How Businesses are Turning to Social Media and Crowdfunding for Capital



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If there’s one thing most businesses hate doing, it’s raising more capital. But it’s a necessary evil that must be addressed. Well, the good news is that businesses have a handful of different options when it comes to getting additional financing and working capital. One such strategy involves the use of social media and crowdfunding platforms.

Alternative Forms of Lending and the Power of the Internet

The beauty of the internet is that it’s a hotbed for innovation. Twenty years ago, if you needed working capital for your business, you had to drive to your local bank or place a phone call to a lender. Now, you can quickly raise money without ever logging off your computer.

As a disclaimer, prior to discussing some helpful tips and tricks, it’s important to note that most businesses will only be able to raise small amounts of capital using the information contained in this article. We’re talking about a few thousand dollars, as opposed to a few hundred thousand dollars. For larger, more immediate needs, you’ll need to find other sources of alternative lending, such as Credibly, or one of the many members of the American Association of Private Lenders.

4 Tips for Securing Funding via Social Media and Crowdfunding Sites

With that being said, social media and crowdfunding are excellent options for small businesses in need of working capital. Here are some tips for getting started:

  • Identify the right platforms. You have to start by identifying which platforms will allow you to maximize the amount of capital you’re able to raise. Will social media be better for your business, or is a more structured crowdfunding option ideal? A lot will depend on your business, how large of a social following you have, what products and services you’re selling, and what goals you’re trying to accomplish with the capital.
  • Patience is key. If you decide to go the social media route, patience is vital. You can’t simply type up a post that reads, “We need $10,000 in working capital and would greatly appreciate your support.” While this may be true, you have to walk people through the process. Slowly educate them about your business’ needs and constraints. Reassure them that your business is poised for growth. Address any questions or concerns people have. Keeping all of this in mind, it can take weeks or months before you’re actually able to come out and announce that you’re raising capital.
  • Find a way to stand out. Why should someone give money to your business, as opposed to your competitor? That’s a serious question that you need to have an answer for. If you can’t find a way to stand out, you won’t be able to secure funding. People want to invest in unique, promising ideas, not ventures that reek of the status quo.
  • Offer something in return. It’s important that you offer something in return for the capital you raise. The thing about fundraising is that the people giving you money aren’t really getting anything in return. They aren’t lending the money, so there’s no interest rate. And they aren’t investing, so they don’t get any equity in the business. As such, you need to offer something of value. Simple perks like free products and discounts are often enough.

Get the Capital You Need

As a business, you need two primary things to grow. First, you need a vision. You can’t grow if you don’t know where you’re going. Secondly, you need money. Whether you like it or not, money makes the world go round and it’s impossible to scale without access to working capital. Thankfully, gaining access to this capital isn’t as challenging as it once was. Utilizing resources like social media and crowdfunding, virtually anyone can fund growth. It’s time for you to take a serious look at how these platforms could help your business.

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