Grow Your Secondary Network for Crowdfunding Success
It’s been said that if you achieve 30% of your crowdfunding goal, then you are well-situated to reach 100% by the end of your campaign. This rule is a bit confusing since 30% is less than half-way. Yet, despite this fact, it has become a recognized marker for success. Ultimately, there’s one reason for this: 30% of your crowdfunding goal should represent your own personal network’s value—that is, the funds raised in advance to get the ball rolling.
Once crossing the 30% milestone, statistics suggest that crowdfunders have nearly a 90% rate of success. A recent study by Seedrs analysed the different levels of pre-committed funds and its effect on the success of a campaign.
- Projects starting with 0% showed a 15% chance of success
- Projects beginning with 1% experienced a 27% likelihood of success
- Projects with 5% of their funds pre-committed had 50-50 odds
- Projects with 10% pre-committed discovered that their odds increased to 70%
- Projects having 20% experienced a 80% chance of success
- Projects starting with 35% or more completed their goals in every instance
Although these results reflect equity-based crowdfunding in the UK, Kickstarter and Indiegogo have recognized the 30% rule back in North America as well. It seems that after reaching this magic number, project creators feel inspired to persist. The trick to filling the gap between 30% and 100%, however, rests in the hands of the secondary network.
The secondary network refers to the colloquial “friend of a friend.” While you may not know these individuals intimately, the introduction, referral, or recommendation through a friend is crucial to your overall success. But you cannot rely on your primary network to do all of the work for you. You need to map it out – literally. Look at your own confirmed supporters and try to tie some influential individuals to each. You may not get them all, but securing only a few is all you need to put things in motion.
With 30% under the belt, your project is validated—it instantly becomes credible. No one wants to be the first to pledge money to an unknown, uncertain project. By exhausting your personal network at the beginning, you ensure that those in the secondary network are already familiar with your cause, thus feeling less hesitant to throw a few bucks your way. The 30% rule is an interesting and merited strategy, so it’s worth considering. Before launching, try and pre-commit at least 30% (if not more), either through guaranteed pledges or your own personal money.
Source : Crowdclan
It cannot be stressed enough: social media is one of the most important aspects of crowdfunding. Under no circumstance should a project ever neglect to reach-out to supporters and expand its network. Managing several different accounts across the web takes time, but it’s a necessary step towards success. Instead of joining every platform, however, look for those that suit your campaign. In other words, SoundCloud works well for musicians, whereas Instagram, in most cases, does not.
For crowdfunders, there are a few staple websites to join if you have not done so already. These include Facebook, Twitter and Youtube. For entrepreneurs, Google and LinkedIn are also advised. Focusing on the first three, let’s take a look at some statistics that illustrate social networking’s potential:
- 189-million Facebook users are on “mobile only”
- Youtube has a greater viewership of those between the ages of 18-34 than any cable network in the US
- The fastest growing demographic on Twitter is 55-64; this same age group comprises 46% of Facebook users and 56% of Google+
- Every second, two people sign-up on LinkedIn
Knowledge is key, so continuously browse the web for data for it will ensure that your social media campaign remains relevant, intelligent and targeted. Two great sites to research trends are Mashable and Hypebot, but some industries may need to rely on more specific feeds.
For Twitter and Facebook, be creative and use the tools available to you. The average user may not think to create a community page or a twitition, but these are both powerful and sharable tools that businesses and non-profits use regularly. Remember that it’s not necessarily about the quantity of people in your network but the quality as well. For instance, finding “amplifiers” — influential social media enthusiasts — will help spread your word faster.
Try and always keep the mobile market in mind and practice concise messaging. Consider the statistic about Facebook users — not everyone wants to read a novel on their handheld. In fact, infographics have become one of the most compelling forms of social media today. So save the paragraphs for your blast e-newsletters at the end of each week (more about this later!).
There are a handful of tools one can use to increase their social media presence, but there’s a few tricks unknown to the average user. If social media can assist crowdfunding, can it not work the other way around? Yes it can. For example, consider offering loyal followers and fans incentives through a social media contest. This is only one of many ways to uniquely engage an audience and generate a buzz in the online world.
Source : Crowdclan
A successful campaign takes a lot of prep—and upkeep along the way
Natalia Rodriguez, co-founder of Jiva Cubes Jiva Cubes
Want to launch a crowdfunding campaign? You’d better get started yesterday.
The popular perception of fundraising sites like Kickstarter is that entrepreneurs can cut out a lot of the legwork of landing money. But experts say that’s far from true.
A successful campaign takes plenty of advance planning—as well as constant involvement along the way—to keep backers happy and new supporters joining on. A halfhearted effort could not only make a cash drive stall out, it also could do lasting damage to an entrepreneur’s standing with customers and potential investors down the road.
Here’s some advice from pros and entrepreneurs who have made the process work.
Form a Company
As you plunge into fundraising, it’s smart to make sure that you protect yourself by creating a formal business entity, such as a limited-liability company. With a structure like an LLC in place, anyone who sues you can only receive assets from your LLC, not from your personal wealth, says Tom Murphy, senior partner at McDermott Will & Emery LLP in Chicago.
Ms. Rodriguez has run two successful campaigns for her products Jiva Cubes
Beyond that, having a company structure shows potential clients you’re a professional. Samantha Rose, founder of GIR: Get It Right, which launched two Kickstarter campaigns in October 2012 and September 2013 for silicone spatulas, says if you’re trying to get your product into stores, retailers will expect you to have a business entity, such as an LLC or corporation, in place. Forming a corporation also makes the process of filing taxes at the end of the year easier, she says.
Find Backers First
On Kickstarter, which launched in April 2009, people seeking funds set a deadline within 60 days of the start date and a goal amount for funding. But campaigns should start gathering support even before they launch.
Natalia Rodriguez, co-founder of Jiva Cubes, which makes cubes of instant coffee and hot cocoa, found this out after a failed campaign in March 2012. She didn’t get enough backers on day one—and thus her project didn’t gain any momentum.
When she made a second attempt in May 2012, she asked the initial backers to lend support early on in the second campaign and to tell others. Forty of the original backers came on board, and that strong initial presence placed the project on the Kickstarter home page, thus attracting more supporters.
She reached $1,000 within 24 hours and the $15,000 target of the previous project on the fourth day.
“The name of the game is to get on these front pages where people are going,” Ms. Rodriguez says.
For her third campaign, Ms. Rodriguez reached out to even more potential backers in advance by contacting bloggers who covered her target market—travelers, moms and students. That effort brought in $82,012.
Keep Talking to Backers
Scott Heimendinger, co-founder of Sansaire, launched a Kickstarter in August 2013 for an at-home sous vide machine—a method of cooking that heats food to a precise temperature. During his campaign, which hit its funding goal of $100,000 in 13 hours, he spent seven to eight hours a day addressing comments from backers and fine-tuning the prototype.
“It makes them feel like the project is alive,” Mr. Heimendinger says. “It makes them feel like there’s a human being on the other end.”
If existing backers are unhappy, then they can voice concerns on the creators’ comment page, thus dissuading others from backing the project. Backers can also decrease or cancel their pledge at any time in the campaign, except for the last 24 hours.
Another reason for entrepreneurs to keep talking: Midway through the campaign, projects often hit a lull in new backers. That’s why it pays to plan surprises, like testimonials from well-known individuals in the field, rewards or small project announcements, says business consultant and speaker Scott Steinberg.
Keeping backers updated can also keep them happy if things go wrong after the campaign is over. Kickstarter creators have been infamously plagued by delays in shipping and fulfillment. Both of Ms. Rodriguez’s completed Kickstarter campaigns for Jiva products have been behind schedule, and at the end of the most recent one, she and her co-founder had to fly from Miami to Colombia to package about 250,000 cubes themselves.
But by keeping the backers updated at every turn, Ms. Rodriguez says that they were able to keep the backers happy. “We got so much respect for that,” she says. Still, Ms. Rodriguez advises, “Always create a buffer of at least an extra month.”
Mr. Heimendinger has had a similar experience. He experienced delays with his Sansaire product due to malfunctions in the back cover and a patent complaint, since resolved. But the situation has been helped by open communication with the backers—who have responded well to the updates, he says.
“If you sum it all up, it probably tilted in the positive direction,” Mr. Heimendinger says.
Think Long Term
Keeping up the flow of backers can also lead to business opportunities outside of the site. If the campaign is successful, and especially if it has a large number of backers, it can be “a ticket to [venture capital] meetings,” says Jeffrey Bussgang, general partner at Flybridge Capital Partners in Boston, adding that associates regularly look through the site for popular projects.
“We want to see what has momentum,” he says.
However, if a campaign fails, Mr. Bussgang says, getting funded by venture capitalists becomes very challenging. “It’s hard to erase those initial failures,” he says.
Ms. Huston is an editor of The Wall Street Journal’s Accelerators blog on startups. She can be reached at firstname.lastname@example.org.
Source : The Wall Street Journal
Par Quentin Capelle 16 janvier 2014
L’utilisation de certains mots ou expressions pourrait être un facteur déterminant dans la réussite ou non d’une campagne de crowdfunding.
Les sites de crowdfunding se caractérisent par leur concision. Si le principe en est simple, définir rapidement l’idée pour lever des fonds auprès des particuliers, la pratique n’en est pas moins difficile pour les porteurs de projet. Il s’avère en effet relativement difficile d’expliquer en quelques lignes seulement, aussi bien l’intérêt du projet que sa solidité de structure ou les qualités intrinsèques du porteur de projet. Si nous vous avions déjà parlé justement de l’importance des qualités personnelles de l’individu sur les sites de crowdfunding, l’université Georgia Tech vient de publier une étude portant sur l’importance du langage dans l’appréhension de la réussite ou non d’une campagne. Ainsi, si des mots sont à proscrire, il semble que certaines tournures peuvent s’avérer particulièrement utiles et persuasives dans l’approche de masse que représentent les sites de crowdfunding.
“Quand le projet réussira” vs “Si le projet réussit”
Les résultats de cette étude, concentrés dans un article justement dénommé “The Language that Gets People to Give: Phrases that Predict Success on Kickstarter”, menée sur près de 45 000 projets passés et présents sur Kickstarter fait ainsi émerger une typologie spécifique de communication. Eric Gilbert, un des co-auteurs de l’étude explique que “Les campagnes qui, par exemple, suivent le principe de réciprocité, en offrant un cadeau aux investisseurs, et la perception de la participation sociale et de l’autorité généraient les volumes de fonds les plus importants”. A l’image des stratégies de communications classiques, l’emploi de terminologies négatives seraient ainsi, selon les auteurs de l’étude, à proscrire. En effet, pour un même principe de réciprocité, l’approche lexicale du concept peut faire la différence, notamment dans la projection vers la réussite : de cette façon “quand le projet sera” ou “les investisseurs recevront, en plus de leur part…” expriment une stabilité et une force du projet. Au contraire, ce sont des termes comme “si la campagne n’est pas un succès” ou “confiance” qui peuvent paradoxalement donner une impression de défaite assurée ou du moins préparée.
Une communication théorisée
Au fil de leurs recherches, les deux co-auteurs ont donc pu analyser les quelques 45 000 projets mis à disposition afin d’en extraire des points communs. Selon la terminologie lexicale que ceux-ci ont dressée, le niveau de langue utilisé par les porteurs de projet serait ainsi responsable à un peu moins de 60% du succès possible de la campagne, et ce quel qu’en soit le sujet. On observe ainsi plusieurs grands principes de communication, depuis l’autorité vers la dimension sociale, mettre en avant par exemple aussi bien un lien particulier vers un groupe social que de développer un produit spécifiquement pour eux, notamment en ce qui concerne les personnes souffrant de handicaps moteurs. Avec cette étude, les chercheurs de Georgia Tech ouvrent la voie à une approche réellement universitaire et scientifique de la communication sur les sites de crowdfunding. Si cette approche pourrait s’avérer aller à l’encontre de l’idée générale, elle n’en pourrait pas moins permettre aux porteurs de projet de développer, dès l’amorcage, une approche efficiente de leur discours.
Source : L’Atelier
I write about personal technology and digital imaging
Crowdfunding has quickly moved from trendy buzzword to a mainstream fundraising model. In less than five years, Kickstarter has attracted more than five million contributors pledging close to $1 billion, funding more than 55,000 individual projects. Rival fundraising platform Indiegogo can boast of a campaign that single-handedly generated $12 million in pledges. Numbers like these make crowdfunding an attractive option for first-time entrepreneurs and established businesses alike. But what, exactly, does it take to successfully fund a project?
To find out, I’ve asked creators of some of the most highly successful crowdfunding technology projects – each raised more than $300,000 – to discuss their experiences using Kickstarter and Indiegogo, and share the secrets of their success. Whether you’re looking to raise a few thousand, or a few hundred thousand dollars to bring your product to market, here’s some hard-earned wisdom to consider well before launching your own crowdfunding campaign.
Crowdfunding platforms like Kickstarter and Indiegogo have significantly reduced the barriers to funding for entrepreneurs with compelling products.
1. Solve a real problem As with any sales venture, the first key to success is creating a product that people want to buy. “Your responsibility is to produce a solution to a problem,” advises Adam Sager, whose home security device, Canary, raised more than $1.9 million on Indiegogo. “You need to be able to tell people right away how the product is going to solve a real problem that they have.” If you can’t communicate the essence of your product and what it does in a sentence or two, you’re not going to attract significant interest from backers.
Many entrepreneurs have looked to their own personal experiences in identifying a problem to solve. Peter Dering, an avid traveler and photography buff, came up with the idea for his original Capture Camera Clip – an updated version garnered more than $800,000 on Kickstarter – because he got tired of having his DSLR hang precariously from his neck, swinging into things while backpacking through Asia. “I thought this was a problem enough people had,” he says, “and that my idea for a product could solve it. Identifying a problem, and designing a solution that is solid, equals success.”
It’s great if your product can ride the wave of an emerging trend, but make sure you’re not too far ahead of the curve. “If your idea is too far ahead of its time, you’ll have to spend resources telling people why they need it,” says John Van Den Nieuwenhuizen, whose second version of the Hidden Radio, a wireless portable speaker, has raised more than $500,000 on Kickstarter. “When we came up with the idea for Hidden Radio back in 2008, we didn’t invent the category,” he says. “There were Bluetooth speakers already on the market, but they weren’t attractive and didn’t sound good. We felt we could make a beautiful design that had better sound.”
2. Do your homework The success of any crowdfunding effort is inextricably linked to the amount of hard work you put into testing and refining your idea long before launching the campaign. “Every hour of planning you do before the campaign saves you 100 hours of work after it,” says Phil Bosua, who raised $1.3 million on Kickstarter to launch the Lifx LED smart bulb.
Van Den Nieuwenhuizen’s vision for a portable Bluetooth speaker began with sketches a full five years before his crowdfunding campaign. “You need to do your homework,” he says. “Once my partner and I had a design we liked, we submitted it to some design blogs. The response was very positive, with people asking how they could buy it, and all we had at that point was a rendering. We made our first prototype with a trip to the hardware store. It took us a year of looking in the U.S. and Asia to find the right manufacturer. But by the time we launched on Kickstarter, we were literally ready to begin production if we got the funds.”
The challenges you’ll face after the funding campaign are daunting and must be addressed early on. “You’ve got to have an e-commerce site up and running, a supply chain and distribution network, and way to handle fulfillment and warehousing,” Dering cautions. “Miss any one of these, and you’re dead. You need to be prepared to make your backers happy, and getting as many ducks in a row as you can before starting the campaign, allows you to ship your product to them quickly.”
Seeking advice from those who have more experience is always a wise move. Gabriel Bestard-Ribas, whose Goji smart lock raised more than $300,000 on Indiegogo, did just that. “I got advice from people who had run successful campaigns, asking for feedback on my idea,” he recalls. “But I also talked to people who had failed at crowdfunding. I learned what things to avoid, which is important.”
One thing to avoid is waiting for your campaign to start before doing any marketing. “Build your customer database well before going on Kickstarter,” suggests Van Den Nieuwenhuizen. “Even if you don’t have a prototype yet, you can release drawings or renderings on Facebook and Twitter. You get validation of your idea while building an audience and momentum for your crowdfunding launch.”
3. Bring money to the table “Kickstarter shouldn’t be your first source of money,” says Dering. Indeed, every entrepreneur I spoke with for this story had already acquired some capital before launching their crowdfunding campaign. Jonas Gyalokay, creator of AIRTAME, a wireless HDMI streaming dongle, raised more than $1.2 million on Indiegogo. But before that, he and his team had already poured in tens of thousands of dollars into the project. “We invested our own money, using loans and pension savings as well as profit from some of our earlier companies, to buy food and pay our bills,” he says. “Another company I co-founded invested $10,000 for a 5% stake in AIRTAME. That paid for office space and some of the hardware we needed in an early stage of development.” Your funding sources don’t have to be complicated. Bosua and his small team started Lifx with, “$35,000 that came from maxing out our credit cards,” he recalls.
Marc Barros is a serial entrepreneur, whose Moment smartphone lens campaign attracted more than $100,000 in just its first 28 hours on Kickstarter. “We spent about $80,000 to get to the Kickstarter stage, with prototypes, samples, and additional engineering support to help solve our problems,” he notes. For those looking at mass market production, Barros advises, “You should think about needing $500,000 to get from the idea stage to shipping a final product. Whether you raise that from your backers, investors, or supply partners, that’s about how much you need (with some wiggle room) to make and ship. You’ll encounter mistakes along the way and a little bit of extra cash makes sure you can deliver.”
4. Set a smart funding goal When setting your funding goal, don’t confuse how much money you’d like to raise with how much you need to fund your project. “I made a distinction between ‘expectation’ and ‘hope’ when setting my funding goal,” Dering says of his first campaign. “I expected to raise $10,000 but my hope was to be the top-funded project in Kickstarter’s history.” The browse pages of both Kickstarter and Indiegogo highlight not just a dollar amount, but your funding’s percentage relative to your initial goal. People love to back a winner, so blowing past your funding goal by 300% in the early days of your campaign can actually help attract additional backers. Of course, you need to set an amount high enough to cover the costs of actually manufacturing and delivering your product, but your goal should be one that you’re confident you can reach.
5. Make an effective pitch “Why do people support crowdfunding?” asks Bestard-Ribas. “Because they are drawn to a vision. One they want to engage with. Many people think of their campaign as just selling a product. But you’re really launching your company to the world.” Your presentation will have a huge impact on the success of your campaign. The financial cost of producing it is virtually zero. You can shoot the video pitch on your phone if you need to. But the amount of time and thought you put into this presentation must be significant.
“We crafted a very focused message,” says Sager, “and presented the product to show how it could impact people’s lives in a direct way. We didn’t start by talking about features. Instead we led with how we were solving a problem. It’s also important,” he continues, “to make your team visible. Be very transparent and let potential backers know who you are. Trust is a big part of crowdfunding.”
Of course, when it is time to talk about features you need to emphasize what makes your product stand out from the crowd. Bestard-Ribas stresses that there are benefits to having competitors. “There were three competing products that debuted before us,” he says. “They generated a buzz around the idea of a smart lock, so people understood our product already. What we had to do was propose why we were better. The competing models ranged from plain-looking to ugly. We had a beautiful, sleek design plus the ability to take and send photos of anyone activating the lock and entering your home. So those are the two features we emphasized.”
Rewards/perks are huge calls to action for potential backers. Get creative. Gavin Fish, VP of Sales and Marketing for Light Harmonic, whose campaign for the Geek Pulse, a portable DAC, has raised more than $1.17 million on Indiegogo, has taken full advantage of services unique to that platform. “One of the reasons we switched to Indiegogo for our second campaign was that backers could choose multiple perks.” Fish also made use of Indiegogo’s tracking tools to offer even non-contributors a chance to earn free products by referring friends who did become backers.
6. It’s not (always) about the money Crowdfunding has several benefits beyond access to capital. “We were already well-funded as a company,” says Fish. “And we knew the high-end audio customer well. With the Geek line, we were looking to deliver a mainstream, affordable product, but we didn’t know what the mainstream consumer would buy. For us, the feedback from backers was much more significant than the money we raised. Near the end of our Geek Out campaign, for example, many backers began asking for a larger unit with more features. That feedback led directly to our second product in the lineup, the Geek Pulse.”
Bestard-Ribas also emphasizes the importance of the contributor community. “The feedback we get is 10-fold more valuable than the money we raised,” he says with conviction. “Normally, you’re working in the dark until you bring a product to market. With crowdfunding we get customer feedback before the product is finalized.” And it wasn’t only customers that he was able to build relationships with. “The press coverage that our campaign received opened doors to partnerships,” he continues. “We had retailers and distributors reach out to work with us before the product was finished, which helped us to better fit their needs. Our partnership with Staples is an example. They got in contact with us during the campaign and now our product is part of their [app] ecosystem.”
7. Make the campaign your top priority Managing an active crowdfunding campaign is an intense process. “It’s not only full-time for one person, it’s full-time for everyone in the company,” says Gyalokay. Sager agrees. “When we ran our campaign, the entire team was 100% focused on crowdfunding,” he recalls. “We sent out multiple surveys to our backers. I personally answered 3,000 emails in the first week.” Although it can be a nearly overwhelming experience, the campaign offers a valuable opportunity to engage with your backers. “We believe that if we can have a dialogue with the market, we can be successful,” says Fish. “We decided to host a separate forum for our backers, to continue the conversation beyond the crowdfunding campaigns.”
“Feedback can drive product design,”says Dering. He recalls having to decide between two competing features in a new camera strap that was still in development. “We sent out a Kickstarter survey with a choice of A or B, and our backers overwhelmingly picked a winner,” he recalls. The challenge with feedback, of course, is knowing when to say no. “You’re going to have to decide which requests make sense to implement with this version of your product and which ones are better to save for version 2,” cautions Sager. “We made the simplicity of our product the priority and stuck to solving a specific problem instead of trying to meet everyone’s feature request.”
Heed the advice of these crowdfunding veterans and perhaps your idea will be the next crowdfunding success story.
Source : Forbes