Crowdfunding has become a popular and highly accessible way for startups to raise the money they need to get off the ground. According to Fundera, crowdfunding raises $17.2 billion yearly in North America alone, and just last year there were nearly 6.5 million worldwide crowdfunding campaigns.
It can be intimidating to try and stand out among the other campaigns competing for people's attention and dollars, but you can make your startup shine with the right crowdfunding strategies.
Elements of a successful crowdfunding campaign
According to Elnaz Sarraf, CEO of ROYBI, the momentum built in the first 24 hours a crowdfunding campaign is critical to reaching your funding goal. Here's how to improve your chances of hitting that target.
An existing following
Platforms like Kickstarter and Indiegogo will often highlight projects that fulfill their goal within the first day or two, so Sarraf says some companies believe there's no need to build up their own following before they launch — but this is a mistake.
"It requires several months of preparation that entails obtaining data, building up subscribers and much more," Sarraf added.
A fully funded crowdfunding campaign has an average of 300 backers, so the more followers you already have, the greater the chance of a larger backing. In fact, Sarraf recommends aiming for at least 10,000 subscribers of your own before you launch on a crowdfunding site, so you can leverage this list of followers when you announce your campaign.
Don't have a big following yet? Start with your personal network. Reach out to extended family and friends to spread the word about your campaign, even if they opt not to back it themselves.
[Read: How to Decide Between Crowdfunding and Venture Capitalists]
Compelling, high-quality video content
According to Fundera, crowdfunding campaigns that use video raise more than 105% more than those without videos.
"You need to be ready to spend a good amount of money on producing a high-quality video because it will be the first and most effective tool for your campaign," Sarraf said.
Clear benefits
Dan Demsky, co-founder of Unbound Merino, says a great campaign should highlight the benefits of the product, rather than its features.
"Rather than telling them 'it's breathable' or 'it's made with this fabric,' we pointed to how [our apparel] will relieve aspects of their life, like allowing them to travel with less clothing," said Demsky of his company's crowdfunding campaign.
Being prepared for your launch means doing as much research as possible beforehand.
Trust
Today's consumers demand more transparency from brands. According to Demsky, this trust comes from providing a fully functioning, physical product to show supporters.
"This helps them believe it's actually created, not just some vague concept/prototype," he explained. "We wanted to prove that we were already manufacturing our product."
Tips for crowdfunding success
Here's what to do before, during and after your crowdfunding campaign to give yourself the greatest chance of overall success.
Before
- Do your research and prepare. Being prepared for your launch means doing as much research as possible beforehand. "Tap anyone with a crowdfunding experience," Demsky said. "Go through all the crowdfunding campaigns and stitch together the aspects you like from each one to create your own, [and] read everything you can on the topic!"
- Budget for paid advertising. Sarraf noted that paid advertising is the key driver for campaign success. "Don't just rely on the platform's marketing promises and their audience," he added. "Be prepared to spend at least 25% of any amount you want to raise on paid advertising during launch."
[Read: Everything You Need to Know Before You Start Crowdfunding]
During
- Get personal. Demsky credits the success of Unbound Merino's campaign to getting personal with his audience. "To ensure we got the momentum, we created custom videos [for friends and family] talking about what we were doing and how we needed their help," he explained. "This compelled people to respond because it was so personal, rather than a copied and pasted message." Sarraf agreed and recommended sending different messages to different audience groups to identify what works best.
- Release regular updates. It's important to be as transparent as possible with your supporters about the process and how the campaign is going. "Release updates on the campaign on a weekly basis so your supporters get excited about your progress," said Sarraf.
After
- Follow through. Make sure to fulfill any promises you made during the campaign, whether it was to all investors or individualized groups. This will build trust with your supporters and bring them back to support future projects.
- Accept feedback. While it may be difficult, accepting constructive feedback from consumers and supporters will help you in the long run. Taking into account advice and ideas from your supporters will result in better product development. "Be willing to put in the work," said Demsky.
[Read: 5 Crowdfunding Sites to Fund Your Startup]
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