Finally, you came up with a brilliant idea that is going to turn the world upside down. Now you’re getting somewhere! And, what you have to do now is to conceptualize your idea, accelerate it, and, eventually, materialize it. But, wait a minute, what about the money? If you don’t have your own capital or angel investor, your one chance out of the money problem is crowdfunding.
Crowdfunding is the practice of collecting the necessary amount of money for a startup or a new business by asking a large number of people to donate small contributions. Crowdfunding offers a decent chance to showcase your upcoming product to the world with the help of the compelling message, and to get your ideas to market quickly.
Many a little makes a miracle
Crowdfunding is based on the idea of microfinancing: you expose your project online and leverage collective efforts from a big number of people, who make relatively small donations to you. Put differently, you set your campaign, define a goal amount of money to be collected and a fixed number of days. After that, many people pledge you moderate amounts of money, and altogether these contributions help you get the target amount you need for realization of your idea.
As well, crowdfunding platforms allow to create an extremely effective community of users, receive valuable feedbacks, find out if your product fits the market and test the pricing strategy.
Three pillars crowdfunding leans on:
- The crowd. Money comes from a large number of people.
- The coin. The average contributions are relatively small.
- The net. You leverage online platforms for a greater reach.
Roll up your sleeves
Here’s the checklist of steps you need to take to launch your crowdfunding campaign:
- Make up your legend. Foremost, you need to have the solid concept of your idea, why you want to bring it to life, what pains you want to solve, and how you are going to make the world a better place with your product.
- Build an avatar of your customer. You need to become familiar with the people you design your product for. Do the research and gather actual data about those who you are targeting. Be sure to answer the questions: who are they? where do they live and work? how do the rest? why do they need your product? how are you going to make their lives easier?
- Do your homework research. Find out as much as you can about crowdfunding, mine for success strategies, and choose the right platform specific to your particular niche.
- Design your website or landing page. Here you can put together essential information about your product, teaser videos, short founders’ bios, how it works, testimonials and a call-to-action. The properly designed landing will help you collect email addresses to further connect with those interested in your launch, share updates with them, and offer some freebies and perks. The website may serve as a central hub of your marketing efforts, as well as confirm you are a legitimate company.
- Write a video script. Take your time to think your video through to develop the sequence of scenes, plan your storyboard, and write down the narrative.
- Shoot photos and video. Buy nice or buy twice. Be sure to involve professional video makers and photographers in order to make your story look compelling. However, try to research your network for people ready to help you for a discounted rate.
- Set goals. You need to know exactly how much money you require to make your dream real, so, define accurately your fund-raising goal and specify timelines.
- Submit. Make sure you know exactly the submission rules of the chosen crowdfunding platform and carefully check if your campaign complies with all the requirements. Otherwise, you’ll need to make some changes in the campaign during the approval process on the run.
- Build your media list. Inform relevant media resources, journalists, blog authors, youtubers and other influencers and thought-leaders about your launch and ask for covering it in their media.
- Outreach. Don’t reckon on an automatic noticing of your project by investors. Share your campaign as far and wide as you can. Leverage social media, friends and family networks, and work connections. The wider you spread the information about your crowdfunding campaign launch, the more chances you gain to get noticed and financed.
Same same but different
The biggest and the most popular crowdfunding platforms are Kickstarter and Indiegogo. Both are fantastic, but which one to choose to get the needed investment?
Kickstarter is a crowdfunding platform that provides businesses with a possibility to share their message and mission, expose their project, and collect funds. It is the best suitable platform for innovative thinkers: artists, designers, filmmakers, game developers, musicians, creative tech developers. Kickstarter’s mission is to “help bring creative projects to life”.
Kickstarter has all-or-nothing funding, which means that if you don’t reach your target amount within the specified timeline, you won’t receive any of the pledged funds. There are also no fees if your campaign is unsuccessful.
- Projects must create something to share with others. Your project should feature some finished product that you can bring alive to the world – a physical thing or a piece of art, a film or a game. This should be something you can share with other people.
- Projects must be honest and clearly presented. You should clearly understand what you want to produce, how are you going to do it and what you need for the production. In other words, you have to present a working prototype, not a photorealistic rendering.
- Projects can’t fundraise for charity. Nonprofits and charitable organizations are welcome to use Kickstarter, but funds raised on the platform cannot be used for charity.
- Projects can’t offer equity. Projects can’t offer incentives like revenue sharing or investments.
- Projects can’t involve prohibited items. They don’t allow healthcare apps and devices, things connected to gambling, offensive materials, live animals, alcohol, financial, phone and business marketing services, energy food and drinks, political fundraising, pornography, drugs, and weapons.
Kickstarter: how to apply
- Fill in the application form with the basic details of your project.
- Create the content for your project page.
- Upload a video with a description and rewards the backers will receive.
- Submit the project for review.
In comparison to Kickstarter, Indiegogo offers to submit projects in the considerably broader variety of categories: tech & innovation, health & fitness, art, media, games, writing & publishing, culture, and much more. Both for-profit and non-profit campaigns are allowed on Indiegogo, but the same can’t be said for personal cause campaigns.
The platform runs on a rewards-based system, meaning donors, investors, or customers who are willing help to fund a project or product can donate and receive a gift, rather than an equity stake in the company.
Indiegogo has less strict rules than Kickstarter.
- You must be 18 years or older to signup for Indiegogo account.
- You may not take the action that violates the law, infringes, or violates anyone else’s rights.
- Be truthful; don’t post any information, which is false, misleading or inaccurate.
- Respect the rights of others.
- Avoid spam and unsolicited communications.
- Respect the property of others.
- Don’t engage in activities that affect the functioning of the site.
- Respect privacy.
- Project’s can’t involve prohibited items like related to gambling, alcohol, pipes and vaporizers, weapons, drugs, harassment and hate speech, sexually explicit content and nudity, violence, human rights, air transportation, political campaigns, healthcare.
Indiegogo: how to apply
- Click “Create my campaign” and enter the basic information.
- Upload a short video about your project.
- Explain exactly why are you raising money.
- Choose fixed or flexible funding.
- Invite people to join your campaign team.
- Launch your campaign.
Crowdfunding platforms have revolutionized the way startups bring their products to life. They offer a low-risk and welcoming way to raise money for innovative and startup projects. Still, they should be entered with continuous care. Before launching a crowdfunding campaign, a startup or a business owner should carefully consider which platform suits their business needs the best, plan their campaign and the following marketing activities in accordance with the rules of the chosen platform, and, what is the most important, share the campaign as widely as possible.
Are you a startup planning to launch a crowdfunding campaign? We can consult and help you with this. Contact us for more details.