Crowdfunding Campaign:
10 Tips for Creating a Successful Crowdfunding Campaign
- A crowdfunding campaign is a new financing method that seeks to pre-finance a project.
- This process is usually conducted online, with Social Media and online crowdfunding platforms being the main sources of funding.
- Although crowdfunding is typically used to finance innovative products, it can be used for almost anything.
- Crowdfunding is easily accessible to everyone, unlike, for example, venture capital firms, and when it comes to limiting a crowdfunding campaign, the sky is the limit.
Inhaltsverzeichnis
- 1 Crowdfunding Campaign:
10 Tips for Creating a Successful Crowdfunding Campaign
- 1.1 What is Crowdfunding?
- 1.2 How Does a Crowdfunding Campaign Work?
- 1.3 The Benefits of a Crowdfunding Campaign
- 1.4 What Kind of Product Is Suitable for a Crowdfunding Campaign?
- 1.4.1 1. Spread Your Story
- 1.4.2 2. Set a Funding Goal
- 1.4.3 3. Promote Your Crowdfunding Campaign
- 1.4.4 4. Update Your Backers’ Newsfeed Throughout the Project
- 1.4.5 5. Deliver on Your Promise
- 1.4.6 6. Get People to Believe in Your Product
- 1.4.7 7. Production
- 1.4.8 8. Shipping and Fulfillment
- 1.4.9 9. Choosing Your Reward Tiers
- 1.4.10 10. Make Changes Based on Feedback
- 1.5 Examples of Successful Crowdfunding Campaigns
- 1.6 Conclusion
- 1.7 Further Articles
Zielgruppe |
Kreativität gefragt |
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| Innovative Produkte | Hoch | Hoch |
| Traditionelle Unternehmen | Mittel | Niedrig |
What is Crowdfunding?
Instead of receiving a large sum from a single source, as offered by a bank or a private investor, crowdfunding collects small amounts of money from a large number of people. Often, in exchange for a small investment, there is a direct reward/product, which is why many of these projects are so successful.
The concept of crowdfunding financing is not new. But in the last ten years, websites like Kickstarter, Indiegogo, and Crowdfunder have made the process of raising money online for a business, a product, or a charitable cause simple and accessible to everyone. Such a crowdfunding campaign serves as a virtual partner for entrepreneurs and funders, providing the structure and space to host your crowdfunding campaign and the ability to accept the respective funds.
How Does a Crowdfunding Campaign Work?
Crowdfunding platforms provide a place where you can set up your crowdfunding campaign, usually in exchange for a percentage of the funds raised. Funders receive different ‘rewards’ depending on the amount of money they contribute. These rewards can include exclusive promotional items, early access to the supported product, or a form of public recognition. The more money offered, the better the reward. Some crowdfunding campaigns offer equity instead of rewards, but in this guide we will focus on the latter model.
Most crowdfunding platforms require you to set a financial goal for your crowdfunding campaign as well as a timeframe in which you can achieve this goal. Typically, the process lasts between 30 and 90 days. Some platforms allow you to keep all the money raised during a crowdfunding campaign regardless of whether your goal was reached. Others, like Kickstarter, use an all-or-nothing model, returning money to backers if your crowdfunding campaign is not successful. If your campaign is successful, you are in an excellent position to build a sustainable business by leveraging the audience built through your crowdfunding campaign efforts.
The Benefits of a Crowdfunding Campaign
Crowdfunding offers several valuable advantages and is also a good way to raise initial capital.
Validating Your Ideas
The more you know about the target market for the product or business you want to introduce, the more you reduce your financial risk, and your crowdfunding campaign can be an excellent tool for conducting market research. Pre-selling your product through a crowdfunding campaign helps validate your idea by giving you a solid answer to the question ‘Will anyone buy this?’ Manufacturing your product without any indication of how it will sell could cost you a lot of time and money if it turns out that demand for your idea is lacking. Knowing that people want what you’re selling allows you to plan and scale your business with confidence.
Building a Community
A strong community before you ship your first product is an important and meaningful advantage. When done right, your crowdfunding campaign, especially when combined with social media and press coverage, can help you build an engaged audience that ideally sticks with you as your business grows.
Creating an Accessible Funding Source
Securing funding can be time-consuming and challenging for many young entrepreneurs. Unproven ideas or new business models may not resonate with conservative lenders, such as traditional banks or similar institutions. While finding private investors to support your business is an option, you usually have to give up a portion of the company’s equity in exchange for their investment.
Vorteile des Fundraising |
Nachteile des Fundraising |
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A successful crowdfunding campaign can be a major undertaking, but for many founders it can also be simpler and more rewarding than traditional methods.
What Kind of Product Is Suitable for a Crowdfunding Campaign?
- A specific product: If you look at the biggest crowdfunding success stories, you will find that most focus on funding single products, not businesses. There’s a reason for this: backers tend to support tangible things, not vague ideas. For the best chances of success, seek funding for your best product. You can build a business later after your first idea has launched.
- A targeted, niche audience: Create a product that meets a need or fills a gap, then find the market that craves it. Often, founders develop products that solve a problem in their own lives, like MindJournal did when they couldn’t find a journal tool designed for what they needed. Develop a prototype that meets those requirements.
- Strong differentiation: To generate excitement and attract backers, your product must be something that can’t be found anywhere else. Conduct your research to ensure your product is unique.
1. Spread Your Story
Let your potential backers know how your product or business idea can help them. Share who you are, what you plan to do, where the project idea came from, what your budget is, and why you’re so passionate about this specific project. This shows that you’ve thought through the idea and are enthusiastic about it, which helps establish the legitimacy and credibility of your project.
Make sure to create an attractive project header image as well as an engaging video. You need a stunning video thumbnail. Ensure the video quality is crystal clear, your story is compelling, and your product shines. Demonstrate your credibility by speaking clearly, outlining the concept and its benefits, and showing how it works. Connect emotionally with a personal story so that a potential backer can relate. Finally, talk about why the product is unique. People need to know what problem you’re solving that appeals to consumers. Here is a good example of such a video:
goHenry – a digital banking solution aimed at making kids smarter about money management than their parents, raised £4 million on Crowdcube. The project is the perfect example of a compelling story and mission.
2. Set a Funding Goal
When you launch your crowdfunding campaign on Kickstarter, note that it uses an all-or-nothing funding model. If you reach or exceed your funding goal, you keep the money. If you don’t, you get nothing. Platforms like Indiegogo operate under a slightly different model, where you can keep the funding regardless of whether you meet your goal.
At this point, it’s important to think about how much money you need to get your business up and running and how many people you know who might be willing to commit. While your campaign may attract new attention, the majority of your support will come from those you already know. Be realistic. Also remember that you cannot change your funding goal after you’ve launched the crowdfunding campaign.
The campaign timeline is another variable you set in advance. Shorter campaigns assume a level of trust. They should be long enough for you to build interest and reach your maximum potential audience, but not so long that they become background noise. Seeing that a crowdfunding campaign has only a few days left creates a sense of urgency for potential contributors and motivates them to act now rather than later.
3. Promote Your Crowdfunding Campaign
There are many different ways to get people’s attention on your crowdfunding campaign. Here are a few tips to spread the word:
- Use Social Media channels to spread the message.
- Reach out to media and bloggers to get coverage for your campaign.
- Host a live event to generate interest and engagement.
Without 100% commitment from you, it’s unlikely that your crowdfunding campaign will be successful. You must treat it like a full-time job as you work toward your campaign goals. Use all relationship and marketing channels available to you. By cleverly using various promotion channels, Black Hops Brewing reached its goal within 24 hours.
By cleverly using various promotion channels, Black Hops Brewing reached its goal within 24 hours.
4. Update Your Backers’ Newsfeed Throughout the Project
You need to keep your investors up to date as you move forward with your campaign. If you don’t share regular updates with them, you might lose their interest and fail to attract as many participants as you’d like. Crowdfunding platforms generally have built-in tools that let you update your project progress and send messages to all of your investors and backers. Take advantage of these tools and keep everyone informed.
Also be honest in your regular project updates. If things aren’t going exactly as you hoped, show that and be transparent. Supporters want to know that you can actually deliver on your project and the rewards you promised.
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5. Deliver on Your Promise
Your crowdfunding campaign isn’t over just because you’ve hit your funding goals. It’s over when you’ve fulfilled your promises to your investors. That means completing your project, delivering your perks or rewards, and ensuring you communicate with your supporters at every step. Only when fulfillment is done can you truly say you’ve had a successful crowdfunding campaign.
Remember: your backers are of the utmost importance. If you show them that you’re attentive at all times, they’re more likely to trust you and may even reach out to friends to share your crowdfunding campaign with them.
6. Get People to Believe in Your Product
At its core, the purpose of creating a new product is to solve a problem and relieve a pain point. For a crowdfunding product to be successful—and for any product to be successful—people must believe it can solve one of their problems. ‘You have to be able to communicate the product’s value if you want people to support your crowdfunding project,’ says Chalmers Brown, serial entrepreneur and co-founder of Due, an online invoicing platform. ‘If they don’t believe it works, they won’t back it.’
There’s a great video of a product that managed to raise over $13 million. The product is called Coolest Cooler, and it shows how effectively a three-minute video can present the benefits of an innovative product.
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7. Production
Backers are typically your most understanding customers because they know that funding a product via a crowdfunding campaign is not the same as buying a product off the shelf. But that doesn’t mean they have no expectations. Before you launch your campaign, you should have a solid, well-researched estimate of your production timeline. To create this estimate, consider the following:
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- How many products do you plan to produce? Making one unit is different from making 100, and making 100 is different from making 10,000.
- How long does production take at your ideal order size?
- How long will it take to receive your products from your manufacturer?
- How long does it take to fulfill the rewards for your campaign? Use a shipping calculator to estimate shipping times for various postal classes.
It’s helpful to have your manufacturing or production process completed before you start your campaign. Don’t forget to add extra buffer time to account for unforeseen delays. Your timeline will likely change over time. But a well-thought-out estimate gives backers an idea of what to expect. If delays occur, notify your backers as soon as possible and provide an updated estimate.
8. Shipping and Fulfillment
Before you launch your crowdfunding campaign and make promises to backers, confirm that your manufacturer can ship to your location, especially if they have never shipped to your country before.
Also be prepared to ship products in volume to your supporters. If 1,000 backers pre-order your product, that’s 1,000 orders you need to pack and ship. A bit of planning here can save you a lot of time and effort by creating a smooth fulfillment process from the start. Have you chosen a carrier? Do you know the postal class and postage costs? Do you have a way to print labels? Have you considered international shipping? Factor these considerations into setting and pricing your reward tiers and sharing timelines with backers.
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9. Choosing Your Reward Tiers
Freedom Journal is the perfect example of tiered differentiation in backer perks. The campaign was highly successful—7,063 backers pledged $453,803 to bring this project to life.
Choosing and pricing your reward tiers are important strategic steps in the crowdfunding process. Offer a range of rewards that entice supporters to back your project or product. If the product purchase itself is the main perk, include a few lower-priced options for people who just want to show support, and scale up to some exclusive high-end perks for backers with more money to spend. Here are some of the most common crowdfunding tiers:
Acknowledgment. Public recognition of your backers’ support is a good entry-level perk. For a $5 donation, Dominion City, a Canadian brewery that funded its bottle shop on Kickstarter, published the names of all its backers in a full-page ad in a local magazine.
Brand Affiliation: Backers often enjoy the thrill of being an early adopter. Offer perks that let them show off their participation, like branded stickers, t-shirts, or tote bags. These lower-cost perks are particularly good when your product costs are high.
Product Pre-Orders: One of the most popular perks is early or discounted access to a product. This is the best way to validate demand. If most of your crowdfunding marketing materials focus on the product benefits, you’ll see higher conversions for perks that act as presales.
Creative Collaboration: These perks give backers a role in your project or business. For example, if you’re creating a comic book, you could offer to draw a backer into one of the panels or base a character on them in exchange for a certain level of financial support.
Unique or Exclusive Experiences: Backers may be interested in perks that offer exclusive access to your brand, such as a personal consultation or an invitation to an exclusive event. These experiences will limit your working hours, so use them as higher-value perks.
Price your perks in a way that’s sustainable for your business. If you offer a discounted price for your product in exchange for support, make sure you understand the full cost of delivering that perk to a buyer, including shipping. If you offer one-on-one time, you’ll need to limit the number of that perk so it doesn’t disrupt your daily operations.
10. Make Changes Based on Feedback
One of the most important things you can do before you try to finance your product is to make sure you’ve taken the time to have people test and review your product. Getting this feedback is essential for making any necessary improvements before launching a Kickstarter campaign. You have to take consumer and backer feedback seriously. You may have a great product, but that doesn’t mean it can’t be even better with a little more work. Thanks to the feedback they received during their crowdfunding campaign, Misfit Shine launched with an optimized design preferred by backers.
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Thanks to the feedback they received during their crowdfunding campaign, Misfit Shine launched with an optimized design preferred by backers.
Examples of Successful Crowdfunding Campaigns
Many successful companies started with a crowdfunding campaign:
- GNARBOX: A multimedia management company that built a pre-launch list of 20,000 potential customers before launching its crowdfunding campaign, raising over $500,000 in 30 days.
- BodyBoss: A physical product and related digital service aiming to ‘bring the gym to you.’ It launched consecutively on multiple crowdfunding platforms, raising over half a million dollars on Kickstarter, followed by another $1.3 million on Indiegogo.
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BodyBoss managed to raise almost $2 million through their crowdfunding campaign!
- Wipebook: Two entrepreneurs had the idea for a zero-waste notebook that erases like a whiteboard, and sold the first version of their product to confirm demand before using crowdfunding to grow and build buzz. They hit their $4,000 funding goal within hours and raised over $500,000 over their 30-day campaign.
Conclusion
A crowdfunding campaign can help you get the capital you need to produce a product. But don’t lose sight of the long-term goal of building a sustainable business. Think of a crowdfunding campaign as a wedding: you want it to be spectacular, but the most important thing is what happens afterward. Once you’ve run a successful crowdfunding campaign, you have proven market demand, engaged supporters, and the funds to create a real company.
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