Crowdfunding and the Rules for Success
July 20th, 2011
The concept of raising funds through a collective effort is definitely not a new one. It’s the model from which charities work and year after year politicians have used this format successfully to fund their campaigns. Even in the late 1800’s the Statue of Liberty became a reality thanks to the combined fund-raising efforts of the French-American Union and Joseph Pulitzer, who touted the statue’s importance, and promised recognition in his newspaper in exchange for contributions. However, in the advent of the social media age today, raising funds through collective efforts has moved on line and is taking on a decidedly new and popular shape, referred to as “crowdfunding”.
How does crowdfunding work? Crowdfunding sites register fund-seekers wishing to raise a pre-determined dollar amount, large or small, for an array of endeavors from creative ventures such as films, books, musical recordings and innovative technological gadgets, to small business start-ups and charities. Some sites are more homogenous in their focus, dedicating themselves to one genre, and yet others help participants raise money for a variety of personal wants or needs. Nothing, it seems, is out of bounds. Mini fund raising campaigns are then set up on line for the individual “projects” and patrons are offered tangible rewards in exchange for a financial boost, with the host site receiving a percentage of the monies raised.
How does one mount a successful campaign? Along with this computer age fund raising format, a few tricks of the trade have developed. After viewing numerous spots on YouTube promising the best “tips” to run a successful crowdfunding campaign and reading several articles offering the same, I walked away with the loud and clear message that these are not simply tips, as in suggestions, but rather hard fast rules for success. We present them as follows:
Promote! This is your number one priority and cannot be stressed enough! Once a campaign is up and hosted on a site, it does not, I repeat, it does not automatically run itself. The key to the success of one’s campaign is a high-level of unabashed self-promotion to the people within one’s inner circles, accompanied by the task of expanding upon this base. It’s called “leveraging the crowd”. Your computer is your best friend here, after all that’s the new denominator we’re working with. Use social media websites such as facebook and twitter consistently to create a buzz and keep the ball of excitement in the air. Reach out to your “social network”, in this case, your family, friends, business contacts, teachers, acquaintances, members of your local community, and any other contacts you may gain through these. Your “social network” becomes your capital. They are funding your project.
Engage your supporters! This should be done in two ways. First, clever and compelling text is good especially when accompanied by cool photos…but a video!!! A creative video which clearly states your project goals and your intentions for the monies raised is the ultimate hook of the fundraising campaign. Statistics show that projects accompanied by videos outperform those without videos by 125%! Secondly, who isn’t intrigued by the promise of a desirable reward? People love special treatment, so the best rewards offer exclusivity. Include information about the exciting rewards you are offering to your patrons that they simply cannot get anywhere else. The higher the pledge, the more appealing the reward should be. This provides potential contributors with easy-to-choose from options (kind of like a value meal!) and encourages them to go for the gold!
Communicate! Do not fail to personalize your mission via direct emails. Tell your project story and speak from the heart. Cutting and pasting from dry business plans or speaking about your project in the third person creates distance between you and your supporters, while a sincere, personal message is rarely overlooked. Address questions and comments posted by visitors to your project site. This is another chance to clarify information, re-state your case, and plead for a call to action! And keep interest alive by updating your crowd on your goal status. Interacting with your audience can give you the opportunity to sway a wavering soul in your favor as well as reach new fans. Remember this is a “word of mouth” venture! So, don’t forget to also visit blogs related to your project theme. Leave your calling card in the form or your own comments and links back to your project site.
Avoid funding fatigue! Set a realistic time limit for achieving your financial goal. Too short and you risk missing out on interested parties. Too long and you will wear out your welcome. A longer time limit does not generally translate into more money, but instead wasted time and energy on your part.
A final golden rule…Pre-sell your project! In the end, no matter how you look at it, this is a business undertaking, so treat it like one. Create excitement for your project even before you are up and running. This is one of the best ways to maximize your time on the crowdfunding site. Your crowd will be primed and ready to join you on your journey, and hopefully bring some of their friends along for the ride.
Now you know about crowfunding and the secrets to mounting a successful campaign. Keeping the “tips” in mind, crowdfunding can be an exciting and optimal platform to fund a dream, but its ultimate success will lie in the creativity, innovation and effort you are willing to pour into harnessing the power of the crowd!
- Guest post by Tanya St. John