Crowdfunding (also referred to as Crowd Funding, Crowd Financing and Hyper Funding) is often a great alternative to investor funding for many entrepreneurs and small businesses.
Crowdfunding (also referred to as Crowd Funding, Crowd Financing and Hyper Funding) is often a great alternative to investor funding for many entrepreneurs and small businesses. Crowdfunding allows hundreds or thousands of supporters to contribute money towards a unified goal, such as helping to launch a new product. In exchange, supporters are offered a perk, such as first shipments of the product, t-shirts, or behind the scenes access to development.
Starting a crowdfunding campaign is relatively simple, but you’ll need to put in extra effort to make it successful. We’ve outlined ten steps for increasing your chances of getting funded!
1. Choose the right platform. Kickstarter and IndieGoGo are the most popular, but there are dozens more to choose from. Some sites accept projects from certain locations only, others only allow certain types of projects, and still others accept only non-profits. There are also differences in fees and payouts. Some sites require you hit your goal to get paid, while others will let you collect no matter the amount. You’ll need to evaluate the options to determine the best fit for your project.
2. Write a compelling description. You want to keep it short and concise. A good rule of thumb is to limit your summary to only three or four main features, and use bullet points to share multiple details about the benefits of your offering. Your description should give readers a clear idea of what your project is, why it’s so great, and why they should contribute toward its completion.
3. Create an awesome video. The video is a critical component of your pitch. It gives you the opportunity to make an emotional connection with your backers in two minutes or less. Let them see the real people behind the project by telling them about your team, what inspired your work, and why your project is special. If you have a working prototype make sure to show it here, because it allows the potential donor to see how their life would be improved if they had what you were offering. Be careful not to focus too closely on the technical details, or you’ll lose the interest of some of your less technical backers.
4. Pictures say a thousand words. Include pictures to give prospective backers a better idea of what you’re offering. It’s best if you have real photographs of a prototype or demonstration, but sketches or other design materials are beneficial too (if you’re crowdfunding for an app idea, you should add mockups or screenshots for best results).
5. Determine what your fundraising goal should be. This should be based on what you will do with the funds earned. It also helps if you tell your audience what the funds will be used for, as this will help them feel like they’re contributing toward a specific goal and add to their sense of involvement with the project. You want to set a reasonable goal so that you have a good chance of hitting it, without selling yourself short.
6. Offer multiple funding amounts. Make it possible for someone to pledge any amount of money that they wish. You can allow people to contribute $1 for a small reward, or $50,000 for a grand-slam awesome perk, and everything in between. Don’t prevent people from supporting you, even if it’s of nominal magnitude.
7. Offer attractive perks. Your goal is to give people an incentive to contribute money toward your project. Your incentive model should match the multiple levels of funding amounts, which means if one person backs you for $500, then they should get a significantly better prize than someone who pledges $10. However, be sure that every perk is enticing enough to deserve the amount you’re asking for it.
8. Plan well. Don’t tell your supporters that you’ll ship their rewards by a specific date if you’re not certain you can follow through on the commitment. Many successful crowdfunding campaigns have ultimately angered their backers because they promised something they ultimately couldn’t provide within the timeline promised. Unexpected setbacks happen, so build in extra time from the start.
9. Use your social network. You should create a community around your project before launching your crowdfunding campaign. Generate some buzz about what you’re doing and gain supporters before you need their help. Once your campaign launches, tell your fans they can help make your project a reality by contributing toward the fundraising goal or by sharing the campaign with their friends and family.
10. Put your marketing and promotional skills to the test. Most crowdfunding platforms have tens of thousands of campaigns running simultaneously. So don’t expect them to be the only source of awareness; you’ll need to give your campaign the attention it needs to succeed. Use every resource you have to get the word out and reach your funding goal.
This is by no means an exhaustive list, but if you follow the tips listed above you’ll have a much better chance of reaching your crowdfunding goals.