Crowdfunding is a new tool that entrepreneurs and business-savvy creatives can use to raise funds and awareness for upcoming projects. Unlike venture capital where investors get shares in your start-up in exchange for money, crowdfunding lets people who want to see the product get to market fund campaigns in exchange for a reward, usually the end-product at a discounted price.
Big names like Zach Braff and Rob Thomas have used crowdfunding so they could create films independently, without having to adhere to the guidelines of a major production company. Independent authors are using crowdfunding to lessen the financial burden of self-publishing and to produce a high quality product. Businesses can use the power of the crowd to fund their beginnings, or to bring their company to the next level.
And, yes, there was even that one guy who raised all that money to make potato salad.
Needless to say, crowdfunding has caught on quickly, and with the almost absurd success of projects (sorry, potato salad guy, I’m talking about you again), people have mistakenly perceived crowdfunding as an easy way to access funds. This, however, is not the case.
Yes, crowdfunding campaigns have the ability to go viral, but this isn’t usually the case. In fact, Kickstarter campaigns only succeed about 41% of the time. Many failures are not because the project isn’t viable, or it has no audience, but rather that the campaigner fails to comprehend their role in creating a successful crowdfunding campaign.
So, if you’re thinking about crowdfunding, here are some tips that will not only help you to better understand what goes into crowdfunding, but that will help ensure you get the best results possible from your campaign.
- Don’t overlook pre-campaign planning and promotion. You can’t simply dive into a crowdfunding campaign and expect to see results. Campaigns are time-sensitive and generally last only 30-60 days, so it’s important to have a detailed marketing plan—broken down to weekly and daily goals—before the launch of your campaign. Also, let people know you’re planning a campaign in order to create a sense of anticipation around the launch.
- Secure the support of your “inner circle” to kick off your campaign. Here’s a secret: most people are hesitant to be the first person to support a crowdfunding campaign. Why has no one else pledged? Is no one interested in this project? Why should I pledge if I’m the only one? Yes, these are thoughts people will have if they see a campaign sitting at $0 funding. That’s why it’s important to secure the initial support from close friends and family to immediately boost the amount of money pledged on the day your campaign launches.
- An established network and audience will help ensure success. As the campaign creator, you’re responsible for driving traffic to your campaign, so it’s important to have a loyal network and audience that will be interested in your project. Yes, a campaign can attract support from people outside of your network, but only if you build the initial momentum needed to entice others to click on your campaign and check out your project.
- Don’t be afraid to ask for support. Having an established network is only the first step. The second step is asking them for support. No one will know about a campaign if the creator doesn’t spread the word about it! Many people feel awkward asking others to fund their project, however, it’s important to realize that crowdfunding is reward-based. Supporters receive something of value in return for their pledge, so they are in no way donating to your project, but rather participating in the creation process…and receiving some exclusive rewards in return.
- Personal outreach is most effective. When sharing a campaign and asking for support, it’s most effective to do so on a personal level. If you don’t take the time to personally reach out to the people in your network, why would they take the time to pledge to your campaign? Sending a personal email or message is courteous and could compel a potential supporter to take out their credit card and pledge towards your campaign.
- Create enticing rewards at various levels. The reward levels are a very important component of crowdfunding. Not only do they serve to entice supporters to pledge towards a campaign, but they also act as a thank you. Providing supporters with items of value is important, but remember, the rewards still have to be cost effective for you.
- Be prepared to explain crowdfunding. Despite the growing popularity of crowdfunding and the increasing number of overwhelmingly successful projects, the concept of crowdfunding is still new to many people. In order to be successful, you must be prepared to explain to people what crowdfunding is and how and why you’re using it.
Crowdfunding can be an extremely effective way to launch a project, but you have to be willing to put in the time and effort. Unfortunately, there is no easy funding solution, but crowdfunding is a viable option to those willing to take the necessary steps to success.