3 Tips for Crowdfunding Success for Business Owners
Crowdfunding is an excellent alternative financing option for your business. It essentially accomplishes two things: gets you term-free (except for equity crowdfunding) cash for growth and a large group of early adopters. If you can run a successful campaign it can do wonders for your business.
Crowdfunding platforms like KickStarter and IndieGoGo have made it much easier to accomplish this task. These platforms allow you to collect secure electronic payments directly on the website. If you reach your goal, they will take a small percentage and you get the rest!
Aside from choosing a platform, here are three more tips to get you funded:
1. A Picture is Worth a Thousand Words
Pictures, and videos, can do wonders for a crowdfunding campaign. It is almost imperative that you include at least one video in your campaign. Use the video as your leading pitch. It allows your audience to put a face, or faces, to your company. It will personalize your story and entice others to support you and your dream. Your video should be in between 45 and 90 seconds. You aren’t giving a tutorial here, you just want to excite your audience.
When it comes to your product description, you should include as many photos as possible. Break up large blocks of texts with pictures of your product. If you’re giving out rewards for various donations, you should include photos of those as well.
Take this card game called Exploding Kittens for example. They were able to smash their goal of $10,000 by raising a whopping $8.7MM. They without a doubt launched a successful crowdfunding campaign. If you check out their Kickstarter page, you can see they have an awesome video and a post loaded with funny-compelling images.
The basic premise of crowdfunding is to essentially “pre-sell” your product or service to your target customers. Once the money is pledged, you are now responsible for delivering that good or service. The basic pledge would be for the market price of your product. However, crowdfunding platforms give people the opportunity to raise at a higher “margin” with rewards.
Let’s say your crowdfunding campaign was for a revolutionary skateboard. Your average pledge is at $250, because that’s what you plan on selling your boards for. Often times these campaign’s will offer special rewards for a much higher pledge. Using this example, you could offer the very first-protoytpe for $2,500. That’s 10x the revenue for more or less the same cost to produce. You’d be surprised in how many people bite at the rewards. Leverage exclusivity the best you can so you can maximize the amount of money raised vs. the amount needed to produce (or deliver) your goods/promises.
Take a look at this list of 96 reward ideas from Kickstarter: Here are a few of the best ones:
- For software: “Keys to the kingdom. Share code keys so backers can hack away.”
- For a computer game: “A secret world. Make a special expansion pack for backers only.”
- Beauty Products: “Spa day. Have backers join you for one — complete with fancy juices and mani-pedis.”
3. Do NOT Make an Empty Promise
Your crowdfunding campaign is not a success once you reach your goal, in fact it’s just begun. Once all your money is raised, it’s now time to build your business.
The reason why we see plenty of crowdfunding products “disappear” after funding is because there’s no business behind the product. Because of this people often times under deliver on their promises.
Take the Coolest Cooler for example. About 10 years in the making, it was one of the “Coolest” cooler’s of its time. Due to production disputes, delivery times have been pushed back so far that the CEO was receiving death threats via social media. The Coolest Cooler was named one of the most successful crowdfunding campaigns of all time, however they clearly didn’t think it through.
If you’re looking to go the crowdfunding route for financing, make sure you’re prepared for everything. Whether that’s exceeding your goal by 100000% or just making it by $0.01, you better be prepared to build a business. Use these three tips to get funded successfully!