Crowdfunding is now one of the first things startups look at when hunting for investment. In excess of $1.8bn has been raised on Kickstarter since 2009, with a number of infamous success stories contributing to that figure. Video Game ‘Star Citizen’ is one of the most famous examples, raising over $84m, while investors ponied up a total of $20m to get the Pebble smartwatch going.
But how did they earn such vast sums? A number of factors enter into it, many of which cannot be applied to every campaign. The Veronica Mars film, for example, managed to bring in $1.2m within 12 hours, thanks largely to to the cult following it gained during the cancelled TV series on which it was based. There are some things that can be applied to all successful campaigns though. Here are 9 components of any successful crowdfunding campaign.
1. Plan Ahead
Preparing in advance is necessary. If your campaign comes across as half-baked, people are not going to trust that you’ll be able to deliver the product, nor that the target will be reached. For a website like Kickstarter, which only puts through the investment if the target is met, it feels pointless to make a commitment if you don’t believe anybody else will.
Building excitement for a project should start months in advance, so that you have backers in place when your campaign eventually goes live and it can gather momentum quickly. People are far more likely to invest if they see others have before them. They are even more likely to do so if they respect the backers, so it is important to ensure you get as many influential investors on board as possible early on. You can do this by reaching out to bloggers and media outlets that have covered similar campaigns, and trying to get them to publish about yours.
2. Have A Good Story
The decision to invest in a crowdfunding project is based on a complex combination of emotion and pragmatism, the scales of which often weigh far more in favour of an emotional response to an idea than with a traditional investment. To exploit this, you need a good narrative, one that connects with the reader and evokes a response. They want to be a part of your story, and investment gives them the opportunity to do this.
A good story needs to detail the struggles you’ve overcome to get you into the position you’re in, and why you think it was so worthwhile a project that you were willing to go through the experience. Your enthusiasm has to shine through, or you can’t expect others to get enthusiastic about it.
The story should not only inspire people to put money into your project, it should also move them to share the story on social media and encourage their friends to invest too. Reaching millions of people is not a job for one man, there’s an army of employees out there willing to do a lot of your work - and willing to do it free of charge.
3. Make A Video
The video is one of the most important aspects of the campaign. It reinforces the story and makes it more personal. The 2015 State of Digital Marketing study found that 68% of B2Bs and 73% of B2Cs believed videos to be the most effective tools in their web marketing belts, and this applies to promoting pitch pages too. Moreover, the more multi-media on a page - including images and GIFs - the more likely it is that someone will read it all.
A video need not be a huge expense either. University students are always looking for things to add to their portfolio, and it is possible to put together a professional-looking video on a shoe-string budget. However, an amateur video may end up having a detrimental effect, so if you have no way of putting together a decently produced film then you’re better off putting your time into something else.
4. Use Social Media
Social media is a vital tool in all forms of digital marketing, and that includes selling your idea to crowdfunders.
A report by crowdfunding platform FundedByMe found that companies placing a link to their Facebook or LinkedIn on their pitch page increased the chance of success by over 30% (31.37% for Facebook and 32.58% for LinkedIn). A company’s profile that had 10 likes on either of those social media portals contributed a further 6% to the odds of the target being reached (6% on LinkedIn and 5.6% on Facebook).
In truth, a social media campaign should start long before your pitch goes live, as part of the drive to build excitement. It is important to find new connections to build as large a net as possible, but it is also important to make sure you are connecting with a receptive audience and engaging with them. Be seen to listen and take on board their thoughts, engaging constantly with investors and potential investors to make people feel involved in the process. This means, once the project is underway, maintaining constant contact and updating investors with every bit of news - good or bad.
5. Get Creative With Rewards
Most campaigns offer incentives for different scales of investment, and it is important to be creative with these to set yourself apart. For example, one ice cream parlor seeking investment to fund expansion offered anyone putting in $200 the opportunity to have a custom ice cream flavor or frozen drink named after them, which was then featured on the menu for 1 season. While you should be innovative in what you offer, they also need to be deliverable. There’s little point offering every investor something that is going to be detrimental to your business to pay for. For smaller investments, something as simple as a virtual high five for giving $5 is an option that is well-appreciated.
6. Introduce Your Team
Investors will pay more attention to the background of your team than you may think. FundedByMe found that if a member has a background in management and/or consulting, this helps a company by 26%, while relevant business education increase the likelihood of a company’s success by 25%. If you have a team of people, make sure people get to know who they are. This will also help potential investors feel involved in the process.
7. Don’t Forget About Offline
With so much of people’s focus being online, it’s easy to forget that you can go out into the world and promote your pitch page that way. Organizing events that showcase your product and draw attention to your pitch are a good way to get people on board.
8. Never stop
According to Star Citizen, what drove them to reach their record-smashing total was that unlike other crowdsourcing they never stopped crowdfunding. Everything above, they kept doing, and have kept doing. They’re always coming up with new rewards, constantly driving publicity on social media, and they developed the story as it happened. In many ways, their fundraising has become self-perpetuating in that they have gained more and more publicity off the back of their success, but they have managed to keep control of the wave with huge success.