What is Crowdfunding?
Crowdfunding is the practice of acquiring capital through many small donations made by a large number of persons. Basically you’ll be asking people (known as backers) to invest in your project with a typically small pledge and offering a reward for it. Though a few decades ago that might have taken you to walking numerous streets and knocking on many doors like an annoying salesman, nowadays this can easily be done in the internet in a fixed period of time.
Launching a crowdfunding campaign can look deceitfully easy thanks to the many businesses that have successfully tried it and even gone viral with their projects. That certainly is a possibility, but you should avoid thinking it will be as easy as creating a website and sitting back while you wait for CNN to call you.
The truth is that there’s a lot of work involved behind the scenes, and it starts well before you even think about asking people to fund your project. Expecting the public to go crazy for your idea is painfully naive. You need to develop a carefully thought out plan just as you would with any other marketing effort you’d make. There are some general recommendations you should follow to avoid any mishaps:
Your campaign starts before the launch
Don’t ask for money right away, build a community. Crowdfunding is not where you start but rather one of the final stages for your product. If you don’t have a following, chances are you won’t be successful. Of course you could trust your idea is so great that it will become viral the moment you put it up on Kickstarter or Indiegogo, but be realistic: that’s not true for most projects. You should already have a loyal fan base or at least a well researched target market that you can resort to.
If you have people that believe in your product before launching the crowdfunding, you’ll have people willing to recommend it to others that they know will be likely to back your project. They’ll be advocates for your brand so you’ll get to spend less energy asserting yourself as a reputable brand and trustworthy entrepreneur when you should be focusing on press releases and marketing strategies.
It’s important to let your community know you, your personality, your team and your credentials. Don’t withhold information. Let them know what your idea is and what stage you are at any given time before asking them for money. Let them familiarize themselves with what you have to offer before you ask for funding.
You need an appealing and compelling idea
People are not just going to be giving you money because you think you and your team have an interesting idea. You have to show them it will be worth their money.
In the best case scenario, you looked at a target audience and found something they were missing that you could give them and went with it. It can even be a solution they didn’t even know they needed. The point is that when you’re going to the development phase, you already know there’s people willing to buy your product because you started building to fulfill a need. You won’t need to work as hard to convince them of backing you because they can easily see the value in your product.
It doesn’t have to be complicated, you just need to be helpful
Skybell is one of those products that make you wonder how come no one thought of it before. So someone rings your doorbell and you just left for the corner store. Sure, it could be some annoying vendor trying to sell you on some encyclopedias. But it could also be the Fedex guy with that package you’ve been anxiously waiting for. Well, if you’ve got Skybell you will receive a live feed from your front door right into your smartphone. You can see, speak to and hear whoever’s ringing your doorbell.
Andrew Thomas, co founder, was already a semi known author for several publications and had an established reputation in the industry before launching the project. They raised a lot more than they initially set out to get, five times more to be exact. That’s a funding of $606,516 through Indiegogo.
Hatred can successfully fund your project too
Singer songwriter Amanda Palmer is either hated with an undying passion or admired with unrestrained devotion, so it’s no surprise her crowdfunding projects have been controversial to say the least. Around 2012 she wanted to make a new album and was in the midst of a pretty messy fallout with her record label, so she turned to her fans.
That was only four years ago but in music industry years that equals to about a decade. At the time they were still struggling to make sense of the digital world and still drawing a profit with record sales in spite of digital pirates. Palmer claimed the crowdfunding campaign was bound to change the future of music since no one would be paying for music they could get for free so record labels had to change their tactics. She wasn’t entirely wrong, but it wasn’t exactly the visionary act it claimed to be either. Anyway, she managed to get $1.2m. Regardless of what you may think of her as an artist, person or activist, that’s a pretty impressive sum.
It’s not surprise almost all of it came from people who already followed her, but her marketing campaign was also advanced through lots of critics and even petty haters. All she did was post what she intended to do on her website, create a project on Kickstarter and then capitalize on her polarizing reputation. Everyone was chiming in on the project, which gave it a lot more exposure than it would have had if only her fans had been aware of it.
You don’t have to be famous
Take Nourishmat for example. That’s a 4×6 mat with pre planted seeds and with (or without) a built in irrigation system in which you can grow your own veggies. I have no idea how to plant a tomato and I’d never heard of the guys behind the project, but I got irrationally excited at the thought of growing spinach inside the pockets of my jeans. So did the 1,282 backers that helped them reach and surpass their goals.
Research the category
Some products fall neatly into just one category while others seem to overlap. You could be developing a new camera specifically designed to take pictures on low light conditions. Would it be of more interest in the technology category or in the photography category? You could even think of marketing it to theatre types or indie musicians since they’re constantly performing in places with little to no lights.
Some categories are more successful than others when it comes to crowdfunding. Theatre and dance have been far more successfully funded than small businesses, for example. Though you could do an extensive research, there’s also the easier way out with software like Krowdster designed to analyze the success of the best campaigns in any category.
Let your community help
This is why is so important to have an already established community and a solid relationship with your target. This is when they can start acting as brand advocates, raising your popularity and making others aware of what you’re offering.
When you give your community a concrete way to help you, they will do so. Asking them to share or like a picture might not be compelling enough to all your followers, but when you give them something tangible, like a Kickstarter or Indiegogo project, they can feel their contributions have a much more real effect. Even if they’re not in the position to make a pledge to your project, chances are, at the very least, they can point you in the direction of potential backers.
Reach out to the right channels and influencers
Do you know where your audience and potential funders go online? You need to know how they behave. Everything counts: think of the hashtags they use, where in social media they’re the most active, which keywords they’re looking for and whether they’d rather listen to a podcast than read a blog post or spend 3 hours a day on Pinterest rather than Facebook.
The point is to know where you have to be so that you can be found by pertinent people that can help your cause. Looking at the fans you already have is undeniably helpful, but you’ll also need a more thorough study that’s solely dedicated to construct your buyer’s persona and even your funder’s persona.
Design a landing page just for backers
Every part of your website is important, but your landing page for potential backers should be specially designed to get them interested enough in your project to give you their email address.
If you were meeting these people in real life you would want to come across as confident and knowledgeable. Online you do that with a compelling and succinct headline that let’s them know right away what your product is about.
The second thing you need to do is give them something to look at; a video that showcases your project or pictures of what you’re offering will be much more interesting than a wall of text. After that, you can give them a clear incentive for them to sign up accompanied by a direct call to action.
Have all the info pack for journalist ready to go
You’re going to have to reach lots of journalists to cover your journey so it makes sense that you have a well designed info pack just for this purpose. That is unless you want to repeat information over and over and over again at the risk of forgetting crucial facts and not coming off as professional enough.
Think of everything a journalist would appreciate having from the getgo, from high quality pictures to accompany a piece to a brief profile of the team that could help as a back story for your product. You’ll have all the information you’d like to release efficiently packaged and journalists won’t have to waste their time coming to you for crucial questions they’ll need to ask to write the piece.
Offer a compelling reward
This one’s easy if you have a celebrity on your team. In 2015 Meow Wolf partnered up with George RR Martin to create an Art Complex with an impressive list of artist creating galleries and installations. By itself, the project is exciting enough, attach George RR Martin and you’ll garner a lot of attention. Add different rewards for any pledge your backers would like to make and you’ll have an excited audience. Meow Wolf offered two tickets to the exhibition for a pledge of $25, a signed copy of George RR Martin book and a MW sticker for a $90 pledge, and a $400 pledge would get you all 5 of The Song of Ice and Fire books signed by George RR Martin. They were looking for $100,000 and ended up with $105,221.
Most of us don’t have a public figure to help bring in the backers, so that leaves us in the position of looking at the product to see what can be offered. Almost any project can offer a tshirt or at least a sticker. A pledge for a book or an album can serve as a pre order. For projects of a more technological nature you could offer a behind the scenes tour to where the product is being developed. Film projects have let their biggest pledgers be directly involved in the project’s outcomes. Designers have been known to offer access to exclusive events and launch party. It really depends on what your end product is and the kind of backers you’re looking to attract.
Carefully consider the deadline
According to Kickstarter, your project is statistically more likely to succeed if it’s up for 30 days instead of 60. The idea is that you capitalize on the momentum, create a sense of urgency among your backers and keep yourself and your followers pumped throughout the duration of the campaign.
Indiegogo says the same and adds that it’s easier to keep yourself and the audience engaged with a shorter campaign. According to them a 60 days campaign should be treated like two 30 days campaigns rather than a long one to help keep up the momentum.
Shopify puts the magic number between 47 and 39 days so that the audience feels the sense of urgency, and marketers can pique the press’ interests.
Remember not to rush it
If you just got the idea and have barely sketched any plans to actually see it through, you’re not ready to crowdfund it. Always keep in mind this is not your first step. You need to have a well thought out plan and know what you can offer before you can actually ask people to fund it.
When you have an idea you know to be absolutely great, there’s always the need to see it through as soon as possible, but remember that’s often counterproductive. Unsuccessful crowdfunding campaigns usually fail because of a rushed planning stage that didn’t properly account for all the expenses, production time, or lack of interest by the public.
Though no technique, tip, or advice will keep you from failing, you can still set yourself up for success. Prepare your crowdfunding campaign as you would any other campaign you launch. You need to do research, have a realistic plan of action, and know what you’re doing way before you even log onto Kickstarter or Indiegogo. You don’t want to be a week into your crowdfunding campaign only to realize you prepared nothing to keep people excited in the middle of the campaign. Likewise, you don’t want to find yourself on launch day without a list of journalist and influencers to contact.
In the crowdfunding world you’re not a special snowflake
Yes, some projects exceed their goals, but they’re a minority. In this case, it serves you better not to believe you’re special in any way. Don’t set out to reach an inflated goal and then some. Statistically you’re barely likely to reach your goal.
Those who make more money than what they set out to get, only do so by a small percentage. The ones that fail, fail really big. And the special cases you hear that make 10x what they set out to make, are more than likely started by celebrities or teams that already had a pretty big following.
Treat your crowdfunding campaign as feedback
Launching a crowdfunding campaign puts you in the unique position of seeing how much interest you can gauge without spending a fortune on developing the real product.
This is an opportunity for you to see how much attention you’ll receive from your potential customer and whether you’ll need to tweak your product or strategy in any way. Treat it as such even if your project is not successfully funded, there’s always something you can learn from a failed campaign.