We can agree that crowdfunding is certainly trendy right now, especially in the startup community. It’s easy to understand why.
Getting funded by appealing to the public seems like an incredibly appealing funding solution for a myriad of reasons.
In fact, both established business owners seeking cash to launch new products, services, or programs and startup founders can find the concept of crowdfunding compelling – after all, it’s a way to get a decent amount of cash for relatively low risk on both sides. Or so it seems.
By crowdfunding, you’re essentially building a future audience of customers, since people tend to fund business ideas, causes, or concepts they are interested in buying, being involved with, or taking advantage of in the future.
However, developing an effective crowdfunding campaign is much more complicated than simply putting the word out that you’re seeking low level investments from individuals or non-venture capitalists.
The Art and Science of Crowdfunding
There is both an art and a science to launching a successful crowdfunding initiative – and this blend is not dissimilar to the process of pitching an investor or potential client. After all, the people who crowdfund your goals are investors, and you’re selling them on an idea that most likely doesn’t even exist yet.
After all, the people who crowdfund your goals are investors, and you’re selling them on an idea that most likely doesn’t even exist yet.
So you need the art in the form of a good story to tell, a platform from which to share it to go along with the science or the numbers and plan to back it up and a step by step process which helps you achieve your goals.
Set Goals for Crowdfunding Campaign
Like any successful project or initiative, start by determining what your goals are before launching a crowdfunding campaign. Now, obviously, you want money to fund your company, but you need to get more specific than that.
Do you want to generate extra publicity in addition to improving your cash flow? Do you want to reach a certain demographic or audience? Do you want to use your crowdfunding audience to get potential user data and feedback in order to further refine your offerings?
And perhaps most importantly, how much money do you need to get things going?
Designate a minimum amount necessary to move forward with your business plans and an ideal figure that when reached, will decrease or cease your crowdfunding marketing activities. Anything above that is gravy.
Finally, there is one more thing to keep in mind once you’ve set your goals. After you make them public on the crowdfunding platform(s) of your choice, you cannot easily change them. So make sure you are realistic about what you need to be successful.
Understanding the Crowdfunding Psychology
There’s a certain thought process, or psychological aspect, to crowdfunding that even the savviest of business owners may not be consciously aware, even as they execute successful campaigns.
For instance, one common way to crowdfund is to run an “all or nothing” campaign, where the recipient of the funds doesn’t keep any money unless they meet their goal (as opposed to campaigns where the fundee keeps the cash regardless of whether they reached their goal or not).
Balance your startup fund raise between want and need
While the latter seemingly poses a lower risk for the business, the former is often more successful for both the startup raising funds and the investors – the all or nothing campaigns show that the entrepreneurs involved are “betting it all” and that appeals to the target audience.
Besides, it puts all the risk on the recipient, not the lender.
Causing the audience to feel slightly guilty also works – but be careful with this sort of trigger.
It works best by comparing the price of funding your startup with a low-cost luxury, e.g. “for the value of a week’s worth of Starbucks, you’ll get access to technology that will improve your life and everyone else’s”.
Play to their middle- or upper-class guilt just a little and you’ll likely be rewarded.
Finally, target people who can empathize with your initiative in some ways, whether it is entrepreneurs who’ve been successful with crowdfunding themselves (and therefore may want to pay it forward), people who currently are customers of your competitors or brands that are similar to yours, or people who are connected to people who’ll directly benefit from a favorable outcome for your company.
How to Prepare for your Crowdfund Campaign
Before you start telling your audience that you’re looking to crowdfund, you need to make sure you’ve got all your ducks in a row.
This involves not only determining your goals (although that should definitely be your first step), but more prosaic but equally important steps like:
Establish a budget for advertising and promoting your crowdfunding campaign
Understand the rules and regulations from each platform
Create and/or source the resources and assets that you’ll need
Determine how to get the word out
Crunch the numbers as you go in order to refine your campaign and position your brand
Reward your investors once you get your business, product line, or other initiative rolling”
What’s more, you’ll need to determine where you’ll be promoting your campaign, including what platforms to use, which social media sites you’ll be targeting, and where you will engage your audience with content and advertisements.
It is important to consistently market your crowdfunding campaign across channels, steadily repeat and reiterate your message, and diversify your reach.
Not only does that maximize your success in general, you won’t be at the mercy of one particular social media site or platform and its requirements.
Hopefully, you’ve built the costs of marketing your crowdfunding initiative into your overall marketing plan – the phrase “you have to spend money to make money” has become an adage for a reason, after all.
Not only do popular crowdfunding platforms like Kickstarter, IndieGoGo, IgnitionDeck, and GoFundMe take a percentage of the funds raised, you’ll likely need to advertise your efforts and your business in order to make people aware of the campaign in the first place. Those are the hard costs.
Soft costs like more indirect forms of outreach like using social media to promote your campaign, working with influencers in the industry to get the word out, and creating content about your company should also be factored into the budget.
For example, perhaps you’ll hire a dedicated marketing specialist or an intern(s) to get this done – and these people need to get paid. Even if all these forms of marketing cost is your (and your team’s) time, that needs to be factored into the overall budget.
Crowdfunding Rules And Regulations
Consider the crowdfunding guidelines and requirements for the funding site that you plan to use to market your crowdfunding opportunity. For instance, Kickstarter is one of the most popular crowdfunding sites, and accordingly they are quite selective about the projects they’ll accept – so be prepared for that process to take a while, and you may have to make changes to your overall plan to get things going on the platform(s) of your choice.
Another thing to keep in mind is the sheer availability of resources out there. Even if you’re not planning on using Kickstarter yourself, checking out their Creator’s Handbook. It is a great resource for inspiration and a place to learn about all those little details that you’ll need to address during the planning process.
Other popular platforms like GoFundMe, IndieGogo, and startup-centric IgnitionDeck all have extensive resources and example use cases available for your learning purposes.
Tell Your Story: Crowdfunding and Content Marketing
One of the key aspects of capturing the hearts and minds of potential investors is telling your story in a way that’s authentic, compelling, and effectively communicates the value of your business, products, and services.
Really, promoting your crowdfunding campaign is essentially just content marketing. Create content that people find compelling, whether it is text, images, audio, or video, or ideally some mix of the aforementioned. And by compelling, we mean something that inspires people to take action in some way – whether it is to share it, sign up for something, make a purchase, or in this case, invest in a business or cause.
Keep in mind that this often easier said than done, and you’ll likely want to work with a partner or two in order to refine your brand, produce high quality messaging that includes videos and related imagery, and disseminate that message in a coherent way that reaches the desired target audience where they live, work, and play.
Personalize Your Campaign with a Heartfelt Video
Video is often a popular way to share your startup with the world, and for good reason – if a picture is worth a thousand words, a video is worth at least a million! That said, you’ll need to come up with a treatment, write a script, and otherwise make the video happen yourself – and spread the word about it (more on how to do that in the next section).
Don’t worry about the quality of the video itself. Research shows people relate to amatuer video footage online so don’t worry too much about the quality of the video itself. Film your message with your mobile device and upload it “as is” from one take.
That said, there are basic guidelines that you can take in order to generate the maximum influence with a simple, homemade video. People respond well to eye contact, so you and/or your team should definitely be in the video yourselves in order to humanize the company. Plus, using a second person narrative or pronouns is also high impactful. Try speaking directly to your audience as a “you” or “we” during the video, and implying that they are already part of your circle with phrases like “let’s make a difference” or “we can do this together”.
Work With The Media
It is also essential to consider how your company and campaign are presented to members of the media – journalists, bloggers, and other key influencers will want to see more than just a Kickstarter page or Twitter account.
Accordingly, having a media sectionor (at least) clearly-defined contact information on your website – and these media page(s) can also serve as a spot for a press kit download and links to press mentions or features about your company.
Remember that the press won’t promote you unless you let them know about your company first, and make things easy for them. Most journalists are unlikely to cover a new startup or business favorably unless it is relatively simple for them to get relevant information that’s related to an emerging trend or news story, so if you can, tie whatever you are doing into popular culture or current events.
Making yourself available for insights, expertise, or quotes is also a good way to get the press (and therefore the rest of the world) buzzing about your business. Get on the radar of journalists seeking stories related to your company or industry, monitor and reply to requests or solicitations for sources on Twitter, or considering engaging a PR firm experienced with startups to get people talking.
Get Your Message Out There Early And Often
Once you’ve created your marketing plan and all the content associated with your crowdfunding efforts, you need to tell the crowd! That could involve anything from social media outreach to working with top bloggers and influencers in your vertical to paid advertising on various networks to hosting live events, and any combination of these activities.
Of course, announcing your initiative once is hardly enough.
It is generally prevailing marketing wisdom that people need to hear about things more than once and from a variety of sources before they convert into customers (or in this case, investors). Therefore, hitting your audience from multiple angles is key, especially since most individuals tend to use more than one social platform.
On the other hand, you don’t want to spread yourself (and your budget) too thin.
Accordingly, you need to hit the audience where they “live” on social media. This means that you need to interact with them where they are most likely to engage with a brand – not necessarily the sites they visit most often.
For instance, people tend to be more likely to actively interact with a brand on Twitter or professional networks like LinkedIn versus Facebook or Instagram.
These active users tend to be more focused on their own networks, or if there is brand interaction it is done more passively in the form of a follow or Like. And of course, remember that people usually participate in more than one more social platform, so you don’t need to be everywhere to hit your target demographics.
Chances are people won’t necessarily get the message or pay attention to it the first time they see it, so you’ll need to ensure that they view it more than once – which means that you’ll want to start spreading the word about your crowdfunding opportunity as soon as possible along with disseminating related content repeatedly, across various platforms.
Follow Up On Opt-Ins
The communication cycle shouldn’t end once someone has converted to become an investor either – these valued individuals should certainly be kept in the loop regarding their rewards as well as how your company is doing in general!
Let them know their worth to your organization and not only will they feel appreciated, they may share their positive experience with their network, extending the reach of your marketing efforts and generating some more great buzz around your brand and crowdfunding campaign.
This also applies to anyone who signs up to receive your emails or follows you on whichever social media platforms that you use. They’ve opted in to hear your messages and learn more about your campaign, products, and/or services already, so talk to them!
Use Your Existing Network
Chances are that if you’re considering a crowdfunded initiative, you already have a decent social media following and network built up – that likely already knows and respects your reputation as a business owner, founder, or entrepreneur. And you can and should take full advantage of that following by sharing information and updates about your campaign with them.
What’s more, you can give them a first peek or first opportunity to get involved from the beginning. This is particularly important because typically, the overwhelming majority of early donations and support comes from people in the same geographical location or who are connected to the founder in some way, shape, or form.
Additional rewards for investing early, recognition of some kind as an elite or exclusive group on your brand’s digital and/or physical presence, early access to new spaces or services, or any other kind of special opportunity that you can offer your network for getting in on the ground floor of your crowdfunding campaign could work.
Having a strong display of support from your network also gets the ball rolling for future investors – people naturally flock to causes or businesses that they see others supporting. It’ll help to validate your startup in the eyes of the public.
An added bonus of using this tactic is that it sparks the interest of members of your network who believe in you, your skills and abilities, and what your company has to offer and would like to invest, but they don’t have the financial prowess or freedom of a larger investor type like a venture capitalist.
Consider Engaging Partners
Marketing your crowdfunding opportunities can be something that you can do on your own, but once you’re operating above the grassroots level you’ll likely need to hire additional help, whether that means getting a marketing person or two on board internally or working with an agency of some kind (marketing, PR, social media, etc. These types of services are practically enmeshed nowadays).
While it may seem counterintuitive or contrary to the bootstrapping mentality that most crowdfunders seem to possess, working with professionals for marketing may actually prove to be the most beneficial and effective way to get the word out. After all, you’re hardly going to get any investors if they don’t know about your brand.
Plus, the broader pool or audience that you need to reach for crowdfunding purposes likely won’t hear about your company through the more traditional routes – and you’ll need to get the attention of a lot more individuals than a few venture capitalists and their ilk.
Don’t forget that you’re aiming for a broad and shallow target, rather than one than that’s deep and narrow. A public relations firm or digital marketing agency can help you reach beyond your personal network and connections to capture the hearts and minds of the larger public.
Reward Your Investors
Most crowdfunding programs involve some kind of reward or extra bonus for investors. This rewards system is often tiered based on how much each investor contributes, but of course it is up to you to determine what works best for your company and your target audience.
This reward can be tangible (e.g. a free sample or trial of your products), or something like tickets to an event, or early access or discounts once your service is launched. And of course, some kind of public recognition that they are involved in your business almost never hurts. People generally like to be thanked and associated with something positive like a growing company or budding startup.
Keep in mind the simple fact that your reward scheme can (and perhaps should) have multiple tiers or price points for various levels of investors.
Not everyone can spare the same amounts, or perhaps some people simply aren’t willing to gamble much on a crowdfunding operation – so give them opportunities to buy in as much or as little as they are comfortable with.
Remember that unlike venture capital or bank loans, you need to appeal just a little to a broad base of individuals, not deeply impress only a few people.
Make Investors Your Promotional Allies
Remember that your investors can be your best allies in regard to promoting your crowdfunding opportunity as well – their benefit to you isn’t only financial. They can talk about your brand on their social media accounts, refer you to their family and friends, and lend your brand the appearance and impression of support through sheer volume. There’s strength in numbers after all, and a larger and growing number of donors signifies success.
Strength in Numbers
Think about offering special rewards for referrals or running a sort of referral campaign that offers extra recognition or perks for backers who get their friends and family to participate and help to crowdfund your business or startup.
Playing on people’s natural inclination to highlight a good cause and bring positivity to their friends and family’s lives along with their own will incentivize people to promote your brand. Besides, they’ll get some bonus rewards or free stuff in exchange for providing some publicity.
You can and should also engage with your investor community without the need for direct or immediate referrals – ask them questions on Twitter, Snapchat, or Facebook, set up meet-and-greets (whether it is real life or via Hangouts or Facebook Live, or both), and let them share their opinion on your current offerings and future products. Give them access and a personal stake in your brand and they’ll support and promote your causes.
When you structure your crowdfunding landing pages, website, and social media pages, make sure to keep the current number of investors or amount raised visible, in a chart, graph, or a news ticker of sorts that shows the progress of your efforts. People are inherently drawn to join up with successful causes, so play on those instincts and emotions.
Learn From The Masters (And Their Failures)
While of course you should never directly copy another company’s initiatives, there’s something to be said from learning from the most successful – and unsuccessful – crowdfunding campaigns.
Check out case studies, take note of any successful crowdfunding campaigns that you find compelling, and may have invested in yourself. Furthermore, consider the idea of making a small personal investment in a couple crowdfunding initiatives on Kickstarter or IgnitionDeck in order to examine the process from the audience’s perspective.
Not only will this help to educate you on the crowdfunding process, if you do it transparently it shows indirect reciprocity; in the eyes of your target audience, you’re not just asking for money from the community, you’re paying it forward as well.
What did you find compelling, interesting, or positive about the process? What didn’t you like and what did you think could be done better? How did the so-called “experts” fail at times? Take all that into account when you’re developing your own crowdfunding campaign.
Lastly, check out apps like Krowdster that help you optimize your campaign with analytics, engagement monitoring, and perhaps most importantly, comparison tools that let you assess and therefore improve your performance against some of the most popular crowdfunding campaigns out there.
What Happens If You Fail?
On that note, let’s start with acknowledging two things.
First, failure inevitably happens sometimes, even to the best, smartest, most skilled, and most prepared individuals.
Second, sometimes failure can be a blessing in disguise.
We’ve all heard the phrase “fail up” as it applies to startups and entrepreneurs in general. And really, failure can be a learning experience – so if you don’t raise the necessary funds in your first (or second, or third) crowdfunding attempts, consider why your plans didn’t pan out and learn from those mistakes in order to evolve improve in the future.
Don’t be afraid to change your platform, change your promotional approach, change the audience you’re targeting, or even reposition your brand altogether if that’s what it takes. And at the end of the day, remember that the “higher you fall, the higher you bounce”.
Build Upon Success
But of course, you’ll never enter into an initiative assuming you’ll fail. That said, since you’re planning to win that you’ll want to ensure you maintain and build upon your success. That means not only distributing the promised rewards, but also keeping to your project plans and goals and launching or kicking off your business!
And finally, don’t forget to publicly thank your investors.
After all, you wouldn’t be where you were without them, and a little gratitude goes a long way both in the eyes of your audience and in keeping yourself humble and appreciative. Good for the image and the soul!
In the end, promoting your company as a crowdfunding investment to the “crowd” is not too different from pitching more traditional types of investors. You want to position yourself and your products or services as appealing, useful, profitable, and sustainable. Show your audience what they have to gain by pitching in and helping make your dream a reality, and you’ll be successful.
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