Crowdfunding has changed since the first exciting days, and several new trends show the maturing industry. Projects rooted in sustainability remain popular, such as hemp fiber glasses frames and window blinds with integral solar panels. There is an emerging trend in remaking classic equipment using new lighter and less expensive technology, such as a large format camera with a lightweight wooden body, and a turntable with all-in-one functionality. Fashion and design projects remain popular, with a move toward minimalism and simplicity in clothing, shoes, and accessories such as watches.
Running crowdfunding campaigns have also matured. Those who invest in new product development have come to expect a degree of sophistication in the marketing of a campaign as a sign of business maturity. Common best practices have been identified, such as video marketing, a strong mail campaign before the crowdfunding campaign opens, contests to build up the mailing list, and access to products from the first production run at below cost. This last is a critical piece for companies with a working prototype, and allows the crowdfunding campaign to be used to estimate demand, take first orders, and form a customer base.
Some companies are also using multiple crowdfunding campaigns through the course of their business growth. Expansion, new product development, and opening new branches or outlets are all reasons for a second or third crowdfunding campaign. Companies that have had success with crowdfunding are turning back to it as a method of funding business growth and expansion.
Crowdfunding on the current platforms is a unique funding opportunity for a business, but it is at the core a funding opportunity–meaning the financial planning and books need to be the first step. Preparation for a crowdfunding campaign should need at least the degree of preparation and planning of any business going to the bank to request a loan, including a functional business model and a business plan with projections. In addition, there is some planning and work that is unique to the crowdfunding platform.
- Have your financial and business planning done before beginning the campaign.
- The R and D should be done before a decision to monetize the product. Have a working prototype on hand.
- Tell the story of how your business will change the world.
- Successful crowdfunding campaigns, in addition to the financial planning for the business, plan marketing and outreach for several months before the launch of the campaign.
- Start the buzz early about the campaign; showcase your social justice roots; convert backers to customers with discounts, information, and shared goals.
- Clear communication with backers about the state of the project is another best practice.
- Keep backers informed about progress, and convert backers to customers with financial incentives, information, and shared goals.
Crowdfunding is an excellent resource for hopeful entrepreneurs, with the potential for providing start-up capital for new businesses. It is a highly visible way to market your company and your ideas. However, there is a downside as well: a failed campaign can also mean highly visible bad press for your company. A vital step before jumping into the crowdfunding waters is to do your research first. The most common mistakes that cause new ventures to fail include:
- Lack of research and planning
- Financial mismanagement
- Poor hiring and leadership practices
Research and Planning
You need a solid business plan and a good working understanding of what your target market wants. You need to understand the value of your own product and how to communicate that value to your potential investors and client base. To garner the initial start-up funding you need with a crowd-funding campaign, you can’t just assume you have supporters out there—you need to identify and target your supporters. A professional investor pitch story is critical – why do you need funding, why should investors fund you, what separates you from your competition, what makes you unique and special? Will your product contribute to economic growth? One of the best ways to encourage people to donate to your crowdfunding campaign is to offer rewards to donors. However, you need to have a solid plan and strategy to make this work.
Tips for Crowdfunding
Know your team and make sure they share your commitment; then trust them to do their part. Before the money comes in have a plan and a budget for allocation; once the money is coming in, keep to your budget. Do the research—understand your market thoroughly. Gain momentum and follow through.
Find your Resources
Once you start doing your homework, the first question you need to ask is what Crowdfunding platform should you use? When offering rewards, make sure to choose the right platform to launch your crowdfunding campaign. You need a platform that works for your niche and that will be able to give you the tools you need to make your campaign a smashing success. Commit to success and let us help. Contact us!
Do Your Research
Before you start out, make sure to research how other successful crowdfunding campaigns offered rewards. Make a list of a bunch of crowdfunding campaigns that focused on a similar niche or target audience. What types of rewards did they offer? How much did people need to donate in order to qualify?
Focus on the Big Fish
You might want to consider focusing on big donors and offering bigger rewards for them, rather than focusing on offering small rewards to those who donate very small amounts of money. Remember that you need just a few large donations to reach what you’d collect with many small donations. Again, research what others have done successfully and emulate them.
Offer Time-Limited Rewards
One way to get people to donate is to offer limited time rewards. For example, you can offer rewards only to the first set number of people who donate, or only to people who donate before a specific time. This will create urgency and get people to donate, and it will help tremendously for attracting momentum to your campaign.
Highlight Any Press
Whenever you get any mention in the press, make a big deal about it. Talk about it on your crowdfunding page, mention in on your social channels, and make a point about it in your advertising campaigns. The law of social proof will cause people to pay attention when they see that other people are paying attention.
Communicate your Crowdfunding Campaign
Make sure to communicate with supporters and potential donors. When people leave comments on your webpage or social accounts, always reply to them. It’s important that people see that you’re active and that you care.
Besides engaging with your audience, show people an inside look into your campaign. If you have a staff, show pictures or video clips of them and what they do. Show pictures of you working on your project.
Be open about your plans and ideas. What are you going to do with the money you raise? What is your budget?
Track, Track, Track
It’s very important to track your traffic. Which sources are they coming from? Which countries are they located in? What are their age demographics? Use a link tracking tool to track all your traffic. When you figure out what your target audience is, you’ll be able to focus on them in your advertising campaigns.
Build Up Momentum Beforehand
Build up hype and publicity before your campaign actually launches. Use this time period to attract supporters; get as many backers as you can. If you have social media profiles for your campaign, aim to get as many likes and followers before your campaign actually goes live.
Activate Your Support Network
Once your campaign goes live, activate the support network you’ve just built up. Encourage your backers to finally contribute. In addition, enlist the support of your family, friends, and anyone else you know. This way, you won’t have to deal with a campaign that’s still floating around with $0 invested.
Attract High-Profile Investors
Do your best to attract even just one high-profile investor who would be willing to invest a nice sum of money. This will give your campaign additional publicity and will give it even more traction. If possible, enlist their support before your actual launch, so that your campaign has sizeable investments right at the beginning.
Market Aggressively your Crowdfunding Campaign
You do need a marketing campaign in order to attract investors. Invest in some online marketing. Social media is a great marketing platform; you can invest in either paid or free social media traffic.
Have a Clear Plan of Action
Don’t start a fundraising campaign on a vague idea. People want to know that you are serious. They want to know whether your project has any chance of success and whether or not you know what you are doing. Lay out a clear plan of action for potential investors to see.
Focus On Benefits
Let investors know what’s in it for them. Focus on how they will benefit from rewards or equity. Don’t make it all about yourself and your project.
Create a Separate Webpage
Create a separate webpage where investors and the media can get information about your project. Include your plan, any endorsements, images that journalists can use, etc. This will make it easier to attract funds and publicity.
Create a Video for your Crowdfunding Campaign
Having a video that will showcase and explain your project is extremely powerful. It’s also a great marketing tool and a chance to get your pitch out there. However, remember that a poorly created video is worse than no video at all. If you can’t afford a professional video, skip it. If you can, do it and put it up on your webpage and link to it from your social profiles.
Many of us tend to be magpies, and the ideas and challenges of the future-world give us so many ideas the inside of our heads looks like the sky, full of stars. To successfully imagine the future, and then crowdfund it, it helps to focus in and find your tribe. It is difficult to follow more than one dream at a time. Perhaps the biggest challenge for those who imagine the future is to narrow the field of vision down to the one small piece of it you are going to change. But if you can, you can crowdfund the future. Contact us!