Office Hours: The College Student’s Guide to Funding a Side Hustle
Originally published on Medium.
College is a great time to launch a side project. Odds are you have some free time, campus resources at your disposal, and plenty of peers to bounce your ideas off of. But even if you work a couple jobs, it can be hard to save up enough money to get your project off the ground.
If you’re manufacturing a physical product, putting on a large event, or need to hire someone to make your brilliant app idea a reality, you’ll probably need to raise a little moola—even if you’re thrifty. There are all kinds of ways to raise money for a new venture, but for the budding entrepreneur, we recommend crowdfunding.
Every year, VFA Fellows launch companies and side projects through the VFA Innovation Fund, our annual crowdfunding competition. Some of our Fellows’ most successful companies—like Banza (chickpea pasta), Ash & Anvil (shirts for shorter guys), and NaturAll Club (fresh, natural haircare products)—got their start through crowdfunding. We know it works.
Here’s everything you need to know!
Crowdfunding isn’t the only way to raise money for a new company, and it doesn’t make sense for every idea. (Ex: if you plan to sell a product or service to another business, rather than to a customer, it would be a lot harder to bring in donations.) But if you plan to produce a product or event that individual customers can directly buy or participate in, there are a few reasons why it can be a great first step.
1. You can find out if your idea really has a market
So you’ve designed a product you love—that doesn’t mean anyone will buy it. It’s useful to talk through your ideas with potential customers before you start production. But even if your friends or classmates say they’re interested, there’s no guarantee they’ll actually want to spend money on the finished product. Crowdfunding is a great way to find out if people actually want to buy what you’re selling. If your project is less popular than you hoped, it might be time to go back to the drawing board.
2. Your risk is low
If you’re funding a product out of pocket, it’s hard to anticipate how much you’re really going to sell. By selling your first batch, or event, through a crowdfunding campaign, you’ll have guaranteed buyers in place before you begin production. Along with helping you determine whether or not you really have a market, selling in advance reduces your own financial risk.
3. There are (almost) no strings attached
Yes, you have to fulfill the promises you made to donors (more on that later). But unlike other funding options, you won’t be tied to investors (or owe your sister $500).
4. It’s a great way to get people invested for the long term
If your product is good and you craft a compelling story, your funders will become invested in your business—and in you. If you’re just shy of meeting your goal, your donors can be leveraged to help you spread the word. If you keep them updated with your progress and accomplishments in the future, you might have some repeat customers on your hands.
5. You never know who might see your campaign
If you use a crowdfunding platform, there’s a good chance you’ll reach people outside of your immediate network. During last year’s Innovation Fund, Sean Wen, the co-founder of Pinch Boil House and Bia Bar, woke up to a $10k donation from the Triscuit Maker Fund. All in all, he raised over $20k for his crawfish bar, and he and his co-founder are opening up a brick and mortar location later this year. It was an unexpected and game-changing win that wouldn’t have happened if he hadn’t created an Indiegogo campaign.
Preparing for your crowdfunding campaign
1. Find a team
With a partner (or two or three), you’ll have a wider network of potential donors, someone to bounce ideas off of, and more hours to devote to promoting your project and fulfilling orders. It’s not mandatory, and we’ve seen Fellows succeed on their own—but the process is a lot easier with a co-founder. (According to Indiegogo, “campaigns run by two or more people typically generate 94% more funds than those run by an individual.”)
2. Pick a platform
Every platform is a little different. We recommend reading up on the pros and cons of each before deciding which one is right for you. (Our Fellows love Indiegogo for its flexible funding option.)
3. Set a reasonable goal
It’s not a bad idea to start on the small side—people will be more incentivized to donate if they think you actually have a shot. And according to Indiegogo, you’re most likely to meet your goal if you can reach at least 30% from friends and family. If you reach your initial goal, you can always set a larger one later.
5. Come up with good incentives
It’s possible the product you hope to produce will be one of your incentives, but you don’t need to stop there! When Sean was raising money for his crawfish food truck, he offered incentives like beanies, t-shirts, and stickers. The design was great, so it worked.
Feeling stuck? If you’ve donated to a campaign before, think about the incentives that made you pull out your debit card. Check out some successful campaigns and see what they offered. And most importantly, have a plan for producing these incentives before you launch your campaign. The last thing you want is to not be able to fulfill your promises, or to spend more money than you earned manufacturing and shipping swag.
4. Tell a compelling story, and build the buzz
Some people just want to buy a cool new product—but you’ll have better luck if you can get potential funders invested in the story of the company. Don’t just present the thing you’ve made. Introduce yourself. Talk about your background and goals. Let potential funders know why you think your company matters.
Get the buzz going well before the launch of your campaign. Tell your personal network about your project so they’re ready to chip in on day one. (You’ll have a higher chance of success with a good number of early donations.) To stay calm once the campaign launches, queue up social media posts ahead of time for the first few weeks.
Running a strong campaign
1. Be shameless, and keep the momentum going!
It can be hard to ask people for help! But if you’re serious about funding your campaign, you’re going to have to get serious about beating the drum any chance you get.
Make sure to get your personal network on board. Send personalized emails to your friends and family. Post on your personal social media channels. Include announcements in your college’s listserve. Tell the other students in your classes about your project.
Outside of your personal network, keep donors (and potential donors) engaged by never letting your social media presence dip. Celebrate milestones (like getting halfway there) with shareable graphics or videos. Introduce new incentives. Thank individual donors on Twitter or Facebook. In short: do everything you can to make your project visible until the last day.
And if you reach your goal early, you can always set a new one! Ash & Anvil surpassed their initial goal by more than $16k—having additional products to “unlock” definitely helped.
2. Engage with your funders
You’ve already put in the work to forge relationships with your supporters—now’s the time to keep the momentum up. You don’t have to wait until the campaign is over to thank your supporters. If you contact them with a sincere thank you after each donation, and keep them updated on your progress, it’s always possible they’ll chip in again.
3. And when it’s over—keep your promises
We shouldn’t need to tell you this—but don’t bail on your promises. If you experience any manufacturing hiccups or logistical trouble, be honest with your funders. Most people don’t mind if you’re a little late fulfilling their order, but they do mind being left in the dark. Transparency is key.
And just like that—you did it! Whether you hit your target or missed it by thissss much, you’ve learned something about your business, your target market, and what it takes to launch a company. Now get ready for the next campaign.