CHAPTER ELEVEN: Part C – Okay, so you have finally decided to raise money for your business through crowdfunding. Well, below is a detailed step by step guide to setting up and running a successful crowdfunding campaign online.
The success rate for raising funds successfully through crowdfunding is very slim. Why? The reason is because it takes a lot of time, effort, and planning to run a successful crowdfunding campaign. Without wasting your time, below are the steps involved:
A Step by Step Guide to Running a Successful Crowdfunding Campaign
1. The first step to starting the crowdfunding process is to decide how much you are looking to raise and how you will use the money. Also, you must determine the number of days within which you can raise the amount you need.
2. The next step is to decide when you want to launch the project. You can set anytime you want, once you are ready. However, you need to think about anything that must be completed before your crowdfunding campaign can begin, and work this into the expected timescale.
3. It is your duty to inform your team members about the campaign, so they can start getting involved and spreading the word. Campaigns(whether marketing, sales, fundraising, etc) are more successful when planned and executed alongside a team. You must let your team know the fund raising goal, the deadline involved and what is expected of them to make the campaign a success.
4. The fourth step is to package your sales pitch and emphasize your unique selling points. Your goal here is to convince people to part with their money to support your business project. So, let them know how much you need and where that money goes. You must make your pitch human, and most importantly; “Emotional.”
5. To increase the success chances of your fundraising campaign, you need to arrange with key influential contacts and ask if they will support and share the project. This is key to driving the project early, and ensuring support prior to the project. If you can guarantee as many as possible supporters before the campaign starts, you have better chances of success.
6. Another important step to take is to build social media following, and set up a blog if possible; long before the launch of the campaign. This is one of the main factors that will influence potential contributors. Facebook and Twitter should be your main target social media platforms.
7. This is a step you will need to sit down and think through. To ensure maximum support for your project, you will need to create exciting rewards so unique that no one can get it unless they contribute to your business. Above all, offer valuable rewards.
8. After you have executed step one to seven, you can then proceed to register with an online crowdfunding service (such as Kickstarter or Seedrs) and start posting your campaign. You will need to add a short description that hooks people and develops their interest in your business. You will also need to add a long description that explains what your offer is all about and why people should support your business.
In addition, you will need to add links to your website, blog, and social media channels as well as pictures and videos that will illustrate your business concept more clearly. The information required varies among crowdfunding services. But you should try to fill every field with the most appropriate information.
Note: You may decide to launch your campaign yourself without using a crowdfunding platform, though this is much more difficult. In this case, you will need extra time, money, and technical know-how.
9. Launch your campaign—preferably with a launch party—and announce the launch on social media, your blog, other blogs, and other communication channels you can access.
10. You must keep spreading word about your campaign as much as you can. You can never do this enough. Even if all your followers don’t contribute their money, you will still have them as ambassadors.
Three Factors that Make a Successful Crowdfunding Campaign:
- The size of the audience and how well they engage with your campaign and show interest in it
- Your business idea and how promising it is
- The value and uniqueness of your rewards
Five Additional Tips for a Successful Crowdfunding Campaign
a. You must bear in mind that crowdfunding websites charge a percentage commission on the funds you realize. You may want to add this to your target.
b. You must make sure your reward links directly to your business and appeals to the widest possible audience.
c. Openness is key. People will ask you questions. Doing business online is all about transparency, so you need to be ready for such an active process.
d. If possible, go for a longer crowdfunding period. The longer your campaign takes, the farther word would spread about your business.
e. Before staging your campaign, it is important consult experts, previous successful fundraisers and resources to learn more about the intricacies of crowdfunding as well as how to make it work.
A Case Study of a Company that Successfully Raised Capital through Crowdfunding
Owned by Eric Migicovsky, Pebble started under the brand name inPulse. As inPulse, they had raised venture capital to run their business. However, after the change of brand name to Pebble, the company failed to attract traditional investors, a development which forced them to adopt crowdfunding as a financing option in April 2012.
On April 11 2012, Pebble Technology launched their crowdfunding campaign on Kickstarter.com, with an initial fundraising target of $100,000. The promise to contributors was that they would each receive a Pebble watch when the product became available. Each contributor gave $115 ($99 for the first 200 contributors), effectively pre-ordering the $150 Pebble watch at a discounted price.
Within just 2 hours of going live, the campaign had met the $100,000 goal, and within 6 days, it had become the most funded crowdfunding campaign in the history of Kickstarter, raising over $4.7million within 30days of the campaign. Pebble’s crowdfunding campaign closed on May 18, 2012 with $10,266,844 pledged by 68,928 people.
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