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Setting the right target for your campaign raise is critical to its success. A well-defined goal strikes a balance between ambition and credibility, encouraging potential investors to contribute while showcasing your business’s potential. Here’s how to determine the optimal target for your campaign.
1. Survey Your Community and Evaluate Your Investor Pipeline
Understanding your existing network and investor commitments is the foundation of setting your target. If you’ve already secured $50,000 in commitments, setting a target of $1 million might appear unrealistic and deter potential investors. Instead, aim for a goal that reflects your current pipeline while leaving room for growth.
2. Leverage Social Proof to Build Momentum
Before your campaign can go public, you need to secure at least 20% of your target amount from a minimum of 20 different investors. This requirement isn’t just a formality—it’s a powerful way to demonstrate investor interest and build credibility.
Social proof plays a crucial role in investment decisions, much like how online reviews influence purchasing choices or a busy restaurant signals great food. When potential investors see others already backing your campaign, they feel more confident in joining in. This early traction reassures new investors that your opportunity is compelling, reducing perceived risk and increasing overall engagement.
3. Understand Minimum and Maximum Raise Amounts
Your offering documentation typically defines the minimum amount required to close the round and the maximum you’re allowed to accept. Setting a stretch goal just above your minimum can create momentum.
For example, let’s say your business needs $50,000 to purchase new equipment that will help scale operations, and your total allowable raise for this round is $1 million. Instead of setting your target at the full $1 million upfront, you might set an initial goal of $250,000. By framing your raise as the "first milestone" toward your larger $1 million round, you give investors a tangible, achievable objective.
4. Leverage Milestones to Show Progress
Breaking your raise into milestones can keep the campaign dynamic and engaging. For example, Blossom Social initially targeted $1 million and later opened an additional $500,000, signaling strong investor interest. Similarly, PKA Soft Touch outlined clear goals tied to their milestones, which helped convey their strategy effectively.
Also important is the option to oversubscribe or increase the tracker as you achieve these milestones, further enhancing momentum and attracting additional investor interest.
5. Tying your Target Raise to your Use of Funds
Determine the exact amount needed to achieve your business goals. This could include:
- Product development costs
- Marketing expenses
- Scaling operations
- Hiring and growing the team
See the example below of how Work Water successfully raised their target amount through FrontFundr by tying the exact funding needs to their business goals.
6. Create Urgency and Social Proof
Investors are more likely to contribute when they see a campaign gaining traction. Reaching 100% funding creates a sense of urgency and signals strong interest. Highlighting that your campaign is oversubscribed can drive even more investment.
To increase the likelihood of reaching this milestone, consider setting a lower target that you know you can easily achieve. This approach helps you hit 100% funding quickly, building momentum and demonstrating to potential investors that there is strong demand for your campaign, which can lead to even greater contributions as the campaign progresses.
7. Targets by Industry
In many industries, an initial raise of $250,000 to $500,000 is a common recommendation. This range is ambitious yet achievable for early-stage businesses, particularly when paired with a transparent use-of-funds plan. For example, direct-to-consumer food and beverage brands often target the lower end of this range to cover production and distribution costs, while tech startups, such as SaaS companies, may require closer to $500,000 to support product development and customer acquisition.
Notable past campaigns, like joni, a consumer goods company specializing in feminine hygiene products, set a target raise at the lower end of $200,000 and ended up reaching 190% of their goal by setting a more conservative target. On the other hand, Blossom Social, a tech startup, set an ambitious goal of $1,500,000 and achieved 159% of their target through their active community. These examples illustrate how different industries tailor their fundraising strategies.
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By following these steps, you can set a fundraising target that not only inspires confidence but also positions your business for long-term success. Be sure to connect with your Campaign Manager to refine your target and strategy, ensuring your fundraising efforts are well-aligned with your business goals.
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