Crowdfunding: what works, now
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Crowdfunding: what works, now

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Crowdfunding offers so much more than just money for start-up projects. It's funds with benefits. ...

Crowdfunding offers so much more than just money for start-up projects. It's funds with benefits.

What works in raising money changes quickly, but for now. There are some fairly solid principles that hold:
What to expect; what to beware of; what costs are meaningful and some tips on fan engagement.

This is the notes-added version of a stripped-back presentation, so not perfect for using in the realworld. But hopefully handy if you're about to embark on a crowdfunding campaign of your own.

PS. good luck! And please pop on a link to your campaign if you have one about to launch. I'd love to track it.

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  • 1. Funds with Benefits* CROWDFUNDING What’s worth knowing before you dive in?
  • 2. WHY CROWDFUND? Quick ignition financing is a win, but wait, that’s not all you get ... Crowdfunding bundles up some of the most valuable components any revenue-generating venture needs to survive early contact with the real-world: LEARN FAST & SAVE: capital, labour, hope and time - the quickest way to find out if you have a MARKET or supporters. No interest, no go. TARGET + QUALIFY who your paying clients are. But also, gather your fans, they may not pay directly, but they seed the message and build momentum R&D for free: feedback and feature suggestions on your offering before you build. So you’re more likely to have a much-improved end-product. PRE-ORDERS! Gold Accelerated marketing, MEDIA EXPOSURE and public PARTICIPATION. [Maybe even the tastemaker lottery if someone deeply influential delights in your project]. it’s worth much more than the money
  • 3. ... it’s just not especially EASY money.
  • 4. WHO CARES? Unfair as it may be, ingenious ideas, unadorned (or hidden in technicalities) don’t succeed as well as those with the right context. Is it relevant; does it solve an urgent pain; for whom; how easily? Does it ensure safety; enhance social status; connect a clan of misfits? Find the backstory to help unlock why hundreds of people might care - and be moved enough to see this project materialise, with their money. Even at the micro-investor level, there’s so much fighting for their attention now. So take the time to craft a compelling case to earn their time, trust and consequently, their money. Good storytelling = getting us to care about something we didn’t care about before. make it matter - to more than you
  • 5. KNOW YOUR NUMBERS 1. Calculate (as close to) EXACTLY how much it will cost to fulfil your REWARDS. But also build in contingency costs - because, $#!* happens. 2. SHIPPING costs vary wildly dependent on final-weight (it may seem obvious, but you may get non-local orders, cater for international deliveries) 3. Perk PRODUCTION is often packed with hidden costs. Do your homework. (And add the contingency, again) 4. Account not just for the PLATFORM’s commission (4 - 15%) but also the PAYMENT gateway fees used to process the pledges (5/6%) 4.Additionally, check the holding periods before money can be released to you. 5. It’s not free money if you FAIL: Read those T’s & C’s. In most cases, you’re legally bound to fulfil perks or REFUND donors or investors if the project doesn’t work. Make sure you have a buffer of cash saved for refunds and banking/admin charges to pay it back. 6. Not everyone will institute legal action if you don’t, but reputational damage is hard to shake off online. Caveat Crowdfunder.
  • 6. IT’S A PERFORMANCE Crowdfunding is hard work (especially if you’re an introvert). You have to do more than just deliver a product and some perks at the end of the process. It’s no joke. It’s much more INTERACTIVE than dealing with a bank. Or even pitching traditional funders. Staging a strong crowdfunding campaign: Develop your compelling, shareable story to match your goal - with awe or aww factor Good visuals, particularly video, contribute significantly to success Create enticing (project relevant) rewards Team credibility = investor confidence. Reveal your expertise. Get on your social & traditional media strategy, preferably months in advance. Feed the media beast with story angles throughout funding, into fulfilment. 6. Grow a fan-base! Interact openly with your campaign community. Surprise them with more than they expect and you might stir up love. Fan devotion goes beyond necessity or reason - and is exceptionally valuable to your sustainability beyond this campaign. 1. 2. 3. 4. 5.
  • 7. AMBITION IS TRIBAL Don’t be so inoffensive to all that you win none. We long to belong, but we sometimes need gathering points to find each other. What will you stand up for - how is this project a powerful exemplar of your particular tribe’s ideal, made real? Make us believe that you can make that happen.
  • 8. WIN HEARTS + MINDS Develop your Awe or Awww to snag attention, intellectual or emotional. Emotions are excellent to hook initial interest. But make sure there is something substantial for those who want to investigate deeper. And many will. Be sure you’re ready for that. Are your claims solid? Prove it. Slay the jargon. Plain language is not only more accessible, but oddly, brain-friendly = more TRUST (and understanding means wider social spread). Remember we buy into teams/personalities, not just A-grade ideas. Even casual investors appreciate the strength of execution of an idea is up to the strength of the people driving it. Establish trust in your expertise to deliver. [That said, wild charisma has been known to trump evidence, since, well, always] Oh, and check your spelling. Mistakes trigger trust concerns and extra scrutiny.
  • 9. KNOW THE GAME Popularity = security. (If only a perception, it’s a bias we’re prone to. So use it) Get friends and family to back you EARLY - investors feel assured by others‘ buy-in. Social proof and all that. Interestingly, aggregates show that once you cross half of your goal, you have a 95 percent chance of success.  Long campaigns seem to both signal a lack of confidence, and appear to diminish the chances of success. << I-don’t-wan’t-to-miss-out last minute rush The funding cycle is typically: It often happens in the closing 3 days, or even hours. Early excitement Friends, family, local community come in here.  Mid-way lull Expect this, don’t freak out. Work hard to slowly cross the halfway funding mark. Step up the FOMO to win.
  • 10. REPORT RELENTLESSLY We humans HATE feeling fleeced. Any suspicion of being cheated can lead to a run-on of refund requests. Which could impair your ability to fulfil the project for those who stick with you. And lead to wholesale project refunding. Horrors. It’s game is over, if trust is lost. Report (on problems particularly during the fulfilment phase): time-changes, glitches, commercial interest changes, are vital to maintaining the trust of your insta-community. Avert anxiety and anger, with regular updates. Save time by anticipating questions and answering them upfront in your pitch. Projects are rarely smooth. Share your progress good AND bad. Transparency and humanity are vital ingredients of a successful campaign.
  • 11. Weak personal network engagement Weak media relationships No video and/or visually uninspiring pitch Crappy rewards with no creativity or relevant appeal Insufficient expertise to pull it off Perk production cost & labour unexpectedly expensive Didn’t disclose questionable ethical, relationship or regulatory issues Poor choice of crowdfunding platform Funding goal set too high ...Too damn boring the various flavours of OOPS
  • 12. Fame & Fortune. not guaranteed The majority of crowdfunding campaigns don’t succeed, but there is such strong upside from the bonus benefits and lessons learned quickly. It’s worth it ...IF you have the time to put the effort in; plan carefully; build your fan-base, media relationships, a robust prototype and a great (visual) story; and aren’t afraid to interact. Then there is a massive advantage to giving it a go. Make a quick buck? Not so much Powerful business tool? No doubt
  • 13. RECOGNITION is more than ‘being nice’ Loyalty has monetary value. Gratitude is an under-appreciated business powertool for sustainability Give credit where it’s due to people that have inspired your project. Say thanks when fans stand up for you. Spread the word about your project. Give useful feedback (even criticism). For the journalists that cover your story. And obviously to people who do more than ‘like’ you, they’re trusting you with their cash. Give ‘em love. * Creative Commons Images in Order of Appearance: Slide 1: http://www.flickr.com/photos/notsogoodphotographer Slide 3: http://www.flickr.com/photos/pixelplacebo Slide 5: http://www.flickr.com/photos/overthinkingme Slide 7: http://www.flickr.com/photos/ tjt195 Slide 8: http://www.flickr.com/photos/ seedingchaos Slide 11: http://www.flickr.com/photos/ jdevaunsa Slide 12: http://www.flickr.com/photos/purplemattfish Slide 13: http://www.flickr.com/photos/wvs ‘funds with benefits’ borrowed from Thundafund. Thanks Patrick!
  • 14. Oh and though you’ll need to be less reliant on the whimsies of fate now, a little dash of extra GOOD LUCK never hurts :) Funds with Benefits by Max Kaizen for Treeshake is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.