Whether you’re looking to finance a startup, secure funding for a feature film or garner support for a charitable cause, there are many ways to reach out to potential investors. In the digital age, one of the most popular is crowdfunding, whereby entrepreneurs, visionaries and non-profits put forward their ideas and products, with the hope of receiving a preordained amount of financial donations in return.
It’s not as simple as setting up a page and watching the investment roll in, though. For your campaign to be a success, it requires full-time commitment and preparation, and even then it may not be enough – only 31% of Kickstarter ventures reach their goal. But by doing your research, preparing thoroughly and employing a solid strategy, there’s no reason why you shouldn’t be one of them.
Luckily, we’re here to help, too. We’ve compiled a handy list of tips on how to successfully set up and grow your campaign so that Harry Potter prequel movie need no longer exist in just your imagination. This is how to do it.
1. Prepare Properly
As with any sizeable project, preparation is everything. Entrepreneur Jessica Alter claims that you should commit to between six and eight weeks of work before your campaign even goes live. She says: ‘From pre-committing donors to selecting a platform, to building your email list, to getting video and creative assets together’, you need time to do it correctly. ‘Crowdfunding, especially the first time, is an incredible amount of work.’
You should research the ‘competition’, too, to see what kind of interest there is in related businesses or ventures. If backers are showing no appetite for a product that is similar to yours, try to figure out why. Is their pitch not good enough? Is it the wrong platform? Or is there simply no interest in the product? The more intelligence you can gather, the more informed your own strategy can be.
2. Use the Right Platform
As mentioned, choosing the right platform is important. Say you require $10,000 to develop your product, for example, but you only receive $8,000. With Kickstarter – who operate an ‘all or nothing’ model – you wouldn’t receive anything; with Indiegogo, you would still keep the donations but you’d then be expected to deliver on your promises with a lower amount.
Many crowdfunding websites also target particular fields of interest, so you should ensure you’re preaching to the converted. GoFundMe is tailored towards non-profits and various social causes, so you’d be unlikely to find much backing for a business proposal. Alternatively, if you’re looking to get a book published, you could try using a smaller, niche-specific platform like Publishizer. There may be fewer backers, but you may find more support.
This ties into the final point: traffic. Kickstarter and Indiegogo attract the most visitors, so there are more people who could potentially donate. Unfortunately, this also means that there will be far more users vying for that hard-earned cash, and you may get lost in the mix. Before you start, research the various platforms carefully and make sure you are setting up shop on the right one.
3. Get Your Numbers Right
Another key part of preparation is making sure your calculations are accurate and correct. The last thing you want is to hit your target of $25,000, only to then realise you underestimated – and have to set up a new campaign asking for an additional $5,000. As well as hindering your progress, it also won’t inspire faith in your budget management skills from prospective backers.
Don’t throw outlandish claims around, either – every reward you promise and every assertion you make about your product needs to be verifiable and deliverable. If you hit unavoidable snags along the way, be transparent and communicate – bad news is better than total silence. Remember, people will be far more likely to fund your future ventures if they trust you.
4. Capture People’s Imagination
If it was easy, everybody would be doing it; alas, taking a theoretical idea and persuading a total stranger to donate money to developing it requires more than your average sales spiel. Therefore, you need to step your game up a notch.
Most experts would recommend you produce – or pay someone to produce – a professionally shot and edited video. While there is a time and a place for a written pitch (typically for charitable ventures), a well-crafted short film that explains your product or idea and can offer a visual representation of it is four times more likely to attract donations.
Even if you’re struggling to show your product off, a short but engaging clip of you talking about the product can still offer value. The key is to emphasise the story behind what you are doing – you shouldn’t even mention money until the end (this applies to written pitches, too). A good tip is to look at the promotion content of campaigns that have been successful, and see what you can learn.
5. Offer Good Rewards
Unless you have a devoted fan base of loyal followers who are ready to throw money at your project, you will have to entice potential backers with additional rewards for their donations, known as perks.
Usually, these perks are tiered depending on how much someone gives. For example, say you are trying to crowdfund the production of a movie; you could offer a rewards system based on the following:
- Low-tier backers: A small but exciting gesture, such as having their names listed in the film’s end credits
- Middle-tier backers: Something more substantial, such as a free copy of the finished film and/or some merchandise
- High-tier/premium backers: A more personalised reward, such as a tour of the set or a chance to meet the key players involved
You can structure your perks any way you wish; the important thing is to offer some sort of equivalent value for each donation. Good perks entice people to give more money, so don’t overlook this part of the process.
6. Promote, Promote, Promote
Your promotion campaign should be well underway before the actual donation campaign has started; this is because you want to create as much buzz and awareness as possible before the real thing goes live. The more exposure you can achieve, the better.
This should continue during the campaign as well, with focus on the following areas:
- Social media: When you’re looking to create traction and get something to travel far and wide in a short space of time, there is nothing better than social media. You can publish constant updates – including live videos – on what is happening with your product, as well as utilise hashtags to generate momentum outside of your current followers. Don’t be afraid to work with influencers, either, especially on Instagram and Twitter where your message could potentially have a lot of reach.
- Media: Reach out to journalists and bloggers who might be interested in covering the launch of your campaign – especially if your project is something that is of significance within its field. If your story is unique and interesting, this will work in your favour as it gives reporters something to work with; as it progresses, you can stick to this theme.
- Website: It’s a good idea to set up a website, too, so that people can learn more about your business, your product or even you personally; the more information people have, the more they are likely to be willing to donate. A professional-looking website gives you another layer of credibility.
- Your own circle: You shouldn’t underestimate the impact of your own extended circle of family and friends – after all, their support is free. Reach out to them, as well as any other relevant personal or professional contacts that you have, and push awareness across your personal social media channels.
7. Fulfil Your Promises
If you manage to meet (or even exceed) your target, you now need to deliver. Unfortunately, nearly 1 in 10 successful crowdfunding campaigns on Kickstarter fail to do so, whether through production difficulties or malicious activity (many crowdfunding platforms offer no meaningful safeguards against fraud, and maintain the risk is with the donating party).
If you are experiencing genuine problems, such as manufacturing issues, make sure you let people know about it and offer some insight into what you are doing to mitigate. Even if everything is moving forward without a hitch, you should still focus on keeping everyone in the loop with progress updates – effective communication is the main source of building trust.
Getting crowdfunded isn’t easy – far from it, in fact. While there are exceptional examples of startups like Oculus and Pebble Time becoming hugely successful off the back of Kickstarter or Indiegogo campaigns, the vast majority of projects won’t even reach their target, let alone take off.
This shouldn’t discourage you, though. If you prepare well, are realistic with your approach and follow the basic principles of this article, there is nothing to stop you from achieving your funding goals; just make sure you can actually deliver once you get there.
Have you ever set up or contributed to a crowdfunding campaign? What was it and what happened? Let us know in the comments!