Crowdfunding has become a popular way for many business owners and entrepreneurs to get their ideas off the ground. While securing money from investors or traditional business loans have traditionally been common ways businesses acquired capital in the past, if you want to keep your vision intact while keeping more ownership stake, then crowdfunding is a highly recommended option nowadays.
Small businesses in the cannabis industry can really take advantage of CBD crowdfunding to raise business capital. Most businesses have limited funding options as they don’t have access to bank loans. Although many of the mainstream crowdfunding platforms may not take money for CBD edibles startups, with proper research you can find the ones that are specifically created for the cannabis industry.
New federal laws allow small businesses and startups to tap ordinary folks in order to give CBD edibles companies a much-needed alternative to traditional funding sources as venture capitalists and angel investors. Thanks to the new laws, companies can now raise up to $1 per year solely via crowdfunding.
Crowdfunding sites like Indiegogo and Kickstarter have existed for years. However, entrepreneurs and companies have only been able to offer a reward, not equity, in exchange for the funding. On the other hand, some sites are only open to qualified investors.
Before the recent rule change, some CBD edibles companies successfully used crowdfunding, however they are few and far between. The new federal laws will make it easier for CBD businesses to raise money this way. Furthermore, they also offer a regulatory framework for businesses to use crowdfunding to raise money, but without loads of red tape.
While CBD crowdfunding may seem like a great way to raise money, not every CBD company should rush to a crowdfunding platform. Cannabis retailers and cultivators are two such businesses that should think before crowdfunding. This is because investors are rarely drawn towards retailers. Funding expansions with your own revenue as a retailer is a much better alternative to crowdfunding.
There are certain cannabis businesses that make good CBD crowdfunding candidates. These include ancillary firms, content companies, and infused products manufacturers. Infused products are quite popular among average people and packaging, distributing, and scaling them is also easier.
Do it Right
If you want to try crowdfunding, then it is highly recommended that you do so carefully. You should hire marketing and branding experts to help you craft your message and create an influential pitch, one that is complete with visual content such as videos.
There are several key points that should be included in the presentation. These include:
• Creating buzz around the product.
• Highlighting your team’s strength.
• Demonstrating how you plan to distribute the product as well as scale the business.
• And show that your team understands the financial ins and outs of the company.
It is recommended that you review previously successful campaigns. Furthermore, you should also be aware of potential pitfalls, such as added scrutiny. Crowdfunding and cannabis are two industries that get a lot of scrutiny by themselves. When they are combined, you can expect even more scrutiny, so be prepared.