CODY — According to the Federal Reserve, there are 27 million businesses that need capital in some form, but 23 percent of those businesses never even apply for funding because of "fear of rejection."
The fears are justified in today's structure. About half of all businesses that do apply for funding get shot down. In fact, during the GRO-Biz Conference & Idea Expo in Cody, one presenter asked all small-business owners who had been refused funding to identify themselves anonymously. The presenter said about 25 people in the room responded they couldn't get a bank loan.
The presenter, Candace Klein, is the CEO of SoMoLend, an online crowdfunding platform. She said crowdfunding — a relatively new funding platform driven by online pitches — will be a $300 billion market by 2015. But anyone interested in leveraging it needs to be willing to do their homework.
"You need to become a really good student about your industry before you get into this," she said.
The reason is people don't want to fund one option when a competitive option is better. So anyone seeking crowdfunding should be able to articulate what makes them unique, and do it quickly. She said crowdfunding requests with a video do 115 percent better than those without, but the videos should not be much longer than two minutes.
"That's where we lose our attention," Klein said.
She said most funding comes into 30- or 45-day campaigns come in during the first or last week. But investors and potential investors should be courted throughout the process. That means, ideally, the offering of intangible rewards. She said people can get successful, whether for offering naming rights for a menu item at a restaurant seeking funding — Klein has a hot dog named after her that cost her $1,000 in funding — or letting an investor hold the boom mic for a day on a creative project.
Beyond that, she said milestones are important to convey because of the excitement it can generate among investors.
"Every milestone has money that comes with it," she said. And that comes from a voice that has been part of hundreds of successful crowdfunding campaigns, including her own.
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