Crowdfunding is a neat way to fund your startup through online fundraising without having to develop complex business and marketing plans and begging for loans in local banks or venture capital offices.
We’ve been there, done that several times and here’s how it looks like to run a successful crowdfunding campaign!
First, we are going to show you how it looks from the inside of the crowdfunding campaign, where you will learn the most efficient marketing methods and get familiar with all associated costs. We also put a couple of caveats or things you need to be on a lookout for to avoid traps and fails.
Then, we are going to teach you how to build your own campaign. More specifically, you’ll learn how to build an efficient crowdfunding page, step by step.
Here we go.
It all starts with the idea, of course. And now, it’s about growing the big and healthy plant from that little seed.
To avoid making mistakes along the way, arm yourself with the knowledge and experience-driven guidance. One of the best resources is definitely THE SEQUENCE PROJECT, a cutting-edge, 6-module, personal development and business program with included 3-stage business model blueprint.
Once you learn how to materialize your idea, the process begins.
You start circling around your friends and family to raise just enough to build the prototype and set the website. Now what? Bank? VC?
How about CROWDFUNDING?
The top choice for your first crowdfunding campaign (yes, there will be more than one) is definitely Kickstarter, the leading reward-based crowdfunding platform. Of course, we are talking about business startups here. If you want to fund some cause, you would need to take your business elsewhere because Kickstarter only allows startups with the tangible products and/or services. In other words, businesses.
What the crowdfunding campaign on Kickstarter looks like?
As you can see, Wallor managed to reach its primary funding goal within a week after the official launch.
Just one note before we show you the inside of marketing, numbers and how everything it’s done. At Kickstarter, it’s ‘all-or-nothing’ crowdfunding campaign type, meaning that in case you fail to reach the set financial goal, you won’t see any money. So do think hard about your most imminent financial goal.
Of course, Wallor team doesn’t have to worry about that anymore. For them, the real race started the moment they passed that first funding milestone – ensuring that every supporter receives the reward. This is the important part of the entire concept and unfortunately the serious obstacle for many.
Before we start, take under consideration that Wallor managed to gather enough backers even without pre-launch outreach and without fully functional website. We advise against that because it’s expensive and requires hardcore pro’s who know their business. Just check the similar projects on Kickstarter and you’ll see how many of them failed to reach the funding goals just because they miss-timed the market or failed to do a proper pre-launch outreach.
Now, let’s see how startups like Wallor manage to run successful crowdfunding campaigns.
The inside-out of every crowdfunding process
Only 8% of all crowdfunding campaigns manage to reach their funding goals. Reward-based or equity, it’s all the same.
Question is: WHY?
First of all, crowdfunding is not a magic wand. 92% of all startups have an entirely wrong approach to the concept of crowdsourcing.
Getting money from the people you don’t know — and even those you do know — is extremely difficult and takes some serious preparations and skills. In most of the cases, without the help from the specialized service, the failure is inevitable.
If you are seeking for a cost-effective marketing team with the successful track of records in running different crowdfunding campaigns, CONTACT US and we’ll recommend it to you.
The right approach to crowdfunding is this:
From the idea seed, to the launch of the campaign itself, there are 2 mid-steps:
- First, you need to develop a fully functional prototype. Fail or ignore to do it and you will decrease your chances by some 50%.
- Second, it’s all about the pre-launch outreach! Remember that.
To compensate for the lack of these two essential segments, you will need a lot of money and brutally efficient marketing team. In that case, you can succeed even if everything has started a week before the launch and you have just a half-working prototype.
We won’t waste time on prototyping here because it’s clear what you need for that. Instead, we’ll place our focus on the crucial part of the successful crowdfunding campaign and that’s the pre-launch buzz.
Remember the following wisdom and let it become your morning and evening prayer:
ALL THINGS SOCIAL – ALL THINGS SHAREABLE!
The pre-launch outreach we are talking about comes down to setting up the working website, listing your product’s images, videos, specifications, listing your team, your story, and pumping up the blog section with content marketing material that is more likely to be shared by the others!!
- Think: infographics and interesting short (up to 59 sec.) videos.
- Think: YouTube, Facebook, Instagram, Pinterest, Twitter.
Why is this important for crowdfunding campaign?
The good portion of all pledges will come from direct search on Kickstarter (or any other platform). To pop up on a favorable — near the top — spot in search results, you need to move up fast with numbers from the Day One! That will put your campaign in front of the eyes of those who are browsing “Populars” – and that’s what you want more than anything else!!!
If you start your campaign in a rush, 5 minutes to 12, you will have serious difficulties with creating the desired momentum. Desired momentum being the fast upward trend in a number of supporters from the first minute of the campaign’s launch. You need this because statistics are brutal: campaigns that manage to reach 25% of their goal in first 48 hours, stand 50% more chances to get funded.
You wanna build the web, build the social profiles with the accent on Facebook page and YouTube, and then you want cool shareable things such as infographics, other types of cool creatives and videos.
You also want email hooks like free e-books, podcasts, webinars and similar.
The emails you collect during the pre-launch period will turn into a real gold once you fire up your crowdfunding campaign. These people are those early adopters that are easily transformed into raging fans.
You don’t pitch anyone. You don’t sell yet. It’s about creating the buzz. Raising the brand awareness. Building the tribe. Keeping your crowd on the edge. In anticipation for the official launch.
When to start with the pre-launch outreach?
2-3 months before you officially launch your Kickstarter crowdfunding campaign.
The point is to share meaningful updates with your people and their people and the people of their people.
Success of every crowdfunding campaign is determined by engagement of the 2nd- and 3rd-tier weak bonds. Without them, fail is almost certain.
For instance, let’s say that you are XYZ company’s CEO, ready to do some crowdfunding. Idea is here. Now you need to materialize it.
You start by going places, talking to designers, engineers, business experts and marketing professionals. Then, production starts. Naturally, you shoot videos and take photos of the process. During that entire time, you’re picking great materials (images, videos), and you share it with your followers.
But how do you get those followers that will, hopefully, turn into crowdfunding supporters?
Your basic circle of people + Communication + Money + Content marketing + Native advertising = Effective Buzz
Don’t think for a second that people will be crazy to share your stuff. It may happen if you have something really cool and innovative but let’s not count on that, OK?
Take this experience-based crash course to crowdfunding you are reading right now. Stuff here is real. The actual process. Not found online that easy. Everything is explained in a simple, meaningful way. Will you click any of the “Share” buttons at the bottom of this page? Will you share the link? There’s less than 1% of chance that you, or anyone else will do it. So don’t count on instant hype, please. It takes time and hard efforts for things to spread around. But they do eventually, if you do your job right.
What you do is simple.
Take the image or hire a pro designer to create some cool pic. Then you just fire up the Facebook ads manager and roll your sponsored post or push the creative with Pinterest’s business solution.
Again, don’t pitch in this point. Let it be casual and informative and don’t put more than $5 daily into the advertising budget. Run it for 24 hours and then change the creative while adjusting the text to fit that new creative.
You won’t spend much money while getting the real data about the public acceptance of your solution. It’s a kind of a A/B testing in the same time!
For instance, if you have a cool, smart, connected, super slim wallet like the one Wallor has designed, you’ll create something like this (click to enlarge, it will be worthwhile, trust us):
As you can see, this is a cool, helpful infographic, a part of the Wallor’s content marketing strategy. There’s no direct sales here. Just a meaningful “8 Ways to Slimify Your Wallet,” where the option #1 is the secret weapon in Wallor’s arsenal. The app that serves as the bridge between the wallet and the owner’s smartphone allows storing of business, membership and loyalty cards to decrease the size of the wallet even more. Cool, right? Also unique and pretty efficient.
Oh, one more thing:
TARGET YOUR MARKET!! TARGET YOUR MARKET!! Once more: TARGET YOUR MARKET!!
If you don’t know what your market is, or what is the type of people that are most likely to buy from you, you really don’t know your product and there’s no chance in hell that you’ll succeed in anything. That’s why it’s critical to at least consult with marketing professionals because they will research the market and position your brand in the most optimal way!
You see, one of the reasons why 92% of all crowdfunding campaigns fail is because they fail to define and/or target the right demographics. And it’s ridiculous because Facebook has one of the most precise targeting systems out there. Their advantage, as opposed to rather expensive Google AdWords for example, is that people are willingly giving away their closest interests and FB’s algorithm is making sure to keep the data fresh. Because, to make the sale, you need two things, in the same moment:
That’s why it’s wise to consider Reddit as one of the advertising channels because sub-reddits, closely related to your niche and/or industry, are full of people with the 100% interest/intention. And by the number of sub-reddits, you can see how large your most imminent crowd is.
You only need to trigger the emotion with your ad.
Again, this is the option during the crowdfunding campaign itself but if you are considering Reddit as a channel, create an account right now (another one, separated from your private one) and engage with people. Start discussions. Comment. Provide with answers. DON’T SELL ANYTHING!
Do the same with Facebook groups. Select 20-30 most promising (high numbers of active participants) Facebook pages within your domain and start talking with the people (not to the people, there’s a difference).
HINT: whenever you are pitched (and you will become a fair game) by some “influencer” who’s bragging with the large base of social followers, check the profile/page, scroll through posts/tweets and see direct engagement of the followers. A FB page, with 100K followers, may be entirely dead in terms of the engagement and the actual number of people who are reading the published stuff is perhaps 3-10 daily. Just self-reflect for a minute. How high is your engagement on newsletters and social posts? Yeah…exactly. So do your homework before you pay $500-$1,500 to some “hot shit influencer” who managed to create some instant hype in the past and then everybody forgot about it. The number of followers stays because people are just too lazy to unfollow/unsubscribe.
That’s how you start the buzz. Something hardly anyone is doing because they are all busy with prototyping and campaign’s page design. So they struggle to raise funds and eventually fail, instead of hiring a professional service to run this for them.
One more thing that you should consider is this:
IDENTIFY INFLUENCERS AND SEND THEM FREE SAMPLES!!
Ideally, you want to do this A WEEK OR SO BEFORE the official launch. If your product is any good, you won’t even have to beg (pay) for the review or a good word.
If this cannot be applied for any reason, you are advised to send the samples immediately after they are made (ASAP!) because when the campaign is over, you are most likely moving to BackerKit to collect essential information from your backers (shipping addresses, additional preferences, additional orders) and even extend your fundraising campaign because BackerKit is allowing people to place new or add-on orders through the simplest possible interface. So every positive review coming from someone who is recognized as an influencer in your niche will bring you more money. That’s just sound marketing.
All this time, you are working on your crowdfunding campaign’s official page.
Setting up the official crowdfunding page
The best place to start figuring out the most optimal layout of your crowdfunding page is to analyze 20 successful campaigns closely similar to yours. It will also give you a lot of useful intelligence information about your most formidable opponents (competitors).
Let’s check the Wallor’s crowdfunding page again: WALLOR ON KICKSTARTER (will open in a new window, don’t worry).
What do you see?
Title. Description. Video. And the most vital thing: the current (real-time) number of supporters and the amount of money campaign managed to collect.
It all starts with the catchy title and even better description. This is the first thing that will influence the decision-making process at the visitor.
Title and description together make that famous “elevator pitch.” The 5-second sales attempt you can say to someone during a single ride in an elevator.
2 minutes max. Tells the story. Explains the BENEFITS of your solution and then lists the specifications and features. Shows the team. Makes sense. Done by a professional!! Again, go over the videos of your past and present competitors.
As a rule of thumb, crowdfunding campaigns without the video have less than 15% to succeed in fundraising.
As you move further, you see WHY and WHAT. It’s the part of your page where you are showcasing your product and explain details. However, if you fail to strike interest with the few first (opening) paragraphs, your conversion rates will suck. It’s vital to keep an eye on CR and keep adjusting the pitch until you see the increase in CR.
And now comes the most sensitive part – THE REWARDS, or the core of every reward-based crowdfunding campaign.
According to statistics (and experience), people are most likely to give you $10 and $25. Everything above that, demands hard sales skills.
Now, the most common reward is the pre-order of your product, part of your product or some bundle. If you can’t “dismantle” your final product to see yourself within $10 or $25, then you’ll have to be creative. T-shirts with custom inscriptions. Special mentioning on your brand’s official site. Discounts. Dinners. Pretty please’s. Again, check the competitors and steal the idea!
Moving up to real money…
It’s not that uncommon for the people to pledge $150 or even $2,000. It mostly depends on what you have to offer and how skillful you are in sales and marketing.
Get help from professional sales and marketing service, specialized in crowdfunding. It will allow you more time to stay connected with your rising number of supporters, followers and those who are having second thoughts about supporting you. Most of them need just a little nudge and that nudge must come from you. You’ll see questions and comments on your crowdfunding page and social pages. Answer them ASAP!
And run frequent updates! Keep the crowd on the edge. Keep them on fire. Let them know that you mean business!
Keeping a constant and quality communication with the world is an ongoing process that doesn’t stop after campaign ends!!
Because, the chances are that you’re gonna need more money. That means new campaign, on the same or on a different platform, like Indiegogo. By the way, Indiegogo has a new feature that allows you to extend your campaign after it’s finished. You are able to keep raising funds without any need for moving to BackerKit for instance!
Your Kickstarter success, which you will clearly showcase, will act as a boost because people follow the crowd. And after the successful Indiegogo campaign, you might also consider equity crowdfunding as the 3rd step in fundraising before that final 4th where big players (angel investors) come in.
Now, let’s explain the underlying importance of the two numbers you see on Wallor’s page.
People move with the crowd. They await approval from the others. In crowdfunding, this means that there are dozens of people waiting for the others to take the first step. That’s why it is so critical to keep the fire going. To keep communication channels open. To pitch. To run native ads (native ads, yes, because, when campaign starts, you don’t want to shy away from direct invitations…it’s not the time to circle around but to hit in the center…the clock is ticking).
What you essentially want, depending on your funding goals, is to reach the critical number of supporters and a big sum of money. When Jim lands on your Kickstarter page, that will be the first thing he’ll notice. Because, nobody likes to come first at the party, right?
Those first supporters are your friends and people you managed to “turn” into raving followers during your pre-launch outreach. But that will most likely be a handful of people at best.
To get the wheel spinning, there are few things you will have to include in your campaign’s strategy.
Neither is magical or self-sufficient, keep that in mind:
NUMBER ONE – The First Signal:
Get the professional to write you a press release and fire it out using Ereleases service.
It will cost you $296 with the discount coupon. Ereleases.com service also includes PRNewswire and Associated Press distribution, so don’t fall on lame attempts of different services promising a PR distribution for $50 or $100. They will take your money and use some inefficient PR platform (there are literally hundreds of them out there, all lurking for fresh crowdfunding campaigners).
Don’t expect miracle. At best, your PR will be picked up by 300 media outlets, blogs and major search engines (in most of the cases, it takes at least 3 press releases to start seeing the real results).
The point is to send that first signal to media and search engines that something is going on. Who knows, maybe you’re lucky and the right people will pick up the news and recognize the value. A long shot, but it happens, nevertheless.
Press releases are important, no matter what you hear, because you can use them in numerous ways like for the “Featured on” or “As seen on” part of your KS page and web, or when you are pitching influencers and high-traffic industry-specific media outlets and blogs. You are already in big media and that helps when you are trying to push a guest post or pitch some influencer to write a review about your product.
During campaigning, try to fire at least 3 PR’s with updates. Let the second get out the moment you reach your initial funding goal.
NUMBER TWO – Keep it social – run the ads:
Constantly run ads on Facebook and Instagram. Hire a professional service that knows how it’s done. Whenever you do an update on your KS page, inform your social followers across the platforms you are using. People are not waiting in anticipation for your next move. They need to be reminded and invited.
And you want all of your best videos uploaded on YouTube.
You also want someone to swipe the YouTube in search for potential affiliates and promoters, or the channels with lots of daily views and the decent subscribers base (1M views; 25,000+ subs). Of course, they have to be related to your industry/niche.
The cost-effectiveness of the ads and how much you should invest
More the merrier, of course. If you can somehow get sufficient funds for your marketing efforts, that would be great. Because, it all comes down to reach:
$300 invested in daily budget to run the ad on Facebook and Instagram, will deliver your message to approx. 40,000 people.
Average CTR (click-through-rate) for the ads on FB is 0,85%. Ideally, you want 2-4% minimum because it will save you time and money. Of those who click through and land on your campaign’s page, less than 1% will give you money!
The rule is simple: more money you invest in quality ads, faster you’ll spread your message to the people, which will subsequently bring you more money.
And that means working with the advertising wizards with the proven high CTR (Just ask them to show you the last 10 FB campaigns they ran. If they average above 2%, you’re good).
How much will this kind of service cost you?
Say, $3-4,000 up front and probably $2K in a later stage plus 10% of funds collected through referrals coming from that source (you can create as much referral links on KS as you like but their referral system is not the best to say the least).
The whole deal requires a bit more money than you may have anticipated because it includes designers, video editors, illustrators, content developers. In other words, the entire team of experienced people dedicated to get your crowdfunding campaign not only funded but overloaded with money. Then again, it’s a subject to the type of the product you have and a funding goal. The expenses can move up and down, depending on your needs and appetites.
While we are on the subject of referrals and affiliates. DO NOT GIVE YOUR REF LINKS TO EVERYONE because most of them will just spam people and ruin your efforts. You’ll see what can and most likely will happen soon.
Speaking of marketing experts, one thing has to be emphasized here:
During your campaign, you’ll become a fair game for all those “experts” who are scouting crowdfunding campaigns, searching for the next victim. Usually, they will try to pitch you in a lame way, bragging with some false successes, massive lists of contacts and asking $1,000 upfront + cut in total funds.
Now, there’s a simple way to distinct garbage from potential wizard.
Wizards will never ask you these things:
- What’s your market
- What’s your targeted demographics
- What’s your marketing strategy
- and similar crap
They won’t ask because the moment they lay eyes on your crowdfunding page and your web, they will instantly know what to do and they will ask a bit more for their services because, even though there are no guarantees, these agencies are your best option. Remember that. You simply must take a calculated risk in order to raise more money and you can’t raise more money without the brutal outreach.
You will also need to give them an access to your social accounts. And do follow their suggestions in terms of desired changes in your brand positioning and content/pitches upgrades. After all, you are hiring them on account of their expertise in a field of marketing and sales. It would be irrational not to follow their guidance.
NUMBER THREE: pitch the influencers but NEVER pitch registered supporters
Services like Backers Database that contain list of registered cross-platform or platform-specific supporters or numerous individuals pitching their services and waving with “The List of known backers,” should be taken with caution. It takes just one spam report and your campaign will be suspended. Those who play with this, usually end up burned. That’s why you need to be careful about sharing your referral links.
However, those who know how it’s done, do possess massive lists of backers, journalists and influencers, only they deploy a different tactic to reach all these people. And we are not talking about cold emails or spamming their social accounts. But that falls in a category of business secrets.
It’s the known fact that only a handful of people truly know how to do effective marketing. The rest will just create numerous accounts on different forums and social networks, using your brand name, and start spamming people. Needless to say how futile and time-wasting this is.
Your best option is to list 50 most influencing industry-relevant media and see how to promote your campaign on each. Although, the marketing agency you hire should do this for you.
For instance, Gadget Flow and TechCrunch are influencing media for tech-based products. But even the direct exposure to millions of eyes, that will cost you anywhere between $300 and $600 (Gadget Flow, depending on the package you choose), can eventually bring 5-20 below average pledges. It depends on what you have to offer and how people respond to it. Some campaigns drove thousands of dollars with a single exposure in the right media but for the most part, this should be perceived as the press release – just another way to spread the word and hope for the best.
With the smart and decisive approach, cumulative effort, and under the assumption that you really have something valuable to offer, crowdfunding is definitely the best method to raise funds for your startup. And, it’s the great method to test the idea because you can see how market responds to your solution BEFORE you invest millions on a potential lost cause. In fact, the thing that usually drives angel investors to invest in you is the cumulative of 2-3 successful fundraising campaigns you ran in the past.
PART 2: How to build a campaign’s page, STEP-BY-STEP Tutorial
Crowdfunding – a Kickstarter of Easy Fundraising Through Crowdsourcing
Some of the best inventions our species have a privilege to enjoy started as partially developed projects and then evolved over the course of time – many of which by becoming a money magnetcrowdfunding idea. No reason why your creation wouldn’t evolve the same way.
Like one of the most popular crowdfunding projects to this day: Coolest Cooler, which managed to raise, through smart and persuasive crowdfunding campaign, an astonishing $13,285,226, with only $50,000 set as a campaign goal.
This is a quick guide to crowdfunding or as it is also known: peer to peer lending, and it will serve you as a great starting point, along with the instructions in Part 1.
What is the Crowdfunding Website?
It’s a central place for online fundraising that connects a fundraiser and a crowdfunder to create anonline money pool. Fundraiser being a person or a group with a need for small business grants and Crowdfunder being a person or a group that recognizes the potential of an idea and decides to support it.
Crowdfunding sites are the new approach to business loans and small business grants. Avoiding the painful and slow bureaucracy and over-caution often present at venture capital offices and banks,online fundraising is gaining a momentum.
How Does Crowdfunding Work?
- Formatting the funding plan
You work out the precise funding goal: a defined value you need in order to develop your project entirely or to cover a segment. Keep in mind that the online fundraising falls into the same group with other small business grants and therefore you need to set the margins and strategy straight. Otherwise no one will take you seriously and you will fail to raise funds.
For instance, if you’re about to make a documentary about the koalas, you might want to collect enough funds just to cover your travel expenses or to fund A-Z.
Or maybe even a better example is the ambitious project of developing an electric car where campaigners decided to break their monetization plan into small pieces and run the first crowdfunding campaign to only finance the necessary tools. As they were progressing with their project, they initiated and executed additional campaigns.
- Crowdfunding Campaign Preparation
Once you’ve dissected your funding plan, it’s time to prepare the campaign.
You’ll sign up for a free account on one of the crowdfunding sites and provide additional details about your identity and go through the bank credentials check. Simple and easy-to-use interface of your project’s page, found on most crowdfunding websites, allows you to add critical details about your project: description, purpose and nature of it, crew and every other related piece of data you find important.
You’ll introduce yourself and the crew if any and explain why should someone support your endeavor. Keep in mind that you are raising capital for your project. You need to pitch your idea efficiently. This means you’ll have to create a short presentation of your agenda – a pitch, either written or a video. But do consider the fact that campaigns without video presentation hardly ever reach their target. People just love to see the movie, that’s all.
One note though. Don’t exceed 2,5 minutes.
- Run the campaign.
This is the most critical part of the entire process after the pitch.
You are spreading the word by any means necessary and keep the constant communication with your current and potential supporters – crowdfunders. Always think about the fact that some people need an extra nudge to support your crowdfunding idea and you never know what that might be so explore and exploit every possibility.
Your best approach is to offer your crowdfunders some kind of reward for their financial participation in your project. It can be anything from T-shirt to special mentioning of the supporter in your project. But what proved itself as the most efficient is pre-order. In other words, offer a widely discount and make sure to show the retail price so the supporter can “see” how much he or she will save by supporting and pre-ordering.
This is the stage where your supporters “invest” in your dream. Everything comes up to this.
As a part of your campaign you want to keep your current and potential supporters up to date by providing them with the visual insights of development and even the events you organized in order to gather more fans.
OK, this is a theory. In reality, things work slightly different.
One of the reasons why only 8% of all campaigns manage to raise funds is their belief that it’s enough to fire few messages to their closest friends and family.
As you could see in the Part 1, it doesn’t work like that. You are asking people to give you money for something that doesn’t even exist. And, your “list” of friends is fairly short.
You need smart native and marketing strategy because it all comes down to these two factors:
- Precise calibration of your brand positioning to ensure precise targeting and cut on costs.
4 things left for you to do:
- Collect your funds;
- Ship your rewards;
- Follow your dream – you’ve earned it!
- Keep your supporters updated with the progress. Nurture the relationship. You might need an additional fundraising campaign if your project evolves into something even bigger!
Trust & Safety at the Largest Crowdfunding Platforms
Crowdfunding in its nature involves 3 different parties to create that online money pool:
- Crowdfunding Platform Team
- Fundraiser (Person or a group raising the funds)
- Crowdfunder (Person or a group investing in project, supporting the campaigner)
It’s critical to establish a high level of trust between the parties in a process. Therefore many of them (crowdfunding platforms) have developed simple guidelines which will point you in a right direction no matter if you’re a fundraiser or a crowdfunder. And you’ll be able to see what they do from their behalf to make this a fun, safe and exciting journey for all.
If You Want To Support the Crowdfunding Idea
- Go over the campaign presentation and any other relative details campaigner’s provided and learn more about the project you’re about to endorse.
- If you think you need more info don’t be afraid to ask the campaigner directly – there is a button just for that purpose.
- Surf the web and try to find campaigner’s homepage or social page and explore some more.
- Listen to the feedback. Nothing beats word-of-mouth and it’s usually a good indicator whether the campaigner and his idea are something close to your aspirations.
If You Want To Run a Crowdfunding Campaign
Every type of the relationship is based on a principle where each party benefits on some level. It’s a two-way road.
- Make sure you clearly introduce yourself and present your creative idea (agenda) honestly and in a precise manner.
- Stay on top of your game and provide feedback whenever needed. This means to keep the communication channels open at all times and respond as fastest as you can.
- Nurture the relationship with your supporters even after your campaign is over.
Where Do Crowdfunding Platform People Fit In
Indiegogo or Kickstarter, or Crowdrise – (3 largest crowdfunding platforms) are communication channels and liaison officers. It’s those crowdfunding platforms what connects you the fundraiser with you the crowdfunder.
To keep the confidence level of their communities, fundraising websites are constantly upgrading their systems and monitor everything that has been happening on the platform. This includes a high-tech early warning system if someone is trying to abuse the platform. Have no doubts – each of them will suspend the offender at the speed of the light. It’s the way to ensure that honesty and trust between the parties are on a highest possible level.
One of the critical features of every crowdfunding platform is most certainly a payment gateway(s) and personal data.Most of the platforms take no chances and use the latest security systems to protect your data and your privacy.
While crowdfunding is a great way to raise capital for your creative idea, it’s by no means a magic stick. There are some things prerequisite to execute a successful fundraising campaign. The most important one – know your business; know your niche. This means that you need to be on top of your game. If you are developing a service or a product you need to know exactly what it is good for. In addition, you need to know your market; your niche.
You might have the best possible idea (at least in your head), but if you don’t have the market for it, everything is in vain.
Preparations prior to launch
85% of every success is a thorough planning and detailed preparations.
Your best approach is to think about the fundraising as the attempt to close the financial structure of your business project by searching for investors who offer a venture capital or asking a loan from the bank. That way you’ll ensure that your project’s blueprint is developed to the smallest detail. This includes, but it is not limited to:
- Full description of the product or service, or any other type of a creative “more-social” idea (campaigning to send your folks on cruising or to build a shelter for lost cats);
- Definition of the problem your creative idea is about to solve. Even if the niche is too crowded you will still be able to catalyze the narrow segment and land your product or service – you just need to break through the noise;
- A classical market analyses which will later help you to construct a compelling pitch – the critical component of every campaign.
- Detailed financial plan including overall cost of your project and possible potential revenue (ROI), once the blueprint is transformed into a live service or fully operational product.
When you have all of that in your pocket, it’s time to develop a PITCH.
Whatever we do in our lives, we pitch. We pitch to push our point of view when discussing an issue. We pitch to push our agenda. We pitch to push our product or service.
Crafting a compelling pitch can be somewhat difficult for many because your pitch should sum every benefit of your idea in a short, meaningful and decisive manner, making it irresistible for your potential supporters.
The practice has shown that the best results are achieved with the 2-3 minute video pitch.
While the video is an optimal way to pitch your idea, you still need to transfer it into the words and you need three (3) different types:
- 300-500 words pitch for your campaign page;
- 15 seconds pitch suitable for the header of the page and for the email campaign – known as the “Elevator Pitch”;
- 5 seconds pitch suitable for social networks; Twitter in particular.
Crafting a successful and compelling pitch is almost a science. Think of it this way: if anyone would be capable to develop a good pitch then marketers and copywriters wouldn’t even exist.
Mastering the craft of the great pitch includes great knowledge about human behavioral psychology among everything else. The pitch must be optimized in a way that it will influence the cognitive behavior of the one who’s been pitched. Words, images, videos – all the same; your message must change the way the prospect thinks.
To make this critical element easy for you so you would be able to focus on other segments, let the professional sales writer handle it. Direct benefits for you are:
- Time saving
Focus on other segments of your campaign such as communications and development and greatly improve the performance of your campaign;
- Increased Effectiveness
Greater brand awareness derived from the professionally composed pitch which communicates your message with additional power;
- More Funds For Your Project
Your ultimate goal is to collect as much capital as possible for your creative idea. Professionally designed pitch will yield far better results than the one developed by someone not so well versed or with the lack of knowledge and experience.
After the pitch had been developed, it’s time to think about the rewards for your supporters.
Reward-based crowdfunding is the most effective way to collect your funds. It’s a relatively small “perk” you’re offering to your potential supporters in exchange to their participation. Depending of your project, you’ll adjust the rewards span.
The analyses show that the most usual amount of money, supporters will invest in you and your idea, is $25. So you need to define 5-7 rewards with the value ranging anywhere from $10 to $1000-$5000.
For $10 you may reward your supporter with the “Thank You” card or with the name engraved somewhere on the wall of your project or with the campaign T-shirt as a memorabilia.
$25 will most likely include a pre-order of your service or product, or maybe even a private dinner. More money you ask for; more you will have to be willing to give. You need to find the most suitable model for your particular campaign.
More money you ask for; more you will have to be willing to give. You need to find the most suitable model for your particular campaign. The best way to get the ideas is to go through successful campaigns and see how they did it. Again, a bit of good old intelligence efforts will come a long way.
While reward-based campaign is a neat way to raise funds, you may raise even more through equity crowdfunding.
Every “funder” earns a cut in revenue your business makes proportionally to the invested amount relative to the value of the project. Funder has no executive rights nor is able to influence decision making. Funder simply waits for his money to be paid on his account. It is an investment similar to stocks and bonds.
Since this type of fundraising is gaining on the momentum and becoming the new way to invest money, more people are swiping through equity based crowdfunding campaigns trying to find a hidden gem to invest some money in it. Some groups and even venture capitals are investing millions in projects they find interesting and lucrative. As we said, money is flowing like a river. You only need to dig a canal and redirect some of it to your business.
This is only a short overview of crowdfunding and its principles. If you are willing to raise funds using the crowdfunding as a method, we suggest that you go over hand-books provided by the specific crowdfunding platform to set up everything and then come back to work out the deal with us. We are delivering supporters and money, ensuring that overshoot your campaign’s financial goal.
If you have questions or need further clarifications, use the comments section below and you’ll get your answers. If you want us to recommend a proven pitch creator or a marketing service, contact us.
Good luck and Godspeed!