Launching crowdfunding campaigns prematurely continues to be the single biggest reason why projects fail. Many entrepreneurs skip important steps to crowdfunding success as they are anxious to get started and to raise that much-needed capital.
Crowdfunding success is a result of preparation and there are no short cuts. I cannot say this often enough: Success is decided way before a campaign is launched and nothing radical can be changed or improved after clicking that launch button.
There are many things to remember and to make your life a little easier, I have put together a list of the most important items you need to cross off your list before you are ready to launch your rewards crowdfunding campaign. Follow the steps below so you have the best chances to see your project succeed.
1. Run a Pre-Campaign
One of the best things you can do right away, before working on completing the rest of this list, is to launch a pre-campaign page on Thunderclap.it or LaunchRock. Both services allow you to quickly and easily create a page that announces your actual crowdfunding campaign and that is designed to let people subscribe to your email list and pledge to share your campaign on social media when it launches. The typical duration of a pre-campaign is 60-90 days.
2. Legal & Taxes
Unless you are already incorporated, make sure to set up an LLC for your crowdfunding project and get a business bank account. Revenue from rewards campaigns and pre-sales of goods are taxable income so talk to your CPA. LLCs are rather simple and inexpensive to set up on sites like LegalZoom.
3. Social Media
Another thing you cannot start soon enough is to bolster is your social media presence. No matter how many or few followers you have, you’ll likely need more to reach your goal and this takes time. Tools like Twitter Marketing make it very easy to gain a highly targeted and engaged following on Twitter. This will get you between 1000-3000 new followers per month and allow you to promote your pre-campaign as your audience grows. How do you know if your social media following is strong enough to reach your crowdfunding goal? Social Capital Gauge is a big data powered tool that can tell you based on over 600,000 analyzed Kickstarter and Indiegogo campaigns. Building an audience on social media takes time and should be started 3-6 months before launching your campaign depending on your crowdfunding type, funding goal and current follower count.
4. Research and Picking the Right Platform
Depending on the kind of crowdfunding campaign you want to run, you have a plethora of platforms at your disposal. Don’t assume that the well-known platforms like Kickstarter and Indiegogo automatically are your best bet. These platforms are very cookie cutter, and there is a lot of competition for eyeballs in the form of other campaigns. For film & video projects you could check out Tubestart or to raise up to $50m in a so-called Mini-IPO via Regulation A+ there is Bankroll.Ventures. Generally, smaller platforms are much more willing to go out of their way to support projects and offer niche-specific features that are lacking on the mainstream platforms.
5. Set Funding Goal
Much has been written about setting the right funding goal and yet it remains somewhat of a crystal ball science. Because every campaign and every situation is unique, you have to do your own calculations. In the most basic scenario your funding goal needs to include these things:
Cost of completing the project
+ Cost of fulfilling rewards
+ PR & marketing
+ Platform & processing fees: ~10%
+ 30% cushion
= Minimum Funding Goal
Remember that only about 2% of all crowdfunding campaigns raise more than $100k and setting a too ambitious goal can deter backers. It’s better to reach your goal in the first week and have three weeks left to reach stretch goals and riding the wave of being successfully funded. A much more elaborate approach to setting the right rewards price point can be found in the free ebook titled “How to set Crowdfunding Goals.”
6. Set Reward Tiers
It makes sense to research the most successful campaigns similar to yours and see which rewards did better than others. There’s also data on what price points work best, in particular, Kickstarter and Indiegogo categories. The best rewards are those you can digitally fulfill and that have no risk of being delayed. According to Indiegogo, the most popular reward price point is $25, on Krowdster you can see a statistical comparison of Kickstarter, Indiegogo, Tubestart, Rockethub and Pozible rewards pricing tiers, filtered by categories.
7. Craft Your Story
Your story is the written description of your crowdfunding campaign that will be visible on your campaign page and is one of the most important elements of your campaign. In business plan terms this is your “executive summary” and should include what your project is about, what you need the money for and what you offer in return, as well as anything else that potential backers may need to know to be able to decide whether or not to support your campaign. Make your story at least 400-600 words and include images or renderings of prototypes as well as video to drive the message home. Have your story reviewed by complete strangers and optimize it based on their feedback until your messaging is clear and concise.
8. Make a Video
The campaign pitch video is without a doubt the most important marketing tool you have available. A well-made video and I don’t mean thousands of dollars spent on superior sound design and animations, but a video that tells your story in an engaging and genuine way is what you want. Keep your pitch under 3-4 minutes and say the most exciting information right at the beginning to keep people watching the rest of your video. From a production standpoint, it is not important aim for a Hollywood grade production value. People know that you are strapped for cash as after all you are crowdfunding. On the contrary, spending too much time on a video may make you come across as having to make up for lack of substance with putting on a cute show. Simply don’t insult your viewers with bad lighting and sound and you’ll be okay.
9. Secure the First 30%
This is arguably the hardest thing to accomplish but also an important constant in most successful campaigns across all platforms and verticals. Let’s circle back to #5 of this list and remember the challenge of setting the right funding goal. Let’s assume that your minimum funding goal is $50,000 which means that you need to secure $15,000 (30%) from partners, friends, and family who will make their pledge as soon as your campaign goes live to give you that initial push your campaign needs to stand a chance of going viral and attracting pledges from strangers.
10. Prepare PR & Media Outreach
Media outlets, journalists, and bloggers play a pivotal role in the crowdfunding ecosystem, and it is important to understand that simply running a crowdfunding campaign is no longer newsworthy. To get coverage for your project, it is crucial to have followed all the steps above and to build media lists of highly targeted journalists and bloggers who have covered topics in your niche. Influencer Marketing is a tool to quickly identify influencers, journalists and bloggers in any vertical and connect with them on social media. You also need to build lists of media outlets and news sites that publish content in your niche that went viral. You also need a well-written press release that you can share with the media. Here’s a blog post on how to write the perfect press release for your crowdfunding campaign.