What is there to say about Crowdfunding in München? Quite a lot, we think. What eight arguments speak for crowdfunding at a startup? An overview with tips, network information and funding opportunities in Munich.
Crowdfunding means crowd financing, which is a special form of financing by a large number of people. Why is this interesting for startups? After all, a rapidly scaling business model often requires a high amount of financing. But especially for startups — and also for established companies — crowdfunding can be much more than just financing. It can be a market test on one hand and a marketing tool on the other. A business idea or product can be tested and marketed directly to the target audience through a crowdfunding campaign.
Here’s an overview of all eight arguments that speak for Crowdfunding in München.
The stress test
Argument 1: Project starters must think through all important aspects of the product and market completely. Therefore, crowdfunding is considered a stress test for founding teams, in addition to the market test of the product, notes Alexander Schmidbauer. He introduced his own funding instrument at Landeshauptstadt München in the Referat für Arbeit und Wirtschaft, with which young entrepreneurs are financially supported in their campaigns. Schmidbauer believes:
“If you will, crowdfunding is the democratization of startup financing. But it’s also much more than that: the concentration of all relevant founding issues in one campaign requires very good and professional preparation as well as entrepreneurial qualities. Campaign starters must master a steep learning curve.”
Successful crowdfunding as an argument for further financing
Argument 2: More money. For founders who are just starting out, a successful crowdfunding campaign can also be a good argument for follow-up financing, Alexander Schmidbauer continues:
“After a successful campaign, founders have good arguments for follow-up financing in hand and can present themselves with more confidence.”
Communication and dialogue
Arguments 3 and 4: A communication strategy — and genuine dialogue. Mona Knorr, a crowdfunding specialist who launched the monthly crowdfunding meetup two years ago, sees it this way:
“Crowdfunding forces project initiators to articulate and communicate an idea or project in a clear and understandable way to their target audience. At the same time, they must present their own founding effort in public and enter into a dialogue with future customers.”
Specifically, this means: A project starter must clearly know what the idea and unique selling point are. Who the target audience is and where they can be reached. After all, supporters don’t find themselves. Unfortunately, it’s still a common misconception that it’s sufficient to put a project with a good video on a platform, Mona Knorr tells us. That’s why she recommends the following approach:
- Turn your family and friends into multipliers for your project,
- research networks,
- set up mailing lists,
- build a community,
- seek contact with the press,
- get involved in groups that are relevant to your project,
- think about ads and paid marketing.
- And start as early as possible!
Founders benefit greatly from a clear approach. After all, it prepares them for market entry. Additionally, through open dialogue with future customers, a startup learns a lot about their “pains”. This helps both with more targeted communication in the future and in improving the product for the customer. Even if it’s just for the next production run.
Expert Mona Knorr can confirm this as well. Through the monthly meetups, she speaks with many projects and sees that all campaign starters take away a learning success or important feedback. And this is regardless of whether the campaign was successfully funded or not. Some project starters only realize through the campaign that they might need to go a different route. Mona Knorr believes:
“With crowdfunding, you can fail without great risk.”
Market test and customer loyalty
Arguments 5 and 6: Digital market research and marketing as well as sustainable customer loyalty. Florian Kemmelmeyer found the topic so interesting that he wrote his master’s thesis on “Crowdfunding as a digital marketing strategy” for startups. His key findings? The feedback from many expert interviews was clear, says Florian Kemmelmeyer:
“Crowdfunding can be used specifically for startups as an instrument for digital marketing. In particular, inexpensive market validation and increased awareness had a positive effect here.”
On one hand, a young company learns through the campaign how its target audience works and what goes over well in the market. On the other hand, a campaign is a good way for young companies to gain attention and build trust with their target audience for the previously unknown brand. In particular, those who continue to communicate with the crowd even after sending thank-you gifts and report on progress and challenges bind customers to their company in the long term. Kemmelmeyer draws further conclusions: A crowdfunding campaign does cost some financial and personnel resources. However, if a startup plans well and enters into a dialogue with its target audience, the company benefits sustainably from its crowdfunding campaign.
For companies and industries that have had no previous connection to crowdfunding, it can also be an interesting tool. As it is for the trades. Many Munich residents know the successful crowdfunding campaigns of Giesinger Bräu, which have been particularly effective in customer loyalty. Currently another campaign by the brewery is in the planning. Georg Räß, commissioner for innovation and technology (BIT) of the Handwerkskammer für München und Oberbayern, believes that crowdfunding and crafts go together very well, especially in the food crafts sector:
“Jäger und Sammler, Giesinger Bräu, and Chocolate³ have proven this impressively. But in my opinion, it also fits in other craft sectors where, as a craftsperson, you have an interesting story to tell and speak directly to customers with your product or service, for example in the field of furniture or also with two-wheelers.”
Network: Where can you get help?
Argument 7: There is a very open crowdfunding network in the city. First, current and former project starters are willing to share information and happily give tips. Second, various exchange platforms offer help for crowdfunders in Munich, often free of charge.
First and foremost is the free networking breakfast: Every month, “Wake up, Crowd” is a free breakfast meetup on the topic of crowdfunding at Cafe Blá. Each participant can introduce themselves briefly, then there’s usually a short keynote from a speaker, and then extensive networking follows. Here, crowdfunding newcomers meet experienced veterans who have already successfully handled several campaigns. A truly valuable exchange on equal footing. Meetup co-founder Mona Knorr believes:
“No matter how many tutorials and handbooks are available online — talking with other campaigners is still the most valuable!”
There’s also regular consulting and crowdfunding breakfast at the ‘KuK Café’. Furthermore, the team of the competence team culture and creative industries regularly offers free workshops on concrete campaign planning. You can also arrange individual orientation meetings with a consultant there. Campaign starters can also get individual consulting meetings at the Munich Business Start-up Office. An individual consulting meeting at one of these two institutions is also necessary to obtain Munich crowdfunding support.
In terms of exchange and knowledge transfer, a well-known highlight is the Crowd Dialog (which unfortunately won’t take place in Munich in 2019). And with ‘Oekom Crowd‘, a publisher with its own platform for book projects is also based in the city.
So there are plenty of contact points for crowdfunders in Munich. Mona Knorr is enthusiastic about the local scene:
“In no other city in Germany do so many institutions deal with the topic and offer information, advice and support specifically for crowdfunding. Personally, I really appreciate everyone’s willingness to share knowledge and experience, to exchange ideas, and to help others with tips and contacts.”
Financial support for Munich crowdfunders
Argument 8: There is a financial subsidy for crowdfunding projects in Munich. When it comes to support for crowdfunding, Munich is really well positioned. Above all, because the city offers a crowdfunding support program that is unique across Germany. Because the Bavarian state capital supports the preparation and implementation of the campaign financially with a subsidy of 50 percent up to a maximum of 3,000 euros.
So expenses for photos or videos, texts, proofreading, translations, graphic design services such as infographics are subsidized, as are storytelling, communication, PR, or social media. Another advantage of funded projects: Those who can demonstrate a successful campaign have a better chance of successful financing with the Munich Savings Bank with the “Munich Crowd” program .
Finally, one more note for campaign starters who are founding from unemployment: Individual coaching can be funded on request, for example by the employment agency.
If you always want to get a current overview of crowdfunding offers and events in Munich, you can find it on a dedicated website.
Top tips for crowdfunders
And finally, a wealth of tips and tricks. Alexander Schmidbauer’s ultimate tip:
“Professional and long-term preparation as well as networking, networking, networking — at the crowdfunding meetup.”
Georg Räß agrees:
“Networking, networking, networking!!!”
And Mona Knorr’s ultimate tip is:
“Think carefully about how you can reach people with your campaign.”
That was indeed one of the biggest challenges for project starter Maria Olinger von Raumio : getting enough people to notice the campaign. She explains:
“That’s why I advise every founder to actively use the time during the campaign, plan measures in advance, activate your entire network, and be persistent — it’s worth giving your all and showing no false modesty! Only those who are persistent will be successful!”
For Carolin Kunert from Knister Grill, the campaign was the “ultimate” (and successful) market test. Her tip for other project starters:
“Plan everything well in advance! Get support and don’t run a campaign on your own.”
For Benedikt Daschner of Chocolate³ as well, meticulous planning in advance was important. He also advises:
“Take in all the advice you can get! If you hear something often, there’s usually something to it (even if you think you know better). And in the end, you just do what works for you!”
So is it worth pursuing Crowdfunding in München?
To be honest: Crowdfunding certainly won’t work for every startup or every product. Additionally, the effort involved in a campaign should not be underestimated. However, if you want to try it, Munich is perfect for it. Because if you want to find out whether the instrument would be interesting for you, there are plenty of exchange platforms. And if you finally decide to run a campaign, you should use all the advantages: Because crowdfunding is not only a stress test for founders, but can also be used as a market test and marketing tool at the same time. In Munich, the Munich crowdfunding support provides a non-repayable grant and potentially even follow-up financing with ‘Munich Crowd’.
For a campaign to be successful, good preparation, transparent communication and dialogue, as well as networking are essential. Munich offers good support for this: The monthly crowdfunding meetup is particularly helpful, as is crowdfunding consulting from the Munich Business Start-up Office or the competence team culture and creative industries.