On SEW we try to reserve Saturdays for non-search content that we still think is of interest to our readers. We've been getting excited about the potential of crowdfunding and so we asked a practitioner to share their strategy with you. Erick Mott is fresh from the field, having backed crowdfunding since 2011 and is in the process of completing a successful campaign on Indiegogo September 30th for his new product called the creatorstand.
Whether you’re serving clients or leading an organization to launch a new product, cause, or creative project on the web – you’ll find these crowdfunding tips useful.
What is Crowdfunding?
Crowdfunding is a collaborative effort of individuals to pool resources, usually via the web, to support entrepreneurial, cause or creative projects initiated by other people, businesses, and community groups.
People sometimes confuse crowdfunding with crowdsourcing – another form of community engagement to outsource tasks. The distinction is crowdfunding raises money from people for an idea or something tangible and crowdsourcing pays money to people for an idea or something tangible.
Ready to Give Crowdfunding a Go?
Great, the world needs more creators taking action rather than just talking about ideas. But crowdfunding is not for the faint of heart.
Follow these tips to increase your odds of success.
1. Have a Go-to-Market Plan
A crowdfunding campaign is very similar to any other event or launch. It requires a plan including goals, strategy, a budget, and known resources in advance of going live. Don’t skimp at this critical stage and focus on raising what is required for a successful campaign.
2. Organize a Core Team
It’s estimated that 30% of funding comes from friends, family and colleagues. And it’s unlikely you’ll be able to do everything yourself – a cross-functional team is essential. Think in terms of two groups in your core team:
- Experts you need to do the work before, during, and after the campaign.
- Initial funders to help you create demand out of the gate.
Funders who don’t know you will respond when they see results and believe the risk is low or nil.
3. Create Multimedia Content for Key Channels and Stages
With so many ways to reach, engage and convert people on the web, you need a variety of content including positioning, SEO, photographs, email marketing campaigns, blog posts, elevator pitches, offers, etc. Video is a proven, low-cost way to create your pitch, help it spread, and increase funding results.
4. Be a Storyteller
We’re attracted to and inspired by stories (a narrative) that enable us to relate to characters, settings, challenges and goals. Be authentic and reveal something that isn’t common knowledge. Help others see themselves in your team’s shoes or as a consumer of your wares.
5. Cultivate Passion and Trust
Passion articulated clearly can spread like wildfire. Crowdfunding is social media and community engagement – so convey your trustworthiness through actions, proof points, clear updates and tone. Funders want to help but also want to know where their money is going and what’s in it for them.
6. Be Courageous and Innovative
Pitching a story on camera, asking for money, and promising delivery of something new are not, typically, comfort zones. Add social media and a compressed timeline and things get interesting. While you will likely lose a few people on Facebook, it’s important to respectfully push the envelope and involve others. Be true your vision and experiment.
7. Remain Flexible and Ready to Pivot
Even with a solid go-to-market plan, crowdfunding isn't predictable. This is one reason why it’s exciting and feels a little bit like a Shark Tank pitch on the web. The crowd will provide valuable feedback, either through action or not, and it’s important to tune in and be prepared to make needed changes on the fly.
8. Connect With an Audience Who Cares
Your core team of experts and initial funders care. To connect with more funders and encourage sharing by others, use a variety of marketing tactics and channels including email, social media, PR, SEO, direct mail, public speaking, etc. Social media is the backbone, but be sure to target and choreograph urgency to create results.
9. Announce With Cash in the Bank
Have enough cash to cover planned and unplanned activities during the campaign. This includes your ability to cover expenses for an additional week or two while the money you raised is making its way to your bank account.
10. Be Committed
Crowdfunding is typically a short-term, low-cost effort but your reputation lives on. If you’re going to use crowdfunding to achieve important goals, be sure to maintain integrity and deliver to the best of your ability. Protect the crowd and craft by always doing the right thing.
Learn more about how to be successful with crowdfunding and the new JOBS Act in this video interview with Danae Ringelmann, co-founder of Indiegogo.