7 THINGS YOU SHOULD KNOW ABOUT CROWDFUNDING YOUR STARTUP by Inna Boyadzhieva

To be honest with you crowdfunding is my passion. What is so fascinating about Crowdfunding is that the market is the one who decides whether or not your mission is viable for fundraising and for the first time in history we're all able to be a part of the process in bringing these spectacular missions to reality! 

If you decide to start a crowdfunding campaign my advise for you is to find an expert who really understands the crowdfunding. This will save you a lot of money and stress. Before you jump in the world of crowdfunding you need to know a few things:

1. What CROWDFUNDING is?

All my trainings about crowdfunding starts with this question. All of you who ever attend to a training could confirm this. Why is so important to know what is crowdfunding? A lot of would-be entrepreneurs think of crowdfunding as the goose laying the golden eggs of startup capital, but it’s far from that. You could find a lot of definitions of the crowdfunding process. Even some of the biggest platform like Indiegogo gives their own definition. However the most important thing that you should know about crowdfunding is that is simply the process of raising capital from potential customers pre-launch. 

2. Crowdfunding is free?

Sorry guys if I broke your hearts with this statement, but its true. We know that online fundraising can be more effective than traditional offline fundraising. So what we are paying for?

• Platform Fees - The fee ranges from 0-20%
• Payment Processing Fees - Fundraising sites often use a payment processor to facilitate donations and withdrawals. PayPal is one of the largest and most well-known payment processors out there. Most companies charge 2.9% + $0.30 per donation. This seems to be the industry standard with very little variability.
• Also you need to calculate the money for video content, creative, marketing, PR, consultations, etc. This usually is about 30 - 35% from the goal you want to reach in your campaign.

3. Which platform to use?

You should define which platform will be best for your project. Will you be on Kickstarter, Indiegogo, Gofundme, Fundable or some other site? Did you know that each site has its own rules and regulations for running campaigns? Kickstarter and Fundable for example require you to meet or exceed your stated goal to receive any money, while others like Indiegogo will let you keep whatever you raise, even if it’s not up to your original goal. Finally, do you know which platform your target audience is more likely to use? Each platform has a certain flavor of project that performs better than others. 

4. What is the project you want to crowdfund?

Please note that you must know your vision, your idea, or your product. I know how hard is for startups to define what exactly they will do. Never forget that in crowdfunding you have to explain it simple. The most common mistake is to talk about the company concept, not about the certain product you want to sell. If you can’t explain to your audience exactly what it is that you want to achieve by launching, your fundraising efforts will be in vain. Likewise, a successful crowdfunding campaign requires you to lay out as much information regarding yourself and your product as posssible in order to attract backers.

5. Do you have a community?

If the answer of this question is "No" you must have a strong pre-campaign preparation. Leveraging existing customers, friends, social media followers, blog readers and others will prime the pump before you ever launch your campaign. The successful campaigners know that gathering a cadre of motivated, excited backers before the campaign ever goes live is critical to early success. Most of the crowdfunding platforms use algorithms that reward early backing, and so will show your campaign to more people faster. Think of it as putting that first $5 in the tip jar: It plays into the psychology of how we spend money. Nobody wants to be the first idiot to back a loser project. 

6. Why is the team important?

Did you know that crowdfunding campaigns run by a team raise over 3 times as much as campaigns run by an individual? No matter what idea you want to fund, big or small, working with a team gives you the opportunity to multiply your network, divide and conquer tasks, focus on your areas of expertise and make your campaign the strongest it can be. Your teammates can be friends, family members, colleagues – anyone that you trust to help make your vision become a reality. 

7. Know the importance of Pre-Campaign

Creating a pre campaign is absolutely critical to the success of your crowdfunding campaign. Usually a pre-campaign is minimum 3 months. Use this time to prepare, prepare and prepare your campaign. Making a crowdfunding campaign is so much fun, work and stress. During this period you should plan your steps, prepare marketing, PR strategies, defining your user persona, target, market, prepare your business plan and many more. You will learn a lot during this period.

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In the end, your crowdfunding campaign is only as good as the time, effort, and passion that you put into it. Like other forms of fundraising, crowdfunding is a powerful option if your product is viable, needed, and popular with your target audience. But if you haven’t done your homework, expect to be looking at a big zero in your bottom line at the end of your campaign.

Tip from Inna Boyadzhieva: In crowdfunding you must bring your own crowd. Before you launch, make sure you know 100 - 400 people who are going to show up and not only share the campaign, but open their wallet in solidarity of support for your goal.