There’s never been a better time to ask someone else to help finance your dreams.
The crowdfunding industry ballooned to $16.2 billion last year, according to a recent report by industry research firm Massolution, and this year, Indiegogo, GoFundMe and the myriad other smaller crowdfunding websites around the world are expected to generate a stunning $34.4 billion.
But as crowdfunding grows, achieving success requires more than just a snappy new idea and an urge to hustle. There are now tons of projects, plans and causes out there competing for investor eyeballs and dollars. So how does a new campaign stand out?
Here’s a look at some highly successful crowdfunding projects and the strategies and techniques they used to achieve their goals.
1. Be well past the 'idea' stage
So, you have a million-dollar idea for an invention or a novel but need some money to build a prototype or to take a writing retreat? That’s not going to be enough.
The most successful crowdfunding campaigns are those in which the final product is already well along in the development stage. Most successful leaders have already spent a good deal of their own money creating models and first drafts, designing logos and packaging, coming up with a social network marketing campaign and mapping out a distribution model.
When you can present all these steps to potential investors on one page, it helps them imagine the product actually coming to life. That’s key, because backers are more interested in projects that have a real chance of working.
Take Pebble. By the time developer Eric Migicovsky took his plan for his smartwatch to Kickstarter, he had already spent years using venture capital money to develop prototypes and generate industry press. By the time he turned to Kickstarter, he had a fully formed plan to pitch and met his $100,000 goal within two hours. Within a week, Pebble had close to $5 million in pledges and was making headlines as the most-funded project in Kickstarter’s history.
Today, Pebble watches are in stores and going head-to-head with the new Apple Watch.
2. Videos are key
The hard reality of crowdfunding is that the majority of campaigns fail. In fact, according to Kickstarter, the biggest crowdfunding site, 13 per cent of campaigns never receive a single pledge. That’s got to hurt.
But campaigns that include a well-produced video describing the proposed idea or project tend to be 50 per cent more successful than those that don't. Videos give visitors a real look at the plan and help you to explain who you are and why the world needs this thing you want to create. Backers might be investing in your product, but they’re also investing in you so you need to sell yourself as well.
Think of the highly successful GoldieBlox crowdfunding campaign. The toy company first generated buzz with a viral video (one that ended up getting them in a heap of trouble with the Beastie Boys.)
But the actual crowdfunding was successful in part because the founder Debbie Sterling used a video to tell her own story of growing up surrounded by dolls and being unable to find cool construction toys. She pointed out that not enough girls were entering high-paying STEM professions and pitched her toys as part of the solution. “Our Girls Need Goldie,” read the GoldieBlox pitch, and investors bought in.
3. Build momentum quickly
One of the key goals of any crowdfunding campaign is building buzz early on. That’s because about 80 per cent of campaigns that attain 20 per cent of their funding goal in the first few days tend go on to meet their target, according to Kickstarter. So to build momentum, you need to already have a fanbase that knows that you’re about to launch a fundraising campaign.
That’s in part how the “Veronica Mars” movie became the most-backed film campaigns in Kickstarter’s history. Writer and creator Rob Thomas knew the TV show still had ardent fans who weren’t happy with the way the series had ended. But the studios simply weren’t interested in a film. So Thomas appealed directly to Veronica Mars fans to help him fund a movie to make the story right.
More than 90,000 responded. The project reached $1 million in pledges in five hours and eventually raised $5.7 million, leading to a movie that, while not a huge box office success, at least gave fans the coda to the Mars story they wanted.
4. Keep your fundraising goals in check
While there have been a few campaigns that have managed to raise millions of dollars, most are much more modest. In fact, the most successful crowdfunding campaigns seek less than $10,000. The more money that campaigns solicit, the less likely they are to reach their goal.
When the creators of Olivers Apparel sought funding to create a line of stylish, waterproof shorts, they set their goal at just $10,000. They met that goal in one day, eventually creating enough buzz to raise $271,000. Founder David Wolfe thinks that setting a low goal and then exceeding it impressed backers and got them noticed among crowdfunders.
Remember, there’s no need to raise all your funds with just one campaign. There can be new campaigns for each stage of your project. The developers of the upcoming video game Star Citizen, for example, have been fundraising since 2012, convincing more than 800,000 backers to pledge a staggering $82 million through several campaigns. The game is still not finished.
5. Time your campaign well
One of the biggest crowdfunding campaigns actually failed the first time.
The Coolest Cooler, a tricked-out cooler with a built-in blender, speakers, and USB charger, seemed like a genius idea. But the first time Inventor Ryan Grepper tried to drum up funds on Kickstarter, he fell short of his $125,000 goal.
Part of the problem, he later explained, was that he launched his crowdfunding campaign in November, thinking he’d appeal to football fans and holiday shoppers. But people only think about coolers during the summer, he found. “It sounds obvious now, but launching a product when backers are most likely to be receptive makes a difference,” Grepper told GeekWire.
Grepper promised his original backers he’d try again. He made a few tweaks to his cooler design, created a slicker video and launched another crowdfunding campaign in July. This time, 62,000 backers pledged more than $13 million, making the cooler the second most successful Kickstarter campaign ever, after Pebble.
6. Focus on what’s in it for them
One of the main ways crowdfunding campaigns attract backers is through incentives. Backers who pledge funds typically get anything from a free T-shirt, to a discount on their first order, to free upgrades.
Artist and musician Amanda Palmer figured out to take rewards up a notch when she went looking for money to release a new album and art book. She not only gave out a digital copy of the album with every $1 pledge, to her bigger backers, she also promised VIP tickets to her shows, private concerts, donuts and photo shoots. Palmer even offered a private dinner and portrait painting session with anyone willing to put up $10,000. Two people took her up on that offer.
The perks worked. While Palmer sought $100,000, she eventually drummed up close to $1.2 million, becoming Kickstarter’s most-funded music project.
Palmer’s success is a good example of why it’s important to create a reward scheme with many different price points so you can encourage backers to give more to get more. Can’t think of good perks to offer? Here are some ideas.
