Before you consider any type of crowdfunding -
- Have you gotten enough feedback directly from potential customers/backers to know there’s strong demand for what you’re about to do?
Are you ready for a rewards-based crowdfunding campaign?
Do you know exactly how much you need?
Expenses to consider:
- Reward fulfillment
- Legal expenses
- Platform/processing fees
- 30% cushion for unexpected expenses
- Be honest about your needs and set a realistic target
- Shoot for a target you think you can hit early in the campaign so you have the last few weeks of the campaign to push beyond it – it’s better to surpass a reasonable target than fall short of an overly ambitious one
Do you have a strong team?
- Teams help spread the work out, increase the size of the networks you can reach, and bring more knowledge to a project. Team projects raise more money than individuals in crowdfunding.
Does the project have a Web and Social media presence?
- FB, Twitter, LinkedIn, Instagram, Youtube – Make accounts on networks that reach the people you specifically need to target
- If you haven’t already, start building a community around your social media accounts to support your project
How big is the direct email list?
- Determine how big your personal network and that of your team members is because this network will give you the strongest support
How will your capital target connect to your network size?
- How many people are you connected to from social media and your personal networks including email etc.?
- How much is your product/service and how many of these people are willing to buy it right now?
- Survey a random sampling of these people and see how many in a group of 20-50 will commit right now to your proposal and how much – this can help estimate a conversion ratio and how many people you need to connect with to get your desired funding.
- For example - If 20% of those surveyed will commit $100 each to your pitch and your campaign will need $20,000– a network of 2,000 people could potentially convert to $20,000 in support
Have you determined the appropriate legal/tax structure for your goals?
- If you’re doing a rewards campaign and aren’t considering selling equity or other securities offerings for your company in the future, you don’t absolutely need to establish a company, but you should. Set up an LLC for your crowdfunding campaign and a business bank account.
- Crowdfunding campaign revenue is taxable income and you should consult a CPA. You can set up an LLC easy with legalzoom and other services
- Talk to a tax accountant about your plan, rewards, and campaign schedule – depending on your state of residence, there can be unique tax consequences that can apply to certain crowdfunding campaigns if you are not proactive
Once you’ve decided on a rewards-based crowdfunding campaign
Plan to start marketing and planning efforts 2 months before the campaign to build your community and email list for your campaign.
Do some recon - Find 3 campaigns that you can compare to
- Review how they crafted their message and campaign content
- Reach out to them and ask them what difficulties they had because it may help you avoid those pitfalls
- Examine their rewards and reward tiers
Make a pre-launch page to announce your plans or create an idea page on Umergence for your business plan
- You want to build a following and collect emails and names of supporters any way you can. If you start with an idea page on Umergence, you can collect supporters on one platform and they can follow you through your fundraising and future capital raises
- Start this in advance (at least a month)
- Find journalists, bloggers, local media who cover subjects related to your campaign and start making connections (try to get in contact with 50 at least)
- Find local news sources with usnpl.com and stationindex.com
- Find media contacts by topics they tweet about with ANewsTip
- Find influencers in subjects related to your campaign and start making connections
Send targeted press releases to media contacts
- Pitch the story, not the campaign
- One guideline for scheduling outreach: 1 month before, 2 weeks before, 1 week before, a few days before, and the day of the campaign launch
- Do it again each time your campaign hits a major milestone
- Connect with organizations that might want to be involved in your project – if you can get organizations interested, their networks can help grow your own
- If you hire people to do your media outreach and social media campaigns for you, make sure you budget to cover this cost before your campaign and not from its proceeds
Get early commitments
- Target 20-30% of your campaign goal from friends, family, and partners. Have them contribute as soon as your campaign goes live. That early support fuels others to feel confident and join the momentum. The more you can get committed early, the higher your probability of success.
- Another way to view this is in reverse - whatever you can get pre-committed, consider a reasonable campaign goal to be 4-5x the pre-commitment total
How long do you want your campaign to last?
- Rewards crowdfunding campaigns are 0-60 days, and usually 30-40 days only
- Most people back a campaign in the beginning, or right before the end, so making a longer campaign doesn’t always add value and can sometimes slow momentum
Set your reward tiers
- Create a broad range with low level ones for people who just want to be a part of the project, and higher levels for your most passionate supporters
- Avoid large jumps in reward tiers that could make you miss out on potential backers – for example, if you have one reward priced at $20, and the next tier is $100, you could be missing supporters wanting to pledge $50.
- Think about special rewards you might introduce into the campaign later to build momentum and achieve stretch goals
- Be mindful of how you will fulfill and ship orders/rewards – make sure your commitments will be realistic and you’ll be able to get everything to your backers in a timely way
- Think of rewards that give your backers a sense of ownership and involve them in the creative process
- It doesn’t have to be an expensive professional video, just tell the story in a captivating way, be honest, and be real. People respect authenticity. Answer: Why does the world need this campaign? Why are you the right person (or team) to do it? What have you accomplished so far and what is the plan from here?
- Keep it under 3-4 minutes (attention drifts in most people after 2 minutes, so a good rule of thumb is to keep the video to the length of a typical movie trailer)
- The “about” section of your campaign page is your pitch to backers. Keep things clear and direct and get people (especially strangers and people who aren’t close friends) to give you objective feedback to help improve it. Include appealing graphics, high quality photos, charts, diagrams, prototype renderings, infographics – anything that can tell your story more visually. Tell your backers what you’re offering them, what you need their money for and how you’re going to use it.
- Highlight the deeper “why” behind what you’re doing
- If you have traction, highlight it - especially growth and momentum
- If you don’t have numbers to highlight yet, focus on building credibility – your credentials and experience, accolades or awards the business has achieved, strategic partners or advisors, intellectual property like patents etc.
- Invite people to your team to help with the visual assets for the campaign
- Test your pitch content and strategy on people in your target audience to see which version is most effective