Crowdfunding advantages go far beyond money

Much of the excitement around crowdfunding is understandably the fact that small businesses with no access to lines of credit (which is most of us), will now have a shot at raising much-needed funds for start-up or expansion. And yes, it all starts with money, but it doesn’t end there. The most successful entrepreneurs going down the crowdfunding path will use their crowds in more ways than one.

There are more similarities between crowdfunding and traditional angel and venture capital investing than one might realize. In the latter case, VC or angel investors typically take an active role in the companies they are funding, offering insight, experience and advice, as well as access to their typically impressive Rolodex. One of the common criticisms of crowdfunding is that this type of support won’t be available, but that’s not necessarily the case.

If you have a crowd of 500 investors, some of those investors are going to have good ideas, and just the right type of background and connections you need to make your business thrive. Granted, most of them are likely to take more of a “back seat” role, but that’s not written in stone. There’s no reason why your at least a portion of your crowd can’t take an advisory role, and it’s quite likely that a good number of them will want to do so. Schedule regular phone conferences and invite your crowd, and you may be surprised at what types of resources and insights you’ll receive. You may not have founders of dotcoms, movie stars, or venture capitalists in your crowd, but you are likely to have a good number of well-connected and successful professionals. Don’t overlook that resource.

It has often been said that success involves simply surrounding yourself with smart people, and crowdfunding is one way to do that without having to put people on the payroll. It has been my experience that people who have already achieved success are often willing, and even eager to share their secrets. Hosting a monthly crowd brainstorming session won’t cost you more than a few boxes of doughnuts and some coffee (and not even that if it’s a teleconference), and you may get something very valuable out of it.

Having the crowd brings you other advantages too. If you’re developing a product or a service, you have a built-in focus group on whom you can test ideas and product innovations.

The money provided by each member of your crowd is only the beginning. Keep them informed with a monthly newsletter, and give them plenty of opportunities to contribute not only money, but ideas, insight and feedback, and ask them to push your message out to their own social networks. A crowd is a powerful thing, use it wisely.