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Whether it’s a clever invention or a smart idea for a service, crowdfunding could help you net the vital cash you need to get your business off the ground. Businesses like Ouya, Oculus VR and Formlabs all famously cleaned up because they cut out the middle-man and went straight to the market for their funding - and it’s clear that if there’s a demand for what you’re selling, consumers are now willing and able to support your journey to becoming a fully-fledged company.
That doesn’t mean it’s easy. In fact, research has found that most crowdfunding campaigns fail, and nearly two-thirds of unsuccessful projects don’t even reach 20 per cent of their target. Does this mean you should forget about Kickstarting your way to success? Of course not - but it does mean you need to be smart about how you run your campaign, and be sure that crowdfunding is the right move compared to the alternatives.
Get it right and there’s no limit to what you could achieve: as London School of Business and Finance (LSBF) reported, a crowdfunding campaign recently set one British company en route to the moon!
With all this in mind, here are a few tips to give yourself the best chance of success:
Choose the right platform
Kickstarter and IndieGogo might be the most famous platforms, but you might stand a better chance of being heard with a specialist platform: TeeSpring for custom T-shirts, for example, or ArtistShare for a music project. Bear in mind too that different sites also have different funding models and take varying amounts of the final cut: this is something you’ll need to factor in when deciding how much to ask for.
Get your pitch right
To a potential backer, your funding page is the face of your business - so it’s vital to tell a great story about why you deserve their money. How you do this is up to you, but as a rule you should focus on what’s in it for them: what does a backer get by pledging? What are they contributing to and what makes it unique? Think carefully about any rewards you’re offering too - are they attractive enough and if so, are you certain you’ll be able to fulfil them all?
Start early
Don’t bank on the campaign to drum up interest by itself - it’s there to raise money, not to promote your business. You should start putting the word out at least six months before your fundraising period, and use this time to get everything prepped and ready, including a healthy list of interested parties to email on launch day. Open communications with your backers and keep them going from the lead-up until well after the campaign is over.
Don’t ask for too much
Many campaigns fail because they simply overestimate people’s willingness to pay. With all-or-nothing platforms like Kickstarter, this can be a fatal error. Ask for as little funding as you think you can manage with: after all, it’s great PR if you manage to overshoot your goal by a clear margin, which may help you attract additional funding from institutional investors in the future.
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