Crowdfunding offers so much more than just money for start-up projects. It's funds with benefits.
What works in raising money changes quickly, but for now. There are some fairly solid principles that hold:
What to expect; what to beware of; what costs are meaningful and some tips on fan engagement.
This is the notes-added version of a stripped-back presentation, so not perfect for using in the realworld. But hopefully handy if you're about to embark on a crowdfunding campaign of your own.
PS. good luck! And please pop on a link to your campaign if you have one about to launch. I'd love to track it.
2. WHY CROWDFUND?
Quick ignition financing is a win, but wait, that’s not all you get ...
Crowdfunding bundles up some of the most valuable components any
revenue-generating venture needs to survive early contact with the real-world:
LEARN FAST & SAVE: capital, labour, hope and time - the quickest way to find out if you
have a MARKET or supporters. No interest, no go.
TARGET + QUALIFY who your paying clients are. But also, gather your fans, they may
not pay directly, but they seed the message and build momentum
R&D for free: feedback and feature suggestions on your offering before you build. So
you’re more likely to have a much-improved end-product.
PRE-ORDERS! Gold
Accelerated marketing, MEDIA EXPOSURE and public PARTICIPATION. [Maybe even
the tastemaker lottery if someone deeply influential delights in your project].
it’s worth much more than the money
4. WHO CARES?
Unfair as it may be, ingenious ideas, unadorned (or hidden in
technicalities) don’t succeed as well as those with the right context.
Is it relevant; does it solve an urgent pain; for whom; how easily?
Does it ensure safety; enhance social status; connect a clan of misfits?
Find the backstory to help unlock why hundreds of people might care - and be
moved enough to see this project materialise, with their money.
Even at the micro-investor level, there’s so much fighting for their
attention now. So take the time to craft a compelling case to earn
their time, trust and consequently, their money.
Good storytelling = getting us to care about something
we didn’t care about before.
make it matter - to more than you
5. KNOW YOUR NUMBERS
1. Calculate (as close to) EXACTLY how much it will cost to fulfil your REWARDS.
But also build in contingency costs - because, $#!* happens.
2. SHIPPING costs vary wildly dependent on final-weight (it may seem obvious, but
you may get non-local orders, cater for international deliveries)
3. Perk PRODUCTION is often packed with hidden costs. Do your homework. (And
add the contingency, again)
4. Account not just for the PLATFORM’s commission (4 - 15%)
but also the PAYMENT gateway fees used to process the pledges (5/6%)
4.Additionally, check the holding periods before money can be released to you.
5. It’s not free money if you FAIL: Read those T’s & C’s. In most cases, you’re legally
bound to fulfil perks or REFUND donors or investors if the project doesn’t work.
Make sure you have a buffer of cash saved for refunds and banking/admin charges to
pay it back.
6. Not everyone will institute legal action if you don’t, but reputational damage is
hard to shake off online. Caveat Crowdfunder.
6. IT’S A PERFORMANCE
Crowdfunding is hard work (especially if you’re an introvert).
You have to do more than just deliver a product and some perks at the end of the
process. It’s no joke.
It’s much more INTERACTIVE than dealing with a bank.
Or even pitching traditional funders.
Staging a strong crowdfunding campaign:
Develop your compelling, shareable story to match your goal - with awe or aww factor
Good visuals, particularly video, contribute significantly to success
Create enticing (project relevant) rewards
Team credibility = investor confidence. Reveal your expertise.
Get on your social & traditional media strategy, preferably months in advance.
Feed the media beast with story angles throughout funding, into fulfilment.
6. Grow a fan-base! Interact openly with your campaign community.
Surprise them with more than they expect and you might stir up love. Fan devotion
goes beyond necessity or reason - and is exceptionally valuable to your sustainability
beyond this campaign.
1.
2.
3.
4.
5.
7. AMBITION IS TRIBAL
Don’t be so inoffensive to all that you win none.
We long to belong, but we sometimes need gathering points to find each other.
What will you stand up for - how is this project a powerful exemplar of your
particular tribe’s ideal, made real? Make us believe that you can make that happen.
8. WIN HEARTS + MINDS
Develop your Awe or Awww to snag attention, intellectual or emotional.
Emotions are excellent to hook initial interest. But make sure there is
something substantial for those who want to investigate deeper. And many
will. Be sure you’re ready for that. Are your claims solid? Prove it.
Slay the jargon. Plain language is not only more accessible, but oddly,
brain-friendly = more TRUST (and understanding means wider social spread).
Remember we buy into teams/personalities, not just A-grade ideas.
Even casual investors appreciate the strength of execution of an idea is up to the
strength of the people driving it. Establish trust in your expertise to deliver.
[That said, wild charisma has been known to trump evidence, since, well, always]
Oh, and check your spelling. Mistakes trigger trust concerns and extra scrutiny.
9. KNOW THE GAME
Popularity = security. (If only a perception, it’s a bias we’re prone to. So use it)
Get friends and family to back you EARLY - investors feel assured by others‘
buy-in. Social proof and all that.
Interestingly, aggregates show that once you cross half of your goal,
you have a 95 percent chance of success.
Long campaigns seem to both signal a lack of confidence, and appear to diminish
the chances of success.
<< I-don’t-wan’t-to-miss-out
last minute rush
The funding cycle is typically:
It often happens in the closing
3 days, or even hours.
Early excitement
Friends, family,
local community
come in here.
Mid-way lull
Expect this, don’t freak out.
Work hard to slowly cross the
halfway funding mark.
Step up the FOMO to win.
10. REPORT RELENTLESSLY
We humans HATE feeling fleeced. Any suspicion of being cheated can lead to
a run-on of refund requests.
Which could impair your ability to fulfil the project for those who stick with you.
And lead to wholesale project refunding. Horrors.
It’s game is over, if trust is lost.
Report (on problems particularly during the fulfilment phase):
time-changes, glitches, commercial interest changes, are vital to maintaining the
trust of your insta-community. Avert anxiety and anger, with regular updates.
Save time by anticipating questions and answering them upfront in your pitch.
Projects are rarely smooth. Share your progress good AND bad.
Transparency and humanity are vital ingredients of a successful campaign.
11. Weak personal network engagement
Weak media relationships
No video and/or visually uninspiring pitch
Crappy rewards with no creativity or relevant appeal
Insufficient expertise to pull it off
Perk production cost & labour unexpectedly expensive
Didn’t disclose questionable ethical, relationship or regulatory issues
Poor choice of crowdfunding platform
Funding goal set too high
...Too damn boring
the various flavours of
OOPS
12. Fame & Fortune.
not guaranteed
The majority of crowdfunding campaigns don’t succeed, but there is such
strong upside from the bonus benefits and lessons learned quickly. It’s worth it
...IF you have the time to put the effort in; plan carefully; build your fan-base,
media relationships, a robust prototype and a great (visual) story; and aren’t
afraid to interact. Then there is a massive advantage to giving it a go.
Make a quick buck?
Not so much
Powerful business tool?
No doubt
13. RECOGNITION
is more than ‘being nice’
Loyalty has monetary value.
Gratitude is an under-appreciated
business powertool for sustainability
Give credit where it’s due to people
that have inspired your project.
Say thanks when fans stand up for
you. Spread the word about your
project. Give useful feedback (even
criticism). For the journalists that
cover your story. And obviously to
people who do more than ‘like’ you,
they’re trusting you with their cash.
Give ‘em love.
*
Creative Commons Images in Order of Appearance:
Slide 1: http://www.flickr.com/photos/notsogoodphotographer
Slide 3: http://www.flickr.com/photos/pixelplacebo
Slide 5: http://www.flickr.com/photos/overthinkingme
Slide 7: http://www.flickr.com/photos/ tjt195
Slide 8: http://www.flickr.com/photos/ seedingchaos
Slide 11: http://www.flickr.com/photos/ jdevaunsa
Slide 12: http://www.flickr.com/photos/purplemattfish
Slide 13: http://www.flickr.com/photos/wvs
‘funds with benefits’ borrowed from Thundafund. Thanks Patrick!
14. Oh and
though you’ll need to be less reliant on the
whimsies of fate now, a little dash of extra
GOOD LUCK
never hurts :)
Funds with Benefits by Max Kaizen for Treeshake is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.