Today, entrepreneurs have more options than ever before when it comes to crowdfunding, an excellent alternative to venture capital, traditional loans, and other popular forms of startup financing. Through crowdfunding, individuals can raise a great deal of money without sacrificing significant equity in the company or facing large repayment bills. At the same time, not all crowdfunding campaigns are successful, and some platforms do not give entrepreneurs any money at all unless their fundraising goals are met. For this reason, entrepreneurs should not take crowdfunding campaigns lightly. Below are some crucial tips for organizing a successful campaign.
- Create a network before you crowdfund.
While some campaigns do create buzz among the general crowd, the majority of money will come from people already in the entrepreneur’s network. Individuals within a professional network or perhaps one degree away from the entrepreneur will pay the most attention, so it makes sense that a larger network will generate more buzz about the project. The most successful entrepreneurs tend to take a number of different opportunities to speak before the community and expand their networks before launching the campaign. Whenever these individuals are at a networking event, they should be sure to have several different ways of connecting, whether through social media, e-mail lists, or other options.
- Always put emphasis on the “why” of a project.
People love a good story, so entrepreneurs should focus on pulling potential investors into the story through an engaging narrative. These narratives answer a lot of questions that investors will have, such as why an entrepreneur is interested in the problem to begin with and what qualifications make that individual particularly capable of solving it. Passion is appealing, and investors want to sense that from entrepreneurs. This passion is what pulls them in and ultimately sells them on the idea. As Simon Sinek, author of Start with Why, says, people buy into why people do something more than what they actually do. Passion points to continued success and dedication to the venture.
- Think carefully about incentives.
Typically, people get rewards for pledging money to a project. When the project is a product, the usual reward is a copy of that product when it hits the market, assuming that the investment is large enough. When this is not possible, entrepreneurs need to become more creative with the rewards that they offer. Research has shown that the most successful campaigns shun the small, meaningless rewards and instead focus on giving meaningful gifts in return for sizeable investments. In this scenario, entrepreneurs need to get fewer investments to reach their goal. They should also consider using time-limited rewards to encourage early pledges or even multiple pledges.
- Implement interesting media that creates a buzz.
Today’s consumers want multimedia content rather than just text. Many of the most successful campaigns rely on short videos to get their message across, as film is a powerful storytelling tool. Through a video, entrepreneurs can quickly tell their story and give a comprehensive look at the problem that the project is trying to address. Entrepreneurs may even want to consider stirring up some controversy with their media. As the old adage goes, no press is bad press. If the video creates some controversy on social media, it has a much greater chance of going viral and roping in people outside of an entrepreneur’s immediate network.
- Set the stage for immediate momentum.
If a campaign launches and doesn’t get any pledges within the first few days, the chances of things turning around are honestly rather low. Typically, campaigns get the most investors in the first couple of days—and more pledges generate more attention. For this reason, it is wise to “prime the pump” by connecting to people who have already agreed to support the project, whether they are business partners, family members, friends, or professional contacts. These individuals should know exactly when the campaign will go live so that they can show their support as quickly as possible. This immediate surge creates exciting momentum that pulls other people into the project.
- Try a wide range of marketing approaches.
When it comes to marketing, no one-size-fits-all approach exists. Entrepreneurs may want to spend some time looking at similar campaigns and what made them successful, but ultimately, individuals need to be willing to experiment. Marketing a crowdfunding campaign should be looked at as a full-time job, considering the time and resources that it requires. Some avenues that individuals may want to explore include Facebook ads, Google AdWords, or publications in professional forums, such as industry newsletters. They can also opt to publish articles on Forbes, LinkedIn, or other key websites. Yet another strategy is targeted e-mailing. Individuals need to think about their project and how they can most effectively appeal to the people most likely to support it.
- Spend some time with analytics.
Some entrepreneurs will find themselves with tens of thousands of followers but relatively few backers. Tracking the numbers is key for seeing how new marketing initiatives influence conversions to pledges. By paying attention to analytics, individuals can see exactly what does and does not work to make the campaign as successful as possible. This information can also prove extremely beneficial if the entrepreneur needs to launch another campaign in the future. Kickstarter allows users to access native analytics, and both Twitter and Facebook ads have extensive analytics tools.