10 Crowdfunding Tips: An Easy Way To Raise Money
As the saying goes, Ideas are cheap, but the execution is expensive. This is exactly why crowdfunding has become such a hit; it enables people with brilliant ideas to showcase them in a risk free way, gain the support of the general public, and carry them out!
What is Crowdfunding?
Crowdfunding is a great way to get ideas off the ground, without the help of the government, a dragon, or your own collateral. It is the funding of a project through an online community, with each backer pledging a small amount relative to the target funding, in exchange for unique rewards, and to be part of something great.
How does it work?
Individuals or groups pitch an idea on a crowdfunding website, set a target amount of money to be raised, and a deadline in which to raise it.
Potential backers can be anyone that can view the pitches online, and if they see one that they want to get behind, they can do so right there and then, via credit/debit card. You don’t have to be a millionaire to want to contribute to a great idea.
The way it usually works on crowdfunding sites is that instead of patrons getting a share of the company, as with typical investments, there are other incentives to fund, such as unique pledge rewards. More on that to come.
Some key tips to having success using crowdfunding:
#1 – Choose the right crowdfunding site.
This can often be the key to your success (as well as your own determination and effort!). Potential backers may be looking at specific sites, looking for something to get behind. There are plenty of crowdfunding sites emerging all over the place, which can make it hard to choose one, especially as the crowdfunding “rules” differ between each site. Some are specifically catered to a niche; others are more general.
Creative Projects: anything from films, documentaries, albums, publications, art based projects. The sites that cater best to these ones are Kickstarter, IndieGogo (based in the USA) or PleaseFund.Us and WeFund (based in the UK).
Business Projects: for a more traditional, practical project, check out ProFounder, or Crowdcube, which is one of the few equity based crowdfunding platforms, along with Microventures.
Social Projects & Causes: 33needs or Buzzbnk are great for these sorts of community projects.
Non-Profits: Firstgiving and JustGiving are both amazing websites for raising huge amounts of money for global charity appeals.
Niche: There are various crowdfunding sites that cater to a very specific niche, such as AppBacker, which is purely for the creation of mobile apps.
With so many crowdfunding websites out there it can be hard to pick the right one for you. Choose carefully!
#2 – Bitesize Projects
The way most crowdfunding sites work is that unless you reach your full fundraising target, you don’t get a penny. So be realistic; set an attainable goal. If necessary, break down one large project into chapter - launching them at different times where possible. You haven’t got long to raise the funds once you pitch, so bitesize projects are ideal. This does not prevent you from exceeding your funding target, but rather maximises your chances of getting fully funded. Patrons feel that they are more individually essential to your success if there is a smaller amount of funding to be raised and they have contributed a larger proportion of the funding.
The funds raised in this project were x64 times greater than the original goal
#3 – Know Your Audience
“No matter how good a project is, without a core network of 1st degree supporters, very few projects get off the ground.” Vladimir Vukicevic, Rockethub.com
Unless the patrons are family and friends (aka ‘1st degree supporters’), others are going to have to be enthused by your project almost as much as you are to part with their cash. This is why it is important to identify your project’s target audience. If you are making a documentary about shark conservation, find societies and blogs online, charitable organizations etc as a forum to connect with the right audience, the ones that are going to back your idea, one example here might be the aptly named www.bite-back.com. These sites can help you direct attention towards your project, and help you gain some momentum.
Anthony Kaufman in his 3 Secrets to Crowdfunding Success iterates this. Anthony refers to an example of a project that raised $150,456 to fund Jennifer Fox’s film My Reincarnation, which had two built-in niche audiences to target: fans and followers of her primary subject, Tibetan Buddhist Master Chogyal Namkhai Norbu, of which there are many worldwide, as well as the estimated 7,000 people that Fox cultivated duringb the grassroots release of her last film; 2006’s “Flying: Confessions of a Free Woman”.
On most sites it is entirely down to you to direct traffic towards your project, so you have to know who to target and the best way in which to do it.
#4 – Have a strategy
Once you launch your project on a crowdfunding site, there isn’t that much time to reach your target! Think ahead, get a plan of action sorted, know who to target and when. The beginning and the end of the project are the parts that see the most cash flying in, so have a think about how you are going to keep people interested and putting their hands in their pockets during the dry, middle period.
A large proportion of successful campaigns have a weekly routine, maybe Monday is your social network day, Tuesday your outreach day (targeting influential people on twitter and facebook), Wednesday is update day, Thursday is thank you day and finally, Friday is begging e-mails day. Just by getting into the routine and constantly pushing your networks you will find your campaign much more manageable.
#5 - Pitch yourself, and your project!
The most successful projects on crowdfunding sites are the ones that stand out, engage people, and capture their interest and imagination. Use your passion to make an impression. The best way to do this is through a video – this gives a face to your project/campaign. There is something very genuine and engaging about a video based pitch. You are often competing for attention among many other projects on crowdfunding sites – make yours stand out; sell yourself!
When making your video, be sure to address the three Ws: Who are you? What are you raising money for? Where will this campaign take place? When do you expect to be finished? And of course, Why do we care?
#6 – How to spend it
Try to be as transparent as you can in your pitch about where the money is going. A lump figure is a start, but it doesn’t tell people anything. If you tell people what it is their money will go towards, they will be more likely to back you, and will feel more connected to the project and trust it’s credibility. Itemise where possible, so that people know that you didn’t make up your fundraising goal out of thin air. The more involved a patron feels with a project, the better. There are plenty of cons on the Internet, so you want to convince your audience that you are the real deal.
#7 – Social networks
The need of a persistent and active online campaign is necessary to draw the attention of funders in order to get multiple small investors to back your project.
Social media is an amazing tool for communicating and connecting with people – so utilise it! It has changed the way we communicate and market ideas completely. If you have time, try and build up your network before you take your campaign live. Not many people have the ability to build a huge following on twitter and facebook in the space of 40 days, and by the time you have a decent sized network your campaign may be over.
Neil Sequeira examines the various methods of ‘Taking Your Crowdfunding Campaign to the Social Web’, focusing particularly on Twitter, Facebook and LinkedIn and their respective networks. None of these should be forgotten. There is a huge community of people online that you can tap into- it would be foolish not to make the most of them.
- Kickstarter listing a project on their facebook page.
#8 – Reward people
Give the people backing your project something back, with the higher sums reaping larger rewards. This gives people further incentive to help you, apart from the warm fuzzy feeling inside, and ticking off their “good deed of the day”. Come up with exciting and relevant pledges that people are going to want to earn! For example, if you are raising money to start your own Fashion line of Hats, your pledges could include having a hat from the collection named after the contributor; all the way to a free hat and 2 tickets to Ladies Day at Royal Ascot to show it off! Be creative, have some fun with it. Make sure each pledge reward is easy and affordable to deliver; exhaust all possible contacts and make use of all resources that are readily available to them. Don't forget to make everything discounted to normal prices. People are supporting you before you have even got your project started, this means that you are a risk, factor this into your pricing, this way you can grab the bargain hunters!
#9 – Share the experience
Keep the community up to speed on how it is all going, before, during and after! They helped you on your way, so it’s important to keep them in the loop about the rest of your journey! Some of the best pledges we have seen are ones where backers get to share in the project, these could be any of the following: a new role in the film has been created; seats on the front row of the opening night of the play are offered; a dedicated individual song on the album; or just an invite down to the pub with the project owner to say thankyou.
Your positive crowdfunding experience may well inspire and help others with great ideas that are hesitant over whether or not to take the leap. Keep updating your community and if you are having fun with your campaign let others know.
#10 – Credit where credit is due
Give people the credit they deserve for helping you on your way. Make sure they know that they will be credited in some way through the project, and express your gratitude. Acknowledge that you couldn’t have done it without their generosity, and give them a figurative pat on the back. It’s all about recognising the people who have made your project possible – that, and keeping good relations if you want them to help fund your next venture!
A crowdfunding campaign requires a lot of determination, effort and passion if it’s going to be successful. But these tips ought to help you on your way. Be prepared, and have a clear vision of what you want to achieve.
This article was written by Charlotte Hamilton and Ben Hamilton, who are currently working as community managers for one of the UK’s leading crowdfunding platforms, PleaseFund.Us. The role involves working with project owners on the PleaseFund.Us platform and helping them market their project in the best way possible in order to have the greatest chance of success.