Site after site, email after email, your idea has claws. It will work! YOU can do this! Only… you can’t… because you have no money. Your brain feels like it’s playing ping pong in your skull. Idea after idea about how to fund this Best Idea Ever. Finally, it dawns on you. CROWDFUNDING! YES! That’s it! Except, it’s not that easy. It’s not until you know more about crowdfunding, and you’ve panhandled to every person you know and haven’t met yet.
1. Crowdfunding can fail very easily
According to Crowdlifted, over 71,000 Kickstarter campaigns have failed as of January, 2014. IndieGogo campaigns fare far worse with a 91% failure rate, according to Crowdfund Insider. Those are abysmally horrible numbers. Especially considering that of those 71,000 fails, over 51,000 fail to make it through the friends and family round. Add that all up and it’s a whole lot of zeroes. Even start-ups like Simplifit, and their co-founder Kevin Packer, know that you can’t just ask for money. You have to know when to crowdfund and when to approach other resources. As a weight loss brand, they couldn’t just take to the streets to ask for cash to get their software funded. He also says creating a crowdfunding campaign is a huge effort and distracts from the actual building out of ideas. Lastly, Packer says crowdfunding best serves products that are unique and stand out quickly. It’s clear that not ALL businesses are suited for crowdfunding. Let’s take a look at what you need to do before hitting the streets.
2. Make sure you know who you are serving
Businesses that are aiming to serve the greater good by producing a product or service that fills deep needs, fare the best when asking for money from strangers. Unless you’re a video game developer. Then you leave everyone in the dust. By in the dust, I mean you walk away with 65 million dollars. The next highest earner stands in shame with 18 million dollars (as reported by Wikipedia). Don’t post some self-serving campaign just because you need a website. Understand?
3. Presentation is everything
You’ve heard the phrase, “You eat with your eyes”, right? Well, it’s the same with your presentation. Throw up any old whatever-you-can and your earnings will suffer. Trust me. Carefully consider your presentation because you don’t want your prospective funders to be on the fence about how serious you are. They’ll not give you a dime if they don’t feel like they can trust you. Invest in a quality video. If all you have access to is your iPhone, watch this vid. Follow their tips to create vivid images that pull people in (along with their donations).
4. The language you use matter a lot
No matter what you do, don’t say the wrong words. If you do, people who are considering donating, will cross your name off their list of charities. You have to know the people you want to appeal to, intimately. You have to say the things that make their hearts sit up and take notice. Because if you don’t? You’re lost… just like Gilligan. Do the legwork to understand how your potential think. Use the language they use. Use the words that open their hearts. Saying “Invest in US” will never earn you anything. But saying, “You want to own the world, and we want to help you do it,” just might.
5. Create early interest
When you present your crowdfunding campaign, it creates credibility and speaks to that, “Oh, Sally’s backing this, so it must be valid” mentality. It’s also known as social proof. If you already have some backing from outside sources, let your prospective funders know. If people who have already invested in the public round are excited about your project, they’ll also be good candidates to share their good intentions with their inner circle and extended contacts; thereby extending your public reach even sooner.
6. Be prepared to present your business plan
Some platforms, like IndieGogo and MicroVentures, want to see some semblance of your business plan. You don’t need to have every detail mapped out for them, they just want the highlights. That said, it’s always great to have your actual business plan on hand so you can present it if asked. You can even elude to it in your video for your campaign, adding a little more “oomph” to your “street cred.”
7. Know which platform will serve you best
Crowdfunding has been an ever-evolving industry since its inception back in 1997 and it’s come a long way. GoFundMe.com has raised over 580 million dollars for personal fundraisers, making it a leader in the field. But, as a business, you might want to look to campaign backers through sites like Kickstarter or Crowdrise for your creative ventures. Or maybe you just want to launch a t-shirt line? If so, check into TeeSpring. Be aware, each has fees attached. Some as low as 5% and some as high as 10% (like TeeSpring).
8. Layout a strategy for marketing
You’ve got a Facebook account, but your BFFs are only going to share your campaign once or twice before they move on to the latest cat video. You need a marketing plan that will allow you to reach far beyond your circles. This is where intimately knowing the people whose hearts will be touched by your pleas for help comes into play. If you know them well, you know where to find them online and off.
9. Influencers can be your friends
Reaching out to influencers during your campaign is a good idea. Let them know you’re raising money for this cause that their audience will truly benefit from. However, do NOT wait until said campaign starts to start conversations with said influencers. Bad, bad idea. Do it early. Start warming those fires. Try and be seen by them long before you need help. Create genuine relationships and don’t be a beggar. No one wants to feel like they’ve been used.
10. Remember it’s hearts that power wallets
No matter what you do, don’t forget the cardinal rule of crowdfunding: It’s hearts that power wallets. There’s a trifecta that you cannot ignore if you want people to tear open their wallets for you: Story, authenticity, and credibility. Bake these things into your campaign and you’ll pull people into it. Let them see the passion that powers the idea. This will power the business. Let them feel how much you’ll put into creating “Awesome” for them. Let them experience just how important this campaign really is. There’s a good chance they will reciprocate with genuine excitement and willingness to give and share. That’s how you create a successful crowdfunding campaign. And that’s how you’ll get your idea from notion to motion.
