Last November we launched a successful Indiegogo fundraising campaign to help us expand our product line. Since then, many people have asked for my thoughts on crowdfunding, and if I had any advice for people looking to launch their own campaign. Well, I definitely do! Crowdfunding can be a great way to launch, or to help grow your business. But in order to be successful, there are some key “best practices” you should be aware of before you start your campaign.
But first, what is crowdfunding? Simply put, crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large number of people. Normally, people receive a “perk” for backing your campaign. We will talk more about perks later, but perks are gifts supporters receive for monetarily supporting your campaign.
Indiegogo was the first perks based crowdfunding company founded back in 2008 and is now the largest global crowdfunding platform. Thousands of companies have launched in the space since then. I chose Indiegogo because of their extraordinary campaign owner support and democratic global approach. When selecting a platform, ensure they support your specific type of campaign. Some platforms restrict the types of projects/ventures they allow on their websites. Regardless of the platform you choose, these lessons learned still apply.
Phase 1: Planning
Organizing a successful campaign takes time. It took us almost four months to fully develop and launch our campaign.
The first question you must ask yourself is do you have a legitimate ask aside from just wanting people to give you money? Everyone loves a good story, and people want to feel they are part of something greater than themselves. By supporting your campaign, what are they helping to accomplish? What problem are they helping to solve? What amazing movement are they becoming a part of? Refining and focusing your pitch is a key component to a successful campaign.
Indiegogo Fact: Campaigns that use video raise 115% more money than campaigns that do not.
People have a short attention span so you need to capture their interest. Tell your story in the video. Do not expect everyone to read the text component of your campaign. Some topics you might want to verbally address in the video:
From a time prospective, your video should be around 2-3 minutes long. You do not need to spend a lot of money to have a high-impact video, but it must be well produced. If you can, work with a videographer. We decided to hire a start-up called 59 Second Pitch to help with our video. But don’t be afraid to ask friends to donate time. Or, if you live near a university, there are normally film students who are looking to add to their professional reels and would be willing to donate their time.
Perks are incentives offered to potential backers in exchange for their support. The type of perk will very depending on the contribution amount.
Most people claim $25 - $100 dollar perks. Having between 5-10 perks is a good range. You do not want to overwhelm people with excessive options.
Don't have too many lower value perks. We started with a simple donation and went up from there. You'll be surprise how many people just want to contribute and don't want anything in return.
Ensure you are not actually loosing money on your perks. Factor in any shipping or handling fees you will incur. Also ensure you can fulfill all of your perks. If you are working with limited inventory, you can limit the number of times a specific perk can be claimed.
Perks generally fall into one of three categories:
-Material: This is an actual product you are going to manufacture, or other physical item like a hat, sticker or t-shirt.
-Personal: Acknowledgement for contributing. This can be a handwritten thank you note, mention on social media, etc.
-Experiential: An experience, like a personal tour of the vineyard you are starting, or a coffee roasting lesson in your new coffee shop.
Build Your Team
Indiegogo Fact: Campaigns run by two or more team members raise 94% more money than campaigns run by a single individual.
The more people you have on your team, the greater the reach of your combined network. You will also benefit from your team’s diverse set of skills. As your campaign grows in popularity, your team will be able to assist with media inquiries, customer support and engagement.
Prepare for Launch
Prior to launching your campaign, establish a list of people (friends and family) that you know will be able to donate. Reach out to them and let them know what you are doing. In addition to that, identify people that are willing to share your campaign via social media, email, etc. Excitement and buzz must be created beforehand.
Statistically, you want 30% of your fundraising goal to come from this group of friends and family. And ideally you want it to come within 24 hours of launch...or if possible, before your formal launch. The reason for this is because "stranger money" - money from people you do not know personally - starts to roll in around the 30% funded mark. It’s a psychological response. Furthermore, according to Indiegogo data, campaigns that reach 48% funding have well over a 95% chance of being fully funded.
As for the actual length of the campaign, 50 days is the sweet spot. That being said, all campaigns hit a mid-campaign slump, so you need to have an engagement plan ready to reinvigorate the initiative.
Phase 2: Launch!
You’ve done all the hard work, now its time to spread the word! Promote, Promote, Promote!
-Schedule emails to your team’s contacts
-Utilize social media to help spread the word. Ask your friends and contributors to help spread the word as well
-Host referral contests
-Update your contributors and keep them engaged
Indiegogo Fact: Campaigns that send out at least 3 updates raise about 239% more money than those that post two or fewer.
Plan for the mid-campaign slump. It happens to us all. They key is to have a plan to re-energize your campaign when contributions start to slow. This can be new perks, releasing a new video, contacting a new email distribution list, reaching out to local news organization/bloggers for coverage. Just keep promoting your campaign and you will be back on track soon.
Phase 3: After Your Campaign
Your campaign is over, and now it is time to fulfill your perks. If possible, include a thank you note with each perk, and encourage your supporters to share their experiences via social media. This will help to drive brand awareness.
Keep in contact with your supporters. They were there from the beginning, and will likely be interested in any new products you release.
Crowdsourcing is a great way to raise money for your new venture. With a little planning and a compelling video, you will be well on your way to reaching your fundraising goal!
We would not have been nearly as successful with our campaign if it wasn't for all of the help provided by my dear friend Breanna DiGiammarino. She is a true crowdfunding expert and always looking to help new ventures.
stubble & 'stache was founded by a former Marine Corps Special Operations Combat Veteran in memory of his fallen comrade. We donate a percentage of profits to organizations supporting those men and women suffering from the mental wounds sustained in combat.
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