How to kick start Your Crowdfunding

As crowdfunding makes gains in popularity, the battle for pageviews and pledges has become increasingly competitive, especially on portal sites that feature thousands of live projects at once. If you’re depending on a Kickstarter feature to kickstart your campaign, then you could be in trouble.

 

So how do you ensure that you’ve optimized your campaign for success? We’ve taken a look at a number of recently funded projects in order to identify some of the techniques, strategies, and crowdfunding secrets that will give you the best chance of meeting your goals.

 

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Most crowdfunding operations follow one of four models:

1. Open online donation requests where donors may or may not be given a thank you note or trinket, but the expectation is that donations are gratis.

2. Reward-based crowdfunding inventicizes donors with the promise of a reward in exchange for their donation. In many cases, donors are given the product or service they helped fund.

3. Crowdlending or peer to peer lending works as a bundle of loans between lenders and the project creator. All loans must be paid back within a pre-ordained time frame with an agreed upon interest rate. In the event that a project fails to become profitable, some crowdlending contracts allow for outstanding loans to be partially or fully forgiven.

4. Equity-based crowdfunding incentivizes funding by offering early entrance into the new venture’s equity shares. If the venture succeeds or ends up turning any kind of a regular profit, the creators are contractually obligated to disperse the agreed upon shares to its funding partners.

 

 

Before You Get Started

 

As with any new business idea, thorough planning can make the difference between success and failure, regardless of how much money is available. It only takes a few minutes to set up a crowdfunding page, so it may be tempting to make this your first step.

 

Don’t jump the gun. If you want investors to take your project seriously, it is crucial to lay out your preliminary business development strategies before you start soliciting funds.

 

 

 

1. Conduct a Business Viability Review

 

Any serious campaign will have a strong sense of the business or product’s viability in the marketplace. If you are organizing a crowdfunding initiative, investors will expect you to grasp concepts like competitive analysis, market projections and your production or ramp up costs. Winning over investors takes a thoughtful, assured presentation; something that shows them you really believe what you are pitching is possible.

 

2. Understand Your Product

 

Before production, before marketing, before sales strategy, the product itself must be thoroughly vetted. Even the slickest marketing campaigns are limited by the product they promote, and entrepreneurs who succeed understand this. Questions to ask yourself as you investigate the possibility of selling your product or service might include:

What unique need does my product meet?

Identify and assess the niche market your product will appeal to

Outline the new ways in which your product will solve a problem for your customers. How will you provide something of higher value than your competitors?

Who is my competition?

Competitive analysis is essential at this step, because understanding the way a similar product meets a market need can tell you about the viability of your idea.

How do similar products meet demonstrated need?

How are these products or services produced and marketed?

What obstacles do your competitors face in bringing this product to market?

Who is my target customer?

Narrowing down your customer profile can help you maximize your marketing efforts and reduce costs. Additionally, a clear understanding of what makes your customer unique can inform the way you develop and sell a product later.

Useful demographic data like this can be found by slicing and dicing data provided by the U.S. Census Bureau, or working with any of the multitude of firms that specialize in demographics.

What are production costs?

Sometimes investors want to see the product before they commit to large donations, so investing in the development of an impressive prototype can pay off in the long term.

If your business idea produces a tangible product, consider the cost of design, materials and labor required to create it.

Also note that prototype development costs are not the same as mass production costs. Raw materials in quantity, a larger production staff, packaging costs and shipping methods are all variables that need to be factored into long-term cost.

What have I missed?

A common practice among successful entrepreneurs is to have other professionals and friends review their business development strategy.

When you’ve put in countless hours toward developing a plan that will attract investors, you may become too close to the project to view it effectively. Ask colleagues, family and friends for objective feedback before you solicit funds.

3. Assemble Your Team

 

Indiegogo, a popular crowdfunding resource, reports significantly better campaign results when entrepreneurs approach fundraising as a team. Working with people who are equally inspired by your idea may bring contributors with diverse backgrounds to the table. Along the same lines, each team member carries their own network of contacts. The more people you involve, the more outreach you can do when fundraising.

 

Be sure to mine your online professional networks. In addition to suggesting professionals within your extended industry network, LinkedIn offers special interest groups. Subscribe to these to keep up on discussions and events related to your industry. Likewise, niche categories on Twitter, Pinterest or Facebook and in the blogosphere can help connect you with potential contacts, team members and board members. Who is doing the talking in your space? Locating and building relationships with reputable industry bloggers and reporters will help you build the kind of brand, and ultimately, the kind of team you want.

 

When you are evaluating potential team members, think about each person’s background in relation to your business needs. All businesses need a finance or operations person, for example, but not all require a high-level IT specialist. Tailor your team to your product, and choose individuals who are as enthusiastic about your idea as you are. Finally, acknowledge that you’ll likely spend an enormous amount of time with these people. Can you work with every team member under pressure? Will the individuals you bring on mesh well?

 

4. Develop a Product Delivery Plan

 

Once your research and personnel efforts are complete, you will need to dig into the details of production, including marketing a finished product or service and delivering it to your customers.

 

Product Development: By the time you’ve built a prototype to present to potential investors, you should have a clear idea of the necessary materials, tools and processes required to deliver the product to customers. Begin researching materials acquisition and pricing, and don’t forget to research alternative supply solutions in the event you need backup during production.

 

Is it cost-effective to outsource design or labor? Would you prefer to oversee all of production? At this stage, you should identify potential outsourcing vendors and pricing, or acquaint yourself with the details around property and equipment acquisition. Build a timeline that is as close to accurate as possible. While it is unlikely you will be able to pick an exact date for mass distribution, you should have a clear time frame to share with investors.

 

Lastly, entrepreneurs need to be aware of the documentation required to own and operate a business and to produce, price and distribute a product. This sort of documentation can involve permits, blueprints, drawings, business plans and site photos.

 

5. Choose a Crowdfunding Platform

 

Digital crowdfunding began with well-publicized sites like Kickstarter and Indiegogo. Kickstarter, in particular, enjoyed quick and early success early on, raising over $27 million in funds for over 3,000 projects in its first year. Kickstarter’s popularity spurred dozens of other crowdfunding platforms into existence.

 

While crowdfunding platforms bewilder many business owners, many are more geared toward launching businesses in a particular industry. For instance, Mashable identifies six specialized crowdfunding platforms, each with their own distinct draw, demonstrating the possibilities of a campaign targeted at a specific community.

 

Many of these sites either have an all-or-nothing donation strategy, wherein entrepreneurs establish a fixed total and due date for all fundraising. If the whole amount isn’t reached by the due date, all funds are returned to investors. Other sites employ a more straightforward donation strategy, accepting all donations for eventual use.

 

Crowdfunding Preparation

 

1. Prepare Your Face Off

You can use crowdfunding to help validate ideas before they are fully realized, but if your campaign comes across as half-baked then your audience isn’t going to invest. “People don’t want to back a campaign that’s not going to work,” says writer and entrepreneur Seth Godin on his crowdfunding experiences, and you can’t use crowdfunding as a shortcut to avoid properly fleshing out your ideas.

 

 

2. Strategic Social Media

 

Social Media Crowdfunding

 

You don’t need a blanket presence on social media, though the wider your reach the better. Pick the networks that best match your marketing and content strategies and where your potential supporters are most likely to be found. Don’t forget to customize your promotion to suit each platform too: indie band Bigtree Bonsai raised $6,956 (almost double their target) via IgnitionDeck after spreading the word with a #letsmakearecord hashtag.

 

3. Produce a Great Video

 

Video Is Important For Crowdfunding

 

Video clips give visitors a better idea of your project — they can see you or your product in action rather than clicking through a series of static images. They are also labor-intensive, so don’t attempt to put together a clip if you don’t have the time, resources and expertise required. An amateur-looking video isn’t going to convince anyone to get involved, and at worst, could damage your campaign’s credibility.

 

It’s usually well worth paying for help to make your video pitch the best it can be because of the investment it will attract. Seth Godin again, on the campaign he ran that reached its goal in three hours: “There’s something about the medium that makes the video even more important than you’d think.”

 

4. Create a Helpful Media Page

 

The Press and your crowdfunding campaign

 

You’ve no doubt seen some of the most popular crowdfunding projects covered in the press, but this won’t happen if you don’t have a solid website and some press materials that journalists can download. Even if you’re a one-man show, don’t rely on your Facebook page to do it all. If journalists can’t find more information about your project and some high-resolution pictures to illustrate their features, they may choose to promote a different project instead.

 

If you have grander plans, think press releases and even tours: the Star Citizen video game raised over $14 million through IgnitionDeck’s WordPress plugin, and the campaign included a press tour before the crowdfunding element was even launched.

 

5. Don’t Ask for Money Immediately

 

Crowdfunding and Money

 

Tell your story and share your enthusiasm for your project, and people will naturally want to add their support. Remember that your supporters are giving you money with the expectation of getting something back: they want to receive a return on their investment, whether it’s a physical product or an emergency relief operation that swings into action. Consider how well the IgnitionDeck-powered campaign for The Public Domain Review worked — it shows the benefits and value of the publication up front, so backers know what it is they’re supporting. What’s more, supporters could pledge as little or as much as they liked.

 

6. Build Interest Before You Close

 

Create an Audience Before Crowdfunding

 

Even before you launch a crowdfunding campaign, you can drum up interest in your project or your business. With a solid fanbase in place, your campaign will get off to a good start. For example, Adam Baker leveraged the active following on his Man Vs. Debt blog to help his I’m Fine, Thanks documentary reach its goal with over 4,000 backers. If you don’t already have a community to tap into, try and get the attention of a handful of influential figures who might be interested in your project.

 

7. Communicate Often

 

Communicate When You're Crowdfunding

 

Whether it’s good news or bad, keep your backers and potential backers in the loop. Post regular updates on your crowdfunding page, and keep the process going after the campaign has ended: “The real work begins after the campaigns to ensure everyone gets what they pledged,” says Piwik’s Matthieu Aubry, who successfully funded a new feature through IgnitionDeck.

 

8. Keep It Personal

 

Be Yoruself With Your Crowdfunding Project

 

Introduce your team to let your supporters meet the people behind your project regardless of whether you’re an established company or an up-and-coming startup. Consider the humor and personality in the crowdfunding campaign A House For Lions ran to fund their debut album using IgnitionDeck. Rewards included surfing lessons from the band and input on the track listing.

 

9. Appeal to Your Existing Fans

 

Appeal To Your Audience First

 

The campaign that earned the Veronica Mars sitcom a shot at the big screen paid particular attention to the show’s existing fans. The campaign didn’t do a great deal to draw in new interest, but was very clever about appealing to people who had already formed an attachment to Veronica Mars. Consider the fans and supporters that you already have, making your project goals and rewards something that these people are going to be ready to identify with.

 

 

 

Crowdfunding for Everyone

 

You can create a campaign that has broad appeal at the same time as paying special attention to your existing supporters. One of the best ways to do this is by creating a reward scheme with many different price points. Even if you can’t offer a physical reward for a $1 donation, you could still give these pledgers early access to your product or a credit within your software package, for example. The Back To The Roots AquaFarm raised $248,873 after setting a $100,000 goal, with rewards ranging from $1 (for behind-the-scenes updates) to $10,000 (for an educational seminar in your community).

 

There’s no way of guaranteeing crowdfunding success, but by studying the projects, strategies, and crowdfunding secrets that have worked for others, you can certainly maximize your chances. Like any other business venture, crowdfunding is an iterative process that start long before the doors are opened, and long after the campaign has closed.

Saad Karim: https://www.upwork.com/o/profiles/users/_~014443e7b5c4a51824/