The lure of crowdfunding can be a powerful thing. High profile success stories, such as Wil Wheaton’s successful Indiegogo campaign or Levar Burton’s Reading Rainbow campaign on Kickstarter, add fuel to the crowdfunding fervor. These successes do a lot to mask the underlying ins and outs of crowdfunding.
Crowdfunding can be used successfully to fund projects and products, but it requires planning. Select a platform that caters to your best audience. Develop clear talking points about the project and drive them home. Most importantly, be crystal clear about what you’re offering and why you believe in it.
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Most contributors pledge small amounts. The most common pledges range from $1 to $50, although larger pledges are possible. If the collective donations of the “crowd” reach the campaign goal, the campaign is funded on a predetermined date and pledges are usually charged to credit cards.
- How it Works
In a crowdfunding campaign, a creator or entrepreneur outlines an idea for a project or product, usually in a short video. The crowdfunding platform displays the video on a standalone page where interested visitors can watch it. In most cases, the person or group running the campaign offer perks, such as t-shirts, credit, or a copy of the finished project/product to encourage people to pledge money. In the case of equity crowdfunding, people get a stake in a business.
- Getting Started
Assuming you have an idea already in hand, you need to select the appropriate crowdfunding platform. There are approximately 700 platforms, many of which cater to niche audiences or industries. Kickstarter, for example, caters to creative projects, while Weeve caters exclusively to charities. Selecting a platform that caters to your kind of idea boosts your chances of it being seen by a receptive audience.
- Develop Buzz in Your Network
Once you pick a platform, your odds of success increase by generating buzz in your network. Create talking points to use in discussions with friends, family and colleagues. Leverage social media, such as creating a Facebook page and a Twitter hashtag. Reach out to crowdfunding media outlets and traditional media outlets to see if you can place a story about your campaign.
- Create the Video
The core of a successful campaign is a good video. While high quality video and audio production help, a clear message about what you’re doing and how you intend to do it are the real essentials.
- Perks
You need to decide what perks to offer and how you plan to fulfill or deliver those perks, if the campaign succeeds. Be very clear on the campaign page what the perks are and their expected delivery date.
- Success Rates
Be realistic. The actual success rates of crowdfunding campaigns are low. On average, only 5 percent of all crowdfunding campaigns reach their funding goal.
- Set Attainable Goals
While the campaign for the Pebble, an e-ink watch, raised millions of dollars, that result is atypical. Most successful crowdfunding campaigns seek modest goals, typically between $5000 and $7000.
