We’ve all received emails from friends and friends of friends asking for our support in getting their businesses off the ground. From Indiegogo to Kickstarter and GoFundMe and beyond, it seems that this is the hottest way to jumpstart an idea. In my previous career, I was one of the founding employees of Indiegogo and Head of Crowdfunding at WME-IMG and I learned some tricks of the trade that I wanted to share in hopes that my advice can propel the launch of your company into something bigger than you’ve ever imagined. Read on…
1. Consider The Big Picture
The crowdfunding landscape has evolved a lot over the last few years. As an industry, it grew rapidly and then slowed down and has become a little less democratic and a lot more specialized. What that means for you is 1. you have the benefit of hundreds of thousands of projects to search and determine whether and how to launch a campaign; 2. the choice of which platform to choose should be greatly informed by your type of pursuit; 3. pre-planning for success is more important than ever.
What has not changed is that crowdfunding is a lot of work. It’s a 24-7 job for about 4 weeks pre-launch, then for roughly 30 days while your campaign is live and was as for a few months while you’re fulfilling your campaign promises. I recommend you think of it as launching a direct-to-consumer business with the public seeing your transactions for the duration of your campaign. The relationships you create with backers/first customers should last as long as you’re in business so plan to keep them informed fully and frequently as your business or creative pursuit grows.
The Indiegogo versus Kickstarter debate is more straightforward now than ever. It really comes down to project type. Kickstarter has remained true to its initial mission of supporting “creative” projects (mainly film, photography, art, games, food and craft, and design). In support of those categories, Kickstarter now offers Quickstarter for small scale projects and Drip for ongoing patronage beyond initial backing. Meanwhile, Indiegogo has become focused on technology and design and offers storefront pages for ongoing sales (though I got a tip this may not last) and equity crowdfunding for entrepreneurs looking for investors rather than one-time backers. Their comprehensive how-to guide can be found here.
Some great reasons to crowdfund that don’t involve money include honing your pitch, testing the market for your product or idea, and creating loyal first customers and early adopters of your offering.
2. Get Crystal Clear on Your Goal
I’m not talking about how much money you want to raise, although that’s a key consideration that we’ll address in a bit. Launching a crowdfunding campaign is very much launching a business, but with your pitch and funding exposed for all to see.
In an interview with Entrepreneur, Hiral Sanghavi, who raised $11.5 M for a travel jacket said this: “the priceless benefit of crowdfunding is that it gives . . . access to real-time feedback from potential customers. (One) can learn about customers’ interest in various elements of the ecosystem before going into production.” I’ve seen many successful campaigns intelligently pivot from their initial business hypothesis to create something with more demand than the initial product, all based on real-time backer input.
With that in mind, ask yourself why you want to crowdfund and what a win looks like for you. Some great reasons to crowdfund that don’t involve money include honing your pitch, testing the market for your product or idea, and creating loyal first customers and early adopters of your offering.
Don’t try and reinvent the wheel. There is a knack to engaging backers through a crowdfunding page, and successful campaigns in your vertical are your best teachers.
3. Research Similar Campaigns
A look at Indiegogo’s Trending Projects or the same on Kickstarter will give you an idea of the kinds of projects that would be taking flight alongside your idea. This is not only helpful in terms of choosing aspirational projects that will inform best practices for your campaign but is also important as you consider the network effects from which your project might benefit.
If your vertical doesn’t turn up a lot of successful projects on either Kickstarter or Indiegogo, it may mean that your customers aren’t going to these sites. Unless you have an established, engaged community, your work is cut out for you and you should probably skip the risk of crowdfunding because you may not reap its rewards.
For example, if you’re considering crowdfunding for a device that helps new moms pump breastmilk at work, do a quick search on Indiegogo or Kickstarter for “mom”, “breastfeeding”, “pump,” “kids,” and the like. Do you find other projects related to yours? If not, that may be a red flag that your customers aren’t on the site.
On the other hand, If you do find projects related to yours, take a look at those that met their funding goal. Look at how much money they tried to raise and whether they exceeded their goal, watch their video, study their rewards, review their narrative pitch. Meanwhile, take notes about what you like and want to include in your campaign. Don’t try and reinvent the wheel. There is a knack to engaging backers through a crowdfunding page, and successful campaigns in your vertical are your best teachers.
4. Perfect Your Pitch
As with any business launch, your pitch is key to funding. First, off, you need a killer pitch video. You cannot skip it, mama. A good video should be brief (less than 2 minutes), tell the story of you as a founder and the “why” behind your offering in a way that compels people to back you and/or entices them to buy your product. Campaigns with videos are 85% more likely to get funded. This article provides further insight into how to make a standout campaign video.
The narrative section of your campaign pitch should include compelling headers and succinctly, cleverly and clearly tell the story of your project. Imagine that you’re turning this section in to a room of potential investors and you have to both keep their attention and feel confident enough about your pitch that you want them to distribute what you’ve written to everyone they know. Because that’s how successful crowdfunding works — the good stuff spreads from one circle to another, building success.
Ask [friends and family] to set an alert for launch day in their calendars, and then remind them the night before…. If that feels too pushy to you, do not crowdfund. I’m being serious. Crowdfunding is not for the passive.
5. How to Pick and Reach Your Number
Why do I feel like this is the moment you’ve all been waiting for?
When it comes to setting your monetary goal, think of a number that would allow you to create something specific or advance a part of your business that’s been held back without funding. Do you need to purchase a sophisticated printer, software and pay the retainer for your legal or communications consultant? What’s holding you back from taking the next or first step in your business? Even better if the number will help you reach a goal that your backers can celebrate with you. Creative campaigns can do this really well by promising an episodic series, a graphic novel, or the like.
Identify that number, then be sure you can lock down at least 30% of that number before launching the campaign. Will $50,000 take you to the next level? Then confirm that you can raise $15,000 through friends and family. Most successful campaigns have locked down up to 30% of their funding ahead of time, and campaigns that meet 30% of their goal on day one are 100% more likely to reach their goal than those who did not.
I cannot overemphasize this: start by calling or emailing friends and family who you know will back you, ask them directly to commit to backing you on day one of your launch, and ask them how much money you can count on them committing. Ask them to set an alert for launch day in their calendars, and then remind them the night before launch and just before going live. If that feels too pushy to you, do not crowdfund. I’m being serious. Crowdfunding is not for the passive.
Similarly, if you can lock down support in sharing your campaign after you’ve hit that 30% benchmark, you’ve done yourself a big favor when it comes to getting past what a former colleague of mine called the “trough of despair”: the bottom of a funding bell curve when money and engagement abruptly stops on your campaign. To address this inevitable event, have a plan for how you’ll execute a second launch about a week into your campaign. Is it a new reward? Do you have a second wave of friendly supporters to hit? Can you do a giveaway on Instagram for backers of your campaign? Have a plan for your second coming, so you don’t panic when you suddenly aren’t converting views to dollars.
By the way, your campaign can be set up to hook into Google Analytics, so you can continuously adjust based on what you learn. To me, the ability to analyze and act based on backer behavior has always been the coolest part of crowdfunding.
6. Choose Rewards Wisely to Keep the Money and Customers You Just Won
Straight up here, mamas: only offer your product or creation, plus rewards you don’t have to ship. Fulfilling crowdfunding rewards is costly, both in terms of dollars and time. I’ve seen businesses raise millions through crowdfunding, only to go bankrupt during fulfillment.
Set expectations with your backers, considering your ideal timing and supply chain. Let backers know when they should reasonably expect to receive their rewards, and then keep them updated on your process. Crowdfunding can be a great place to receive pre-orders while you set up your ideal fulfillment and supply chain strategy if you maintain transparency with backers.
If you’re crowdfunding a film or creative project, offer a first-look digital download, album, or the like. There are scores of campaigns with good ideas for “digital” rewards or rewards that can be delivered by email. Stand in your backers’ shoes and think about what might mean something to them, then find a way to deliver it by email.
In short, crowdfunding can replace angel investors and do a whole lot more than that if undertaken wisely. But it’s not for everyone, and there are other ways to move your pursuit forward if it’s not for you. Here’s to you and your wildest dreams becoming reality.