We have dug into some of the reasons to crowdfund with a coach more generally in the past. And the main point from this past exploration that is relevant to 2021 is that a coach can help you “cut out the confusion and focus on goals,” regarding both funding and business planning.
In the most basic sense, investing in a coach for your crowdfunding efforts means partnering with a professional who’s done (and studied) this sort of thing before. Though modern funding platforms have made the actual dynamics of crowdfunding fairly straightforward, the strategies and organization involved can still be quite complex. A coach can simplify them for you, and help you to approach your funding efforts within a focus on both the big picture and short-term goals.
Help with Social Media
This is a more specific benefit, but it’s another one that came up in the aforementioned look at the benefits of crowdfunding with a coach. Putting things simply, a crowdfunding effort without an accompanying social media campaign in 2021 isn’t doing the work it ought to be doing. Your social media is your best way of affordably putting the word out about your company or product, and this will be all the more true as we move into a year in which social distancing and remote commerce will still be common. Consumers will be looking for opportunities and interactions online, and through social media you can turn some of them into investors. Crowdfunding coaches with experience doing exactly this can help you.
Support While You Better Yourself as a Leader
A lot of prospective business leaders today are actually turning to online educational opportunities in order to better prepare themselves for management positions. And particularly with startup culture having slowed down due to the conditions of 2020, this may be a more sensible path to pursue than ever before. In theory, you can pursue an online masters in management and leadership now, while funding is harder to come by and businesses are harder to start. Then, you can emerge with more education in leadership and qualifications that will make you more appealing to partners, investors, and even employees.
One issue though is that if you are actively trying to get a business off the ground, it’s difficult to pursue education at the same time. A crowdfunding coach can help you manage both. To be clear, your coach is not there to handle funding for you. But he or she can certainly help to streamline the process and allow you to focus on any direct online education or other efforts you might undertake to prepare yourself for an active leadership role.
Focus on the Long Term
A focus on long-term plans is something we’ve alluded to above. The basic idea is that a lot of traditional VCs will push rapid growth at the expense of long-term planning, whereas crowdfunding allows you to move at your own pace and focus on your own intentions. With a coach though, you can continue in this manner with professional input. You can grow at your own pace and stick to your own plans, while a coach combines knowledge of your business goals and assessment of funding efforts to help shape your long-term focus. This will be especially helpful in 2021, when a challenging startup environment is likely to force so much of your competition to narrow their focus to the short term. You’ll be able to build now, but build strategically.
A coach can always offer tremendous benefits in a crowdfunding effort. For these reasons though, we think having someone in this kind of position will be more valuable than ever in 2021.
Written for youhelp.com by Jess Brenna
Jess Brenna is an online self-help business blogger. She writes her articles to help those in business reach their goals. Her specialization is helping those with funding issues. In her free time she plays chess.