Crowdfunding can be a brilliant alternative to getting a loan to fund the development of a project.
(In fact, we’re crowdfunding for our upcoming film Reaching Distance now!)
By creating a campaign, engaging your customers and offering incentives for donations, you could raise enough capital to realize your dreams and get that big idea off the ground. But…Does crowdfunding really work?
As always, there are two sides to the crowdfunding coin.
- Your campaign can make or break your crowdfunding success
- You must provide exciting rewards and incentives to encourage donations
- Without strong existing community support to promote your campaign, success is unrealistic
- It’s not a one-size fits solution – B2Bs, complex products/services that are or not easy to comprehend or are lengthy, and very large projects that require over $100K funding will find it difficult to reach targets through crowdfunding
There is a fine line between success and failure in crowdfunding.
But, on the plus side:
- It’s a great way to raise funds, it’s social, and no banks are involved
- It helps you build relationships, connect with your existing customers, who, through crowdfunding, become your investors
- No sharing! You gain investors, but you still own 100% of your company
- Invaluable opportunity to learn from customers and get feedback while your project is still in development stage
- It’s low risk and low commitment as you only risk the time and effort you have put into the campaign
- It offers a unique channel to market your product/service
If you have a game-changing idea you’re passionate about and you can develop a campaign that really speaks to the community, crowdfunding is the way forward for you!
We need only to look in our own backyard for success stories – in Byron Bay, NSW, a father and son duo has raised a cool $12 million to manufacture beehives on Indiegogo. That’s $12 million for beehives. Aiming to source $70K to get their Flow Hive design that offers honey on tap off the prototype table and onto a production line, Stuart and Cedar Anderson raised $1 million in the first three hours.
An existing community of supporters along with a groundbreaking product meant that their dreams became a reality within hours.
Reckon you could top the beehives? Here are some pointers on how to get started.
Preparation is key
To succeed in crowdfunding world, you not only need a great idea, but also a sensational campaign and an existing community who support you! Your campaign needs to tell your story with passion and it needs to have an instant impact on your prospective donors. It’s your project so make it personal, let your audience know what it means to you and why.
Make sure you have a community who support you and your project and will push your campaign through their channels as well. Without their support, raising enough funds will prove difficult.
Create a great video
You have a few minutes of your audience’s attention at best, so make sure your video has punch. Get to the point, but don’t rush. Show why your product/service is different, how it can help your customers, and why you are passionate about it. Use emotive language, scenes and music to get the feel of your project across.
Without incentives, you’re not going to get far at crowdfunding. Projects that offer exiting rewards have a much better chance at taking off and succeeding. Great incentives could include:
- The product/service itself
- Donor involvement in the development of project
- Crediting your donors via social channels or in product itself
- Project related merchandise
Make sure you have different rewards for the various tiers of donations, so that you really reward your major backers.
There are hundreds of crowdfunding websites out there, so it’s important to choose the right platform for your project. Things to consider when choosing a crowdfunding site:
- Option of partial funding – having the option to take anything you have raised, or having reach your set target to get any money is the most important thing to consider when choosing a platform.
- Fees and charges
- Specialisation – some crowdfunding sites have a specialised focus: charity, eco-friendly or environmental projects, entrepreneurial projects etc.
Crowdfunding relies heavily on the word-of-mouth nature of social media. Existing followers and customers on various social media platforms can spread the word about your campaign. Make sure you don’t neglect your social media channels, listen to feedback and keep people up to date with the progress of your campaign and project.
Failing is OK
Most crowdfunding platforms are great avenues to test the market. Once you put your idea out there, you will quickly see how well the masses respond to it. It might get not response, in which case it’s not something that would succeed regardless of funding. You might get a mediocre response or you might end up like our beekeeper boys and exceed expectations! The key is to communicate with your community and find out if and how you could improve or alter your idea to give it mass appeal.
Have you tried your hand at crowdfunding before? How did it go? We’d love to hear your experiences! Share your story by commenting below.