Today’s hottest form of high-tech investment, crowdfunding — the practice of posting pitches on sites like Kickstarter, RocketHub and IndieGogo and asking Internet users to pledge donations in exchange for merchandise or unique personal experiences — is exploding in popularity. Credit the success of recent campaigns like the Pebble: E-Paper Watch (over $10 million raised for an app- and Internet-ready timepiece) and Double Fine Adventure ($3.3 million for a video game), which have garnered widespread public support and attention.
While no equity or ownership stake has previously changed hands in exchange for contributions, the recent passage of the JOBS Act may prove a game changer for entrepreneurs. Allowing limited investment opportunities in businesses and startups by qualified backers, it threatens to completely reinvent the worlds of venture capital and angel investment. Looking to enjoy your own piece of the American pie, or launch a million-dollar project, idea or invention right from your kitchen table? The following tips and tricks — as seen in new free-to-download book The Crowdfunding Bible — can give you an edge over the competition in any campaign.
- Do your homework — and do the math. Research both failed and successful campaigns to see which projects, marketing strategies and rewards best connect with fans. Budget conservatively up-front for all expenses including reward production and fulfillment, and don’t forget to take taxes into account. To avoid unexpected surprises, when preparing estimates, factor in a 20-30 percent cushion for hidden expenses. Before campaigning, determine the minimum amount required to get projects off the ground, and ask for this sum — the more realistic the funding goal, the likelier fans are to participate. (Happily, many sites will let you exceed it and keep any upside… You can always add more content, features or functionality if extended “stretch goals” are met.) Finally, practice and refine your pitch until you can express ideas simply in 20 seconds or less — it pays to be clear with fans about just what it is you’re offering. You only get one chance to shine, so don’t be afraid to test your spiel out on friends and family before launching as well — many project creators spend as long getting their spiel down as they do on the actual campaign. Set yourself up for success by having a game plan in place that begins long before hitting the Launch button.
- Prepare assets in advance. Crowdfunding is a marathon, not a sprint — throughout the duration of a campaign, you’ll be beyond busy providing project updates, answering emails, manning social media channels, and making ongoing outreach to the general public, backers and media outlets. To save yourself some pain, and increase chances of generating awareness, plot a running range of marketing and promotional activities in advance, and secure as many supporting materials (videos, screenshots, commitments from notable personalities to help you promote via social media channels, etc.) as possible before starting your campaign. Understand before starting who your target audience is, where they live online, how to reach them and preferred forms of contact, and prepare all supporting tools and vehicles (Facebook/Twitter accounts, homepages on crowdfunding services, a dedicated project website, email newsletters, etc.) needed to facilitate outreach efforts in advance. Launching a campaign is incredibly demanding and stressful, and creating running dialogue with backers essential — you’ll save yourself a world of hurt by taking a more focused approach to audience targeting, and not having to scramble at the last minute.
- Design compelling rewards. Ask yourself: What creations can you offer backers that are unique, original and affordable? While basic merchandise such as t-shirts, posters and DVDs can be offered and/or bundled together, and frequently generate the most revenue, often it’s unique items — limited edition trading cards, exclusive studio tours, lunch with a famed celebrity, a bit part in your next movie, etc. — that draw the most attention. A varied mix of these rewards should be provided to generate awareness, raise capital and get Internet trendsetters talking. Compelling gifts should also be available at all pricing levels, with cost tiers evenly spaced out from impulse buys ($5-10) to luxury items ($2,000) — so that everyone has the opportunity to contribute, no matter their budget.
- Create a compelling pitch. Quickly and concisely communicate what makes your project unique or uniquely beneficial, as well as why it deserves to come to fruition and the reason that your team is uniquely qualified to do the job. A strong and urgent call to action is vital too — explain why the moment to strike is now, and potential backers don’t dare miss out. Focus on one to three unique sales points (read: original features) that will be communicated in all messaging (press releases, project descriptions, screenshots, etc.) and refine your elevator pitch until it briskly incorporates all — ideally in as little as one sentence. Use personality and emotion to convey your message as well… contributors are investing in you as much as the end result. Also important to note: A picture says a thousand words, so don’t skimp on presentation or production values. Visual assets (videos, screens, concept sketches, etc.) are a campaigner’s most powerful tool, and should convey as much info as possible at a glance. Similarly, copy should be cleanly separated by arresting subheads, clearly answer readers’ questions (what is this project, why is it unique, what makes you the best person/team to make it, what’s the immediate benefit to me, etc.) in seconds and jump out from the page.
- Stay in constant contact. Think about how to create a running dialogue with your audience or you risk becoming yesterday’s news. When promoting to fans and journalists, remember — the goal is to drive constant conversation, helping you stay top of a mind and relevant. Consider that social media platforms such as Twitter can often be just as, if not more, effective than high-profile media placements in generating awareness. (The latter typically providing just a brief bump in traffic and grist for the promotional mill in terms of project summaries that you can point backers to.) Likewise, throughout your project’s duration, keep backers — your most ardent evangelists — and onlookers apprised of your progress on an ongoing basis, thank them for their support, and provide regular updates to maintain buzz. Eventually, you’ll need to migrate all from crowdfunding services to a centralized online resource, e.g. a dedicated project website, when campaigns end. Don’t be afraid to reach out for help from these individuals either — no one wants to see you succeed more than them.
Professional keynote speaker Scott Steinberg is a leading expert on leveraging new technology trends to enhance business strategy and family life. A noted industry consultant and bestselling author, his new book The Crowdfunding Bible is 100 percent free to download at www.CrowdFundingGuides.com, or in eBook form on Apple, Nook and Sony Reader devices.
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