Crowdfunding Best Practices

Crowdfunding Best Practices from The Startup Garage
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The execution of a crowdfunding campaign is challenging and time-consuming, but can be worth the effort. About 43% of Kickstarter campaigns meet their funding goals, and Indiegogo has a 20% campaign success rate. Whether you are going to launch a donation-based or equity-based crowdfunding initiative, here are some pointers on how to create an outstanding campaign:

The Video

One of the most important features of a crowdfunding campaign is the video. A good video will connect emotionally with the target audience, explain the goal, illustrate the benefits to the investor, and have a call to action. Chances are that an investor may only watch this video and not read any copy about the project,so it must be persuasive enough on its own to pique interest in your project.

Campaign Time Frame

Platforms like Kickstarter allow people to set a time frame from 1 to 60 days for projects to be funded. When choosing a funding duration it is important to consider the business goals and fan base. Businesses with a dedicated following and high awareness should choose a short funding duration to hit the target, so that they can push the campaign and keep up momentum. Yet if a business wants to create more awareness, build understanding of its brand and develop a fan base, then a longer funding duration is appropriate. No matter the duration of the campaign, it is key to maintain a sense of urgency.

Incentives for Backers

In the donation-based crowdfunding model, businesses can choose donation price points and incentives for backers such as early releases and other rewards. Ideally a campaign will have six well-spaced tiers in which to donate, starting at $1. If you have a physical product then it should be featured as a reward, but with software, for example, early access should be granted. Exclusive personalized rewards should be given out at the highest tier. In an equity-based crowdfunding model, where individuals can financially invest in the business, annual dividends should be distributed.

The Fact Section

You want your investors to have a good sense of your business, but often times, less is more. Do not overwhelm potential funders with too much information about your business. Rather, if you get repeat questions throughout the campaign you can go back and add to the frequently asked questions section later.

Social Media

Social media is a crowdfunder’s best friend. In the planning stages, identify your target audience, learn how to best reach them, and create a plan to engage them before, during and after the campaign. Update Facebook, Instagram, Twitter, and Tumblr with pictures and short snippets about your campaign. Use your friends, family and their extended networks. Do not hesitate to ask people for a retweet.

The Media

Drive traffic to your campaign by harnessing the power of the media. Submit your awesome campaign story to places where your target audience lingers. For example, gaining press from sites like Mashable or Tech Crunch would be perfect for new technologies. Reach out to television stations and newspapers to win stories that will promote your brand.

Be Open to Feedback

If the campaign is not going as planned, reach out to supporters and ask them for feedback. Take constructive criticism into consideration, make changes as necessary, and thank your backers for the suggestions.

Crowdfunding is challenging, but when a promising business conveys how it will fill a need in the market and will benefit the investor, it has a higher chance of being backed. Plan ahead, remember to breathe, work hard, and have fun!

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About Tyler Jensen

I work with entrepreneurs who are looking to attract investment and get out of the "Garage". I am passionate about helping entrepreneurs start companies that matter. I helped launch over 100 Companies, Non-Profits and Social Enterprises. I consider myself a serial entrepreneur, startup coach & trusted advisor. * Launching New Companies (For Profit, Non-Profit and Social Enterprise) * Expert Business Plan Writer * Extensive Network of Business Relationships focused on Launch & Rapid Growth of New Companies * Startup, Growth, Marketing, Technology, Web, Business Systems * Trusted Advisor to CEO’s & Entrepreneurs * Capital Raising Strategy Development * Startup Team Development The first company I started and sold is VAVi Sport & Social Club which grew to over 25,000 members in six years, was recognized as San Diego’s 30th fastest growing private company in 2006 by the San Diego Business Journal and 32nd fastest in 2007, and sold for over 25X the capital investment.