Last week, I attended the inaugural Canadian Crowdfunding Summit in Toronto, Ontario, organized by the National Crowdfunding Association of Canada. It was a sold out event with all sorts of people in attendance. I think it needs to be said that before this event, I knew very little about what crowdfunding was about. Two things came to mind whenever someone mentioned crowdfunding – Kickstarter and Indiegogo. That has since changed.
After a day full of keynote speakers, panel presentations, and workshops, I can know say that I know a whole lot more about what drives successful crowdfunding campaigns.
Here are the top 10 things I learned:
1) Talk to potential customers way before starting a crowdfunding campaign.
Crowdfunding is not the right funding mechanism for all projects. Identify potential customers and try approaching them for funding first, before pursuing crowdfunding. There is no sense in trying to appeal to the masses when you are really trying to target one particular funding source.
2) Do not plan on one large campaign, plan on having multiple raises.
Having multiple campaigns allows you to build trust with your customers. It will also break down your funding targets into more achievable chunks.
3) Crowdfunding often attracts non-traditional funding groups.
Many speakers I heard from at the Summit, alluded to the traditional “boys’ club” thatnormally funds projects. People who don’t have a network that include members of this club are at a disadvantage. Crowdfunding allows people to get around this barrier by attracting non-traditional funding sources. Often this includes women and people with a low income.
4) Crowdfunding is all about having a good story.
When someone decides to back a project, they are buying into your story. If you don’t have a good story, they won’t trust you with their money. Refine your story and practice telling it. Tell it to anyone who will listen.
5) Plan your media relations and be prepared for the worst case scenario.
Think of realistic situations that could cause your project to fail. Prepare a communication strategy to use in case one of them happens. You need to know how you are going to maintain the trust of your backers and be able to respond quickly to any problems that occur.
6) Know your audience.
If you are planning a rewards-based campaign, your rewards need to appeal to your audience. Know who your target market is and create rewards that reflect your research.
7) Decide how you will spend the money before starting the campaign.
If your campaign is successful, you don’t want to waste valuable time afterwards trying to decide how you are going to spend your money. Create a plan beforehand and execute it, after you’re successful. Make sure your whole team is part of the creation of this plan.
8) The first 48 hours of a crowdfunding campaign are the most important.
I participated in one session in particular, that stressed how important it is to gain momentum in the first 48 hours of your campaign. Popular campaigns attract attention. This means telling your family, friends, and other backers exactly when you are going to launch your campaign so they can contribute as soon as possible.
9) There are no rewards to give away when crowdfunding the cure for cancer.
Equity-based crowdfunding may be more appropriate for some projects as opposed to rewards-based. Jonathan Medved, our keynote speaker, gave the example of trying to crowdfund for big data or the cure for cancer. Equity in your start-up may be the right path. Similarly, at a certain point people start asking, “Why do I only get the T-shirt?”, especially with the projects you see on sites like Kickstarter. Consider offering equity.
10) Crowdfunding takes a lot of work.
There were many example of successful campaigns given throughout the day, and all of them required hard work. It’s not just about creating a video and clicking a couple buttons in order for the money to come in. Things you need to consider are: what is your organizational structure?; what are the necessary legal considerations?; do you have a brand promise?; is there another city or country that would better suit your project?; and, the quality of your team members, among other considerations.
If you are looking for some further insight into crowdfunding, there are a lot of great resources online to help you with your campaign. Here is a starting point: http://ncfacanada.org/education/.