7 Tips for Creating Successful Crowdfunding Campaigns
Crowdfunding: “the practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet.”
Crowdfunding is a tremendous benefit to businesses, entrepreneurs and startups alike, helping to produce needed start up capital, increase customer base, and build revenue while at the same time helping the economy as new businesses generate spending along with job creation.
There are dozens of crowdfunding platforms on the web, where those seeking funding, and those seeking to donate, can safely and easily participate in fund raising projects. Every platform is different; some are strictly for business projects while others cover everything from fundraising for medical bills to charitable organizations, art projects, book publications and more.
The way it works is that the person or group that is seeking funds to start a project can go to any one of these sites and create a profile that typically consists of an introduction and description of the project, images, sometimes a short video, and a list of compensation or rewards that correspond directly to the donation amount. The goal of each project creator is to deliver a persuasive message that captures the attention of potential donors.
Regular folks, rather than traditional investors, typically donate to crowdfunding campaigns, and most often friends, family and acquaintances of the project owner are responsible kick starting the campaign by contributing, on average, around 33% of the revenue; once a project has gained some momentum, unrelated investors begin to join in to support the projects they appreciate and believe in.
There are a few primary motivators for people who are unconnected to the owner of a project or business to support it:
1. The broader purpose of the campaign resonates with them.
2. They are drawn by the rewards or compensation
3. They appreciate the creative presentation of the project
There is a widespread misconception that building an effective crowdfunding campaign is as easy as throwing up the project portfolio, turning on the campaign and voila, it goes viral. Not so. Granted, it is not unheard of that some brands have had this kind of quick success, but most have to work a little bit harder at it.
Here are 7 tips to help create success with your crowdfunding campaign:
1. Have a well-crafted business plan or prospectus. People want to know that your project has potential. Without a solid plan in place, they may be hesitant to invest in you.
2. Petition pre-launce support by reaching out not only to your family, friends and business associates, but also via your social media network.
Richard Swart, director of research at the Program for Innovation in Entrepreneurial and Social Finance at the University of California, Berkeley says you need to “amplify your message” on social media before launching your campaign. Said Swart, “To be successful in crowdfunding, first you build a community, then you engage them.”
3. Shoot for a lower target dollar amount- the first time around. Some crowdfunding platforms, like Kickstarter, have a make it or break it policy; if you do not meet or exceed the targeted funding of your project, you get nothing and those who have pledged to back you pay nothing. In other words, going for a lower amount could be the difference between reaching your goals or not.
Also, don’t plan on just one go at it. Plan a series of campaigns from the beginning. When you plan small campaigns to target specific milestones you may see more success than you would with a single campaign that has massive funding goals; in addition, you will build brand loyalty over time and give fans more chances to support your business at different stages.
4. Make it about you and your purpose. The most successful campaign creators do a good job of helping potential donors get to know them, feel their passion for their projects and understand the “why” behind what they are doing.
5. Network through traditional offline methods. Keep in mind that the Internet is not the only source for interaction and networking; in fact, face to face can be a much more effective tool as possible backers can really get a feel for the energy and excitement you have for your endeavors.
6. Acknowledge feedback and incorporate it into your project plans when appropriate to do so. Project donors love to feel involved and they offer much more than funding. According to Dan Marom, co-author of The Crowdfunding Revolution, engaged backers are, “a critical resource for the entrepreneur, not just for the funds they are donating to the project but for the ideas they are sharing.”
7. Be a champion at follow up and follow through. A good customer service doesn’t just start after the business is off and running. When you follow up, follow through, acknowledge support and incorporate feedback, you will not only win the trust and confidence of your supporters but you may make evangelists out of them.