Raise Money Like a Pro: 6 Ultimate Tips on Crowdfunding
Many startups prefer not to look for investors, but to raise money via crowdfunding platforms. And 55% of them manage to raise up to 10 thousand dollars at Kickstarter, which is not bad. But only around 3% of startups collect over 100 thousand dollars. What’s the secret? The best projects have a wise marketing strategy behind, and we are here to tell you everything about it.
1. Choose the Platform
Crowdfunding is not something absolutely new, so there are more than enough platforms where you can raise some money. These sites have the same mission, but this doesn’t mean that all of them are just clones of each other. No, you will have to make a choice, and it is important to make it wisely, as the right platform can help you to meet your target audience.
We won’t describe now every single platform available on the Internet — this will take several extra pages, and we don’t want our article to make you feel bored! Instead, we have prepared a list of the most important factors you need to pay attention to when choosing a crowdfunding platform.
• The platform’s popularity
Everything is simple — the more backers the platform has, the higher your chances of success are. Kickstarter is one of the most popular websites of this kind, and in total somewhere around 15 million backers have taken part in funding projects by 2018. Moreover, according to the data provided by Kickstarter itself, over 270 million dollars were pledged to the projects in July 2012. In April 2018, this number reached more than 3.6 billion dollars.
• The money policy
In most cases, when you launch a crowdfunding campaign, you specify the amount you need to collect and the number of days required to reach this goal. Then, if the funding goal is not reached within this time, you will get nothing. Kickstarter is one of the websites which follow this policy. In turn, Indiegogo offers more options. Apart from following the All-Or-Nothing scenario, you can still get funds even in case your goal wasn’t reached. You can even continue raising money after the goal was met!
• The frequency of donations
Usually, crowdfunding platforms offer only one-time donations. That’s normal, but there is still an alternative for those who are looking for ongoing support. For instance, at Patreon you can get regular monthly payments.
• Project support
While some websites are all about raising money, certain platforms offer professional help at any stage of your project. For instance, guys from Indiegogo are ready to assist you not only with raising funds, but also with generating early sales, licensing, and other important things.
• The platform’s specialty
Don’t choose narrowly targeted platforms as the only crowdfunding source — it is better to choose those ones which cover projects of different kinds. While Kickstarter and Indiegogo are pretty versatile and helpful, such websites as Appsplit usually leave much to be desired. As you have already guessed, Appsplit is devoted to crowdfunding for applications. This may sound promising, but we explored the campaigns described on the site and found out that most of them were not successful. You can still try to use Appsplit, but only as an additional crowdfunding source.
2. Make a Video
According to the data provided by Small Business Trends, using product videos can increase the purchases by 144%. So why not to equip your idea description with a nice and catchy video? Here are some recommendations on creating a perfect video for a crowdfunding platform.
- Don’t make it too long. Most of your potential backers won’t watch a video which is, let’s say, 7-10 minutes long. They will simply leave your product page, and, possibly, invest some money in your competitor’s project. We recommend you to make a 1-3 minute video. You will have enough time to talk about all the important things, while the viewers won’t really get bored.
- Cover all the important things. Explain who you are, what is your project about, and why you need support, promise some cool rewards, and thank the viewers!
- Be law-abiding. Never violate the copyright law — this will spoil your reputation at the very beginning and, probably, even lead to some legal problems!
And, obviously, don’t be afraid to be creative — your video has to be memorable! If you need some inspiration, take a look at the video for the Exploding Kittens project. That’s not an app — Exploding Kittens are a card game. However, the video is really well-done, while the project itself is considered to be one of the most successful Kickstarter campaigns ever — it raised over $8.7$ million! And just to let you know — the target amount was only 10 thousand dollars.
3. Tell the Details
Having a great idea is amazing, but it is virtually impossible to raise enough funds when you have nothing else to offer. Sponsors prefer to invest money in those projects which have a detailed roadmap. So, tell your potential backers what you are planning to do, and don’t forget to inform them about your progress.
For instance, the description of the Fluent Forever project includes plenty of important pieces of information. You can find there the guidelines on how the app works, the list of achieved and planned goals, etc. The project has raised almost 600 thousand dollars, while the initial goal was 250 thousand. By the way, their description looks really great, as it contains not only text, but also images and infographics.
And here is an opposite example — Motivation Via People App Development. The authors of this project made a video and offered special merchandise in return (we will talk more about rewards in the next paragraph), but within 1 month the campaign has raised only 1 dollar, while the goal is 2 thousand. Why? Well, just take another look at the Fluent Forever campaign. They always stay in touch with their backers and tell all the details about their project. Motivation Via People is all about motivation, but the project’s page doesn’t motivate potential backers to invest money. (We know, there are too many words related to motivation in one sentence, but still…)
So, follow the Fluent Forever way. Talk to the people, and share your project’s evolution with them. The same rule applies to bad news. If something goes wrong, don’t hide this information. Be honest with your backers, and they will appreciate this.
4. Offer Something In Return
To increase the backers’ motivation, offer a reward in return. But keep in mind that this reward must have something in common with your project — don’t offer a funny notepad in case you are trying to raise funds on the development of a really serious app. Diverse pieces of clothing, such as t-shirts, are also not the best thing to offer even in case they have a print related to the campaign. The first reason is that a t-shirt is a thing any user can buy without investing funds in a startup. Secondly, we guess your brand is not that attractive and world-famous yet, so most people wouldn’t want a t-shirt with your logo.
So, what to offer? If your project includes some physical products (for instance, some smart home gadgets), you can go for free shipping. For apps, there are a lot of options to choose from. Here are some of them:
- Early access to the beta version — this reward will also help you to amass a certain user base even before your app will be officially launched
- The ability to suggest features and vote for them
- An opportunity to get an official version of the app for free (in case you plan to make it paid)
- A free premium account (in case your app will have several types of accounts)
- Some special bonuses. For instance, authors of BUZZ’D let certain backers create and name their custom drinks after the app is released (though eventually it did not work out)
We also recommend you to prepare several sets of rewards depending on the donated amount. Again, check the Fluent Forever page — this project has a really cool rewards system! And please, don’t offer rewards only to those backers who donate a more or less high amount. Even if a person donates 1 dollar, give something in return. At least, personalized emails with information about all the updates.
5. Create a Website
Your campaign page should be as helpful and informative as possible, but it would also be great to create a website devoted to the project. Yes, a website, not only a Facebook page or a Twitter account! That’s just a matter of credibility. Anyone can create an account on a social network, but developing a website requires some efforts, time, skills, and creativity.
Sure, your project can have pages at all the existing social networks, but we still recommend you to start with an official website or, at least, with a nice landing page. It will assure the potential backers that you and your team take the project seriously, and, probably, even motivate them to make a donation. Besides, most Kickstarter startups have no website, and this is one more reason to create one for your own campaign. Make your startup different from the others!
6. Find Backers Before Launching the Campaign
Ask your friends and family members to back your campaign on its launch day — this trick will help you to assure the next backers that your project is worth their trust and money. If you doubt this, just imagine yourself being a backer who tries to choose between two similar projects. The first one has collected nothing within, let’s say, first three days, while the second one was backed by a few dozen people. Which one would you choose? We bet you would go for the second project, as it is more likely to succeed. Apart from this, before starting raising money you can gather the attention of potential sponsors with the help of the social media.
Finding supporters is not the only thing to do before the launch of your campaign. When it comes to crowdfunding, it is better to start early, as creating a website, video, and other materials requires some time. So, this is our final tip here — be an early bird and plan the campaign in advance. And, obviously, follow the previous six tips — they will help your project to succeed!