Joining our first Google+ Hangout about how to successfully launch a crowdfunding campaign was an excellent panel including:
- Steve Strauss, Senior USA TODAY Small Business Columnist
- Justin Renfro, Program Manager at Kiva.org
- Erica Dorn, Consultant
- Lloyd Cambridge, Director at NYC Business Solutions
- Jeff Bekiares, Co-Founder of SparkMarket
If you weren’t able to tune in, you can check out recording below of the whole hangout.
Below are a few highlights of what Steve, Justin, Erica, Jeff and Lloyd shared during the Hangout!
Crowdfunding, as explained by Erica and Jeff, is an age old method of reaching out to a wide community in order to acquire contributions from a large audience. There are two main types of crowdfunding: reward and equity. Reward crowdfunding, like it sounds, gives those who make contributions to a campaign some kind of gift or experience in exchange. The contributions for reward crowdfunding are usually tiered within the crowdfunding platform: starting with small contributions and rewards, and expanding to large contributions and rewards. Equity crowdfunding offers a percentage of the business or profits from the product in exchange for the contribution. It should be noted that there are regulations for this type of funding depending on location. Business owners interested in equity crowdfunding should check their state laws before setting up their campaigns.
Crowdfunding can be also be an opportunity to connect and engage with a community of people who are interested in supporting your business. Because getting loans or investments can sometimes be difficult, crowdfunding is a democratized way of funding. It allows people from your network and around the world to fund you, and opens up a new potential for those who are under funded. Our panel also described how to utilize crowdfunding as a way to tell your story, articulate what you’re doing and where you plan to go with your campaign, and eventually reach a larger audience.
What does successful crowdfunding look like?
One of the first things you should figure out when starting a crowdfunding campaign is what your plan is and what specifically the funding will go toward. A detailed plan and financial break down can help you paint a compelling picture of your business when you put together your marketing materials. Before launching your campaign, consider researching successful crowdfunding campaigns undertaken by other companies in your field. Using their experience, you can pick and choose components that might help serve your campaign. Most crowdfunding platforms have data on what rewards are the most popular and other information. You can use that data to try to craft the most effective campaign for your product.
When considering what incentives to offer in rewards-based crowdfunding, you will want to be mindful of when a reward will help your campaign and when it will present you with more challenges than it’s worth. Make sure that you include the cost for incentives in your overall budget that you’re looking to raise, as well as the shipping costs, if the rewards are to be mailed. Jeff shared a great idea of gifting invitations to a launch party in exchange for donations, which in return provides future engagement with your contributors – and, added bonus, doesn’t have a mailing cost associated with it!
Other things to consider:
- For most platforms, campaigns should include a three minute video to introduce the team and the product, service, or ask. Platforms like Kiva Zip don’t allow for a video, so be sure that you can upload one before you spend time and energy putting one together.
- Allow for prep time for your campaign. For most crowdfunding platforms, you’ll need 30-60 days to prep. For equity crowdfunding, you’ll want to give yourself 60-90 days because you’ll want to research some of the legal pieces and make sure you’re in compliance with them.
- Choose your platform wisely. Each type of crowdfunding platform has different target markets. Make sure you research each platform and try to select the best fit for your company and campaign.
- Be realistic. How much do you actually need? How much would you like? How much will the platform take in fees? How much will you need to pay in taxes?
- Build a trusted team to back you. Because crowdfunding is so social, the most successful campaigns tend to be the ones with a strong support team.
Marketing tips for crowdfunding:
- Create a segment list of who in your current network you know will donate to your campaign and how much you can comfortably ask of them. Then reach out to these people directly, preferably with a phone call.
- Along the same lines, make a list of people you can count on to help spread the word and help expand the network you’re reaching.
- Timing can be crucial. During the holiday seasons, money is usually earmarked for other expenses. Think about this and other factors when deciding when would be the best time to launch your crowdfunding campaign.
- Network while your campaign is running. Go to appropriate events where you can talk about your campaign and keep your ears open for offers of help, even if it’s not financial.
Crowdfunding can be a great way to help you get the money you need to help grow your business. One thing that all of the panelists echoed in their own way is that you should take your campaign seriously. But they also mentioned that launching a crowdfunding is an opportunity to have fun and learn. A couple final important things to remember when launching a crowdfunding campaign are to take it seriously, but have fun and make the best of the opportunity.