Crowdfunding has become the norm for startups seeking to introduce a product to a market without much (or any) prior startup capital. Platforms like Kickstarter or Indiegogo are simple, intuitive solutions for startups who (1) may be seeking to validate an idea before accepting external investment, or (2) may simply be unwilling to hand over equity at such an early stage.
Crowdfunding can be even more appealing to startups because it tends to give customers a sense of benevolence and community in supporting a project. Words like “purchasing” and “buying” are replaced with “backing” and “giving.” Good campaigners seek to extend these feelings of amiability by engaging their community of supporters regularly and authentically, treating them as genuinely valuable stakeholders in the company. People respond well to respect.
Despite the clear advantages of launching a product through a crowdfunding platform, however, the process is not always as easy as it may seem. The projects that overfund their goals by upwards of 1,000% don’t do so by accident. Operating a successful Kickstarter or Indiegogo campaign is still dependent on your knowledge of the market, your team’s skills and your ability to sell. Considering launching your own crowdfunding campaign? Here are three essential questions to ask yourself to make sure crowdfunding is right for you.
1. Why do you need the money?
Do you need the money raised from the campaign for research? Production? Scale? The answer to this question will strongly affect your product’s suitability for a crowdfunding campaign. Supporters want to back a project that:
- Is likely to become a reality. They want something with exhibited research and development processes that give it credibility.
- Is authentic and transparent. They’re taking on risk with their support, so there’s no room to give the slightest impression of incompetence (or worse, deceit). Be prepared to be upfront about what the money will be used for, and plan to keep your backers updated on your progress, even after the campaign ends.
2. Do you have a team?
Indiegogo researched over 100,000 campaigns and compiled the data to uncover some valuable statistics about successful crowdfunding campaigns. One of the most revealing data points is that projects with more than one person raise on average 300% more funds than solo efforts.
No matter how much it might horrify you to admit that you need help with your “baby,” it’s the truth – you do. You may be the founder, the inventor, the visionary – but you, like the rest of us mortals, have limitations. While it’s a beautiful thing that your crowdfunding project could potentially raise hundreds of thousands, or even millions, of dollars in just a few weeks, at the same time it forces you to squeeze all of the planning, marketing and sales that could otherwise take months or years into a 30-day window. Launching a crowdfunding campaign alone is like trying to run a relay race by yourself. It might be possible, but you’d be better off swallowing your pride and accepting help.
Note: This doesn’t mean you need to add co-founders, or even give up equity. Try creating a short term task force. Promise your team members a percentage of the amount you raise, which can protect you in the event that something goes wrong and will give them incentive to ensure the project succeeds. A few factors to consider in putting together your relay team for the big race:
- Find people who complement your skills. If you’re a strong strategist, add a salesperson to your team, then a strong communicator/designer, and so on.
- Find someone to manage your social media channels. Don’t have any? Get them. They’re simultaneously essential to the credibility of your campaign and yet too nasty a beast for you to bother managing yourself. Social media requires less ingenuity than it does time. This is a great task for an intern.
- Find people who not only understand your product, but believe in it. They’ll be your biggest advocates.
3. Do you have time to properly market your campaign before it launches?
This is the single most overlooked factor in crowdfunding campaigns. If you get one thing out of this article, remember this: Your campaign will be won or lost before it ever starts. Most campaigners know that they can’t simply rely on the Kickstarter or Indiegogo platform to carry their product to the masses, but they often underestimate the massive effort it is to get any message to the right people with the constant inundation of content across the internet. Your campaign doesn’t need all of its backers identified prior to the launch; however, you should have attained research, compiled emails, and developed valuable advocates from across your industry well in advance of your launch. Campaigns that leverage their preparation to raise 50% of their goal in the first 48 hours are far more likely to carry that momentum beyond the final goal.
Some pre-launch things you’ll need plenty of time for (minimum 1-3 months):
- Building an email list. Email has the highest conversion rate of all digital channels. Obtaining user emails is earning their express permission to market to them on launch day. Use an email management client like MailChimp (free for up to 2,000 subscribers) to send out regular updates and promotions.
- Building up your social media channels. Email might have the highest conversion rate, but your social media will have the most traffic. Potential backers will see an empty or unpopular account as a lack of credibility on your part. Post real, consistent content and you will do well.
- Building your influencer list. These are the bloggers, the celebrities, the media outlets that can share your content to their vast audiences. You may not be able to land a lot of them, and you may need to pay the ones you can get, but building authentic relationships with these key advocates can be the extra push your campaign needs.
Does this mean my campaign is definitely going to succeed?
No. Think of these tips not as recipes for certain success, but as prerequisites for your campaign to even have a chance. In the end, this entire article presumes that you have a sound product that meets a genuine market demand. The problem is that even great products have failed at crowdfunding, almost invariably due to overconfidence and a lack of proper preparation. Don’t let it happen to you.
Sound product + sound preparation = successful crowdfunding campaign.
Go get ’em.
P.S. Check out this Indiegogo project I’ve been helping spearhead for the past few months. It’s launching on June 16th and we’d love for you to enter for your chance to win your own before we launch 🙂