Want Crowdfunding To Work? Read This
Our thoughts in green below – team Curagami
Crowdfunding is becoming ubiquitous and success stories like the Coolest Cooler, Pebble or An Hour of Code for Every Student impressively demonstrate how this new wave of funding for startups, creative ideas and causes via the crowd can be used to turn dreams into reality. Undoubtedly the most successful crowdfunding campaign of all times, Star Citizen has raised over $88 million dollars at the time of writing this post and shows no signs of slowing down.
Pebble watch is one of our favorite examples of crowdfunding success. The team at Pebble raised $10M on an ask of $100,000. Why? The marketing team at Pebble understood how to use crowdfunding to solve every problem from distribution to publicity. They treated Kickstarter like a marketing channel. By divorcing their campaign from the idea of money and focusing on their needs as a new company with a cool and timely product the Pebble watch team creating winning marketing that also made money.
Crowdfunding is democratizing the access to capital and with all the encouraging news stories, who wouldn’t want to launch a crowdfunding campaign today to fund the next big thing the world has been waiting for? How much easier does it get?
Read on and “easy” shouldn’t be in your crowdfunding vocabulary.
The flip side is that for every successful Kickstarter campaign, two fail and in the case of Indiegogo it gets worse: About 9 out of 10 Indiegogo campaigns fail to reach their goal according to crowdfunding statistics.
The biggest difference between Kickstarter and Indiegogo is that Indiegogo will allow people to raise money for virtually anything, while Kickstarter is a much more restrictive platform when it comes to funding models offered and types of projects it accepts. Kickstarter’s single funding model is “All or nothing” which means campaigns that do not meet or exceed their goal get nothing. This approach seems to attract higher quality campaigns than Indiegogo’s “Keep whatever you raise for whatever you want” model. Other curated platforms like Pozible and Film & Video focused Tubestart achieve much higher success rates as well.
What the media doesn’t cover is how much work actually goes into running a successful crowdfunding campaign and how crucial the pre-launch preparations are. Oftentimes, a false sense is created, suggesting that choosing a popular platform like Kickstarter or Indiegogo is all it takes. I’ve talked to many crowdfunders whose biggest worry seemed to be their choice of platform, whereas there are many more important decisions to be made.
Agree and the emphasis above is ours. Crowdfunding, like all successful marketing, takes work. Coming to the table with substantial assets of your own and a well mapped strategy is crucial to success.
On average 9 out of 10 contributions to your crowdfunding campaign will come from your own efforts. The rest is traffic from the platform to your campaign page which only makes up about 10%. This means that the remaining 90% need to come from a carefully planned and executed plan of action on your part, regardless which platform you decide to use.
Emphasis above is ours too. Crowdfunding is a moveable feast and one YOU are putting on the feast. If you don’t have a social network or rich relatives crowdfunding is going to be TOUGH. If you can raise the funds on your own DO SO. No reason to pay a platform their vigerage if you don’t have too.
Think of your project as a satellite and your crowdfunding campaign as the rocket that will take your satellite to where it needs to be so it can do its job. Now, before you press that launch button to ignite tons of liquid nitrogen to shoot your satellite into orbit, you will want to carefully plan and and test in advance, so that the trajectory of the rocket and all other intricate details are in place, allowing your satellite to be successfully transported into space. You only have one shot, if you burn the fuel and the rocket misses its target and your satellite isn’t deployed, you’ll have to start all over again.
Crowdfunding takes about as much effort as putting a man on the moon. If you decide to crowdfund know you need a dedicated team and your FOCUS needs to be the care and feeding of your campaign. No half measures succeed. You will need to be all in and best if you “seed” the first 25% or more. That first day and week is crucial. Campaigns that raise 25% or more in the first week succeed 80% of the time. Make sure you have commitments for 25% or more of the capital before you launch. The faster your initial support arrives the greater your chances of receiving support from the curators running your platform (Kickstarter or Indigogo). You need to create a sense of the train leaving the station. You want people to run to get on.
The point (and #1 reason why campaigns fail) is that it is pretty much impossible to make improvements or compensate for lack of preparation once your campaign has launched. Success in crowdfunding is in preparation. Don’t let excitement get the better of you and don’t launch before you are ready or you’ll skip important steps to success.
That paragraph is worth reading twice. Crowdfunding is REAL TIME marketing. Once it is happening your ability to correct it is zero. You can influence it, but correction needs to happen before you launch.
Have the below things in place before launching your campaign and you’ll be in good shape:
- 30% of funding goal is guaranteed by friends, family and anyone else you can line up to make a financial contribution to your campaign on the day it launches. If you can raise 30% in the first couple of days of your campaign, you significantly increase your chances of reaching your goal.30% is higher than what we’ve read, but more faster the better.
- Build an email list; compile emails of all team members. The more emails you have the better. Services like Mailchimp allow you to send out emails and drive traffic to your campaign page when it launches and as you hit weekly milestones. As a rule of thumb you should have one email per $1 funding goal.I would go further and say look for the influencers in your list. Influencers have larger social following and are more willing to advocate your cause (than the average). The combination of advocacy and large following can be powerful allies if you empower your advocates with tools such as social kudos, visuals they can use to push your campaign on their social nets and “digital listening” skills such as ReTweting them and curating their content into your campaign with attribution and permission.
- Build a crowd on Social Media that is large enough so you can tap into not only for financial support but also to share your campaign with their followers. Twitter is the most active social network in the crowdfunding sphere. Depending on your funding goal and how many followers you currently have, this process can take several months. Tools like Crowd Builder make it easy to identify and connect with supporters and build a targeted audience. Use Social Media Gauge to see how much money you can expect to raise from your current social media following.Good “new to me” tool recommendations. One point I would make is your social connections are LOOSE connections. That means they don’t do what you ask all that often. You need more intimate close ties for the advocacy needed for crowdfunding. As you build your social following find a few influencers you can build a closer tie with and then do so via direct communication, support, encouragement and use of more intimate tools such as LinkedIn and email.
- Write a Press Release and get Press Release distribution and high impact media lists. To make your campaign look attractive to journalists, do not send your press release or contact individuals before you have reached the 30% funding milestone. Journalists don’t just write about campaigns so they become successful, they write about successful campaigns in the making. Click here for a free guide on how to write the perfect crowdfunding press release.So RIGHT. When we started FoundObjects.com we had to correct many new product developers impression of Oprah. Their business plans focused on getting Oprah’s support. We knew the fallacy of such a plan. Opran, like journalists, talked about things with momentum (for the most part). You have to have the big MO (momentum) to get the press involved.
Original Why Crowdfunding Fails post on Krowdster