Crowdfunding has the potential to open up the world of start-up financing to millions and fund crowdfunding campaigns around the world.
Crowd funding in 2012 reached $2.7 billion, an 81% increase from the prior year and grew to over $5.0 billion in 2013. Just a year after passage of Title II of the JOBS Act saw a total of 534 companies successfully meet their crowdfunding campaign goal for equity participation. More than $200 million in equity capital was raised, averaging a little over $400k per company and when Title III of the JOBS Act opens the door to investment to everyone, the market could boom higher.
But despite the huge growth in crowdfunding, nearly 60% of creative crowdfunding campaigns and more than 80% of equity crowdfunding campaigns miss their funding goal. Why is it that more than half of crowdfunding campaigns fail to reach their target?
Because the people running the crowdfunding campaigns are using the same rules they learned in marketing 101 instead of following crowdfunding concepts. One of the biggest mistakes crowdfunders make is using traditional fundraising ideas in the new social medium. Knowing how crowdfunding is different will help you avoid crowdfunding promotion scams out there.
Tap your Social Animal for your crowdfunding campaign
Despite the rise of social media and interconnectedness today, the internet still feels like a very impersonal experience for many people. Anonymous comments are used as a way to rant on once taboo subjects and social connections developed on sites like Facebook only rarely lead to any type of interaction.
But we are social creatures and we crave interaction with other people. Why do you suppose reality TV has become so popular, besides as a means of feeling good about your own lot in life? Because people want to feel involved in the lives of others, they want to share life experiences and be a part of a community. The sad fact is that most of us do not have much an opportunity to feel that sense of community within our hectic schedules.
Up until the crowdfunding revolution, most people’s exposure to marketing has been through commercials that have gotten so inane that we have learned to unconsciously block them out.
Put it together and you have a huge opportunity for your crowdfunding campaign. An opportunity that, sadly, goes untapped by most projects. There are 6,558 of projects seeking funding on Kickstarter and 15,974 companies on Crowdfunder right now. Data shows that most will not get funded.
Because it’s business, not personal. Projects, especially those seeking equity funding, focus so much on the numbers and the straight-forward business pitch that they forget the power of personality.
Forget what you thought you knew about the world of finance. In crowdfunding; it’s personal, not business.
You need to form an immediate bond with anyone reading your project description. In our world of fast-food and faster YouTube clips, you have very little time to reach someone before they decide to click to the next project. Pick out a couple of sentences about your project that evoke the most emotion and describe the project in results. These points should go to the top of your description before anything else and preferably in bullet points.
Ultimately, many people will want to donate or invest in your project simply because they want to be a part of your journey. That is why you need to tell your story, how you got to this point and how the project is the natural path through that story.
Relating your project as a story and making it a personal journey will go a long way to making an impact on others.
Participation is essential in your project and could be the difference between getting funded or not. Give people a good story and they will likely help out with a donation, give them a chance to be part of something bigger than themselves and they will be busting your door down to help.
- Find ways to make your project personal will go a long way to your success in crowdfunding
- Tell your story
- Find ways that make your story and your project relatable to others
- Highlight the emotions evoked in your story and your crowdfunding campaign
- Tell people what their involvement means and how they can be more than just a donation
Social media is one of the biggest parts of crowdfunding marketing. Check out other pieces to get the most bang from your crowdfunding marketing.
Evoke emotions through sight and sound in crowd funding
Most crowdfunding campaigns fall far short when it comes to appealing to our senses. Understand that people have probably read through a dozen or more campaigns before getting to yours. Believe me, the reading gets old after a while.
Use graphic images, video and audio files throughout your project request. For images, hire a professional photographer to take some shots directly related to your location or cause if it’s applicable. You can also source images on websites like Flickr and Google but you need to make sure they are free of copyright issues.
Finding images on Flickr:
- Go to the website and click Explore
- Click “The Commons” for pictures that can be used in the public domain
- Search for your keywords or pictures you want to find
Finding images on Google:
- Go to Google Images and search for a keyword
- Click “Search Tools” then “Usage Rights”
- You will want to filter for those that can be reused with or without modification depending on what you plan on doing with them
If you are posting a video, you should be in it. Few of us consider ourselves incredibly photogenic and you need to get over any fear you have of public speaking. A crowdfunding campaign is as much about selling yourself and your story as it is about selling your project. Here again, it’s good to hire someone with their own equipment and experience to manage your video creation. Even with the extra cost, you’ll probably save money by not having to buy the equipment or spend time figuring out editing software.
Yancey Strickler, cofounder of Kickstarter, reports that projects with videos have had a success rate of 54% while those without a video have only been successfully funded 39% of the time. We are sensory creatures and any way you can draw upon all five senses will help. Make a video of your project, even if it is just a brief one-minute teaser to the bigger project request.
Simple audio files of testimonials and your own appeals to supporters can really drive a crowdfunding campaign if strategically positioned around your campaign page. Beyond your own campaign page, these additional media items can be used around the web to bring attention to your project. Post videos on YouTube and your images on Flickr for extra reach.
- Reach out to supporters through images, video and audio to really distinguish your project
- Videos are a must and you should be in it, if only for a brief teaser video to drive home the important points of your crowdfunding campaign
- Make sure you use images that evoke emotion and are free of copyright license
- Use your videos, images and audio files around the web to reach more people and integrate the social experience
Taking your crowdfunding campaign beyond friends and family
As with most of the ideas here, participation starts with your own close network of friends and family. Consider hosting a dinner to highlight your project. Give a presentation, including your video and talk to everyone about the project. Chances are, if you cannot draw your closest circle into the project with your vision and passion, you will probably have a hard time doing it with total strangers.
Event planning tips:
- Write out your goals for the event. How much money do you want to raise? How many people do you want to sign up to help out?
- Make sure your event does not conflict with a holiday or another important event
- Talk to people or organizations early to line up sponsorship donations to help fund your event
- If it’s a public event, talk to the local newspapers and television to get the word out
- Build interest through Facebook, Google Hangouts and Twitter a week or two before the event
- Get local bloggers involved by writing a guest post on their site
- Have a backup plan for weather or if any service providers fail to come through
Once you’ve started registering interest in the campaign, every donor or investor needs to be contacted to ask what they do and to be interviewed on what they can bring to the project. That initial monetary commitment means they relate to your message and believe in what you’re doing. Use that association to build a relationship and drive other forms of help.
Supporters may be able to provide services within their profession or connect you to someone they know that offers services you need. They may be active in social groups and can offer an introduction. Interviewing new donors or investors will open up a lot of information on the effectiveness of your ask and may just find someone as passionate about the project as you are.
- Host a dinner or event with friends and family to talk about the project
- Expand your event, or hold another, for the general public
- Reach out personally to supporters and help them find ways to be involved in the project
Making your crowdfunding campaign personal will go a long way in drawing people to the idea and even making them more than just monetary contributors. Anyone that has run a crowdfunding campaign can tell you, it is an immense amount of work and the non-monetary help you get from supporters is just as valuable as the donations. Remember to use different forms of media in your campaign and use special events to closely connect with your biggest supporters.
Ready to start crowdfunding? Check out the Ultimate List of Crowdfunding and Fundraising Websites.