– Top ten tips for a successful crowd funding campaign –
What’s the big deal with crowd funding?
Crowd funding, where individuals, companies or not-for-profit organizations raise money by aggregating the relatively small contributions of a number of people, has been gaining popularity
For example, when Saskatchewan entrepreneur Ryan Grayston, wanted to raise $50K for his innovative 3D printer, instead of going to his local bank, preparing a thorough business plan and begging to qualify for a loan, he went instead to Kickstarter (www.kickstarter.com), one of the most well-known crowd funding platforms.
He ended up raising $651K, more than ten times his target and it took just 30 days. He didn’t have to give up equity in his company to an investor; he just offered various perks to the 4,420 people that backed him. Some only contributed $2, whereas the top ten contributors gave $1200 each. The average contribution was $147.
What if my company isn’t trying to raise money?
One of the most useful aspects of crowd funding is its marketing research insights. Instead of hiring a marketing research firm to help figure out what type of product your customer prospects want, you can test your product ideas via a crowd funding campaign, see the success of the campaign, see which perks get the best response, get invaluable comments and feedback, and engage with your target market.
The crowd funding campaign can become free prototype research! If your campaign is a complete failure, better to “fail fast” and find there is no demand for your idea before investing too much time and money doing a full product launch.
Do I need to get my campaign approved?
This depends on which crowd funding platform you go with. The two largest and most well-known platforms are Kickstarter and Indiegogo (www.indiegogo.com). The biggest difference is that Indiegogo allows anyone to launch their campaign — there is no approval process. This has made it a popular choice, especially for those wanting to launch a campaign with perhaps more uncertain market response or for areas like fundraising for a not-for-profit that is less project based. Kickstarter only accepts campaigns that have a clear start and end and where something tangible is created and vets all campaigns before approving.
Kickstarter is also “all or nothing”. Your campaign either reaches its goal and gets all raised funds or it misses the financial target and gets nothing.
With Indiegogo, campaign creators can choose either a fixed or flexible model. The fixed model is similar to Kickstarter in that if a campaign’s financial goal is not met, then no funds are distributed. With the flexible model however, all funds raised go to the campaign creator even if the financial goal is not met. The down side of this can be that there is less urgency for backers to fund a project and the campaign becomes more like a donation. Also, the transaction fee is higher for the campaign creator if the goal is not met but on the positive side, it’s a safer option. If your goal is to raise $10K and you raise $9,500, you still get to keep what you raised.
Any other tips for running a successful campaign?
Here are our top ten tips:
- Plan ahead. Don’t just “wing” your campaign. Think carefully when setting your target goal and which crowd funding platform is best for your needs.
- Make it personal. Establish trust that you are capable of delivering what you promise with your campaign.
- Better to aim for a lower amount and surpass your target then to aim to high and not reach it. If you want to raise $10K, it’s usually better to go for a $5K campaign. If you exceed it, you will look good and have a good chance of raising your higher goal.
- Have friends and family ready to support your campaign right after it launches. Campaigns that do well quickly have a certain buzz to them and can also be listed on the crowd platform’s home pages, generating even more interest and backing.
- Offer something truly worthwhile. The marketplace can be brutally honest. If you are offering something no one sees value in, you won’t be able to raise much if any funds!
- Interact with your supporters. Promptly send thank-you comments.
- Respond to comments quickly and don’t be defensive with critiques of your project idea. Instead, treat your comments like gold to help you modify your planned offering.
- Leverage social media. Be sure to use Twitter, Facebook, LinkedIn etc. to promote your crowd funding campaign and encourage your supporters to also spread the word. One of the easiest perks to offer is a thank you tweet for a small contribution.
- Check out your crowd funding platform options. While Kickstarter and Indiegogo may be your best options based on their large market base, check out the National Crowdfunding Association of Canada website for a directory of Canadian-based platforms (http://ncfacanada.org/canadian-crowdfunding-directory/).
- If you don’t feel confident with the above, hire a professional who has had experience and success with crowd funding. Where possible, try to tie your payment to the success of your campaign.
Written by Dr. Ivan Surjanovic and Cyri Jones,
adapted from BizTech101 column in Business in Vancouver