The Top 5 Steps to Winning With Crowdfunding

 

Right now, it’s easier than ever to leverage technology to fund your dream project. According to data from crowdfunding site Kickstarter, since launching in 2009, the platform has hosted more than 70,000 successfully funded projects—products, films, etc.— with more than a billion dollars pledged by over seven million separate donors. That means a huge pool of potential investors; of course it also means a ton of competition fighting for their attention. But Kickstarter is just one of many online platforms, some of which may actually be better suited to your specific project. Just know this: Crowdfunding takes massive work, and fewer than half of all projects reach their fundraising goals. But with the help of a few best practices and a handful of tips, setting yourself up for success is simple.

STEP 1
PICK THE RIGHT PLATFORM

Don’t simply decide to use Kickstarter “just because.” For bigger projects, the all-or-nothing format (literally—if you fail to reach your goal, you get nothing) is ideal, but other platforms may be better suited to certain campaigns. Here, a few to consider.

BEST FOR TCHOTCHKES: INDIEGOGO
Unlike Kickstarter’s all-or-nothing approach, Indiegogo offers flexible funding, where the site takes a higher percentage fee in exchange for letting you keep all the funds you raise if you don’t hit your goal. The average goal reached on Indiegogo is $3,700, site data says, so it’s ideal for launching smaller products like the Quickey Multi-Tool, a handy key that acts as a bottle opener, screwdriver, and rope saw—which raised $200K for a $4K goal.

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BEST F0R MEDICAL BILLS: GOFUNDME
For personal fundraising goals—things like charities, funerals, and trips—GoFundMe offers a more targeted platform for causes that may not be allowed on other crowd- funding sites. The most successful GoFundMe projects are charity-based, like a campaign to raise money for Boston Marathon bombing victim Jeff Bauman, which raised more than $800,000.

BEST FOR BACHELOR PARTIES: TILT
A “micro-crowdfunding” startup, Tilt is the most mobile-friendly option. You set a minimum goal, then your pals and colleagues pledge money; when the group hits the goal, or “tilts,” they’re charged. Easily connect with your friends, family, and workmates to get the ball rolling—it’s the Facebook of crowdfunding sites.

BEST FOR YOUR YOUTUBE SHOW: PATREON
Artists, bloggers, musicians, videographers, and other independent content creators looking to secure long-term funding for projects should check out Patreon, which connects you with “patrons” willing to give money to individuals either on a recurring basis or per piece. As of October 2014, more than 125,000 people have become patrons to artists on Patreon.

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STEP 2
CREATE A GREAT VIDEO

The top crowdfunding tip of Indiegogo director of strategic programs Erica Labovitz: Make a kick-ass video. Indeed, video production company MWP Digital Mediaanalyzed 7,000-plus recent Kickstarter projects and found that those with videos were 85% more likely to get funded.

For the video itself, you want to accomplish three things. First, in less than two minutes, explain what problem you’re trying to solve and why you’re best positioned to solve it. Second, find the right people to put on camera. Not everyone is a natural, so think about using a partner or spokesperson. Third, make sure you explain why this is important to you—people need to know your “what” to understand the pitch, but your “why” is what will get them excited enough to support it. Be as transparent but as passionate as possible—the more honest you are, the more people will be willing to pitch in.

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STEP 3
SET YOUR GOAL AND TIMELINE

In the largest academic study on Kickstarter to date, the Wharton School’s Ethan Mollick looked at more than 48,000 Kickstarter projects and found that projects that succeeded tended to do so only by small margins. A quarter of the successful projects managed to raise only 3% more than their goal; 50% raised about 10% more. So, while crowdfunding projects that ask for relatively small amounts of money but go on to raise millions (like the OUYA gaming console) seem to get all the press, the reality is that most projects that succeed do it by a hair’s breadth. When setting your target, aim high but keep it realistic.

In his blog post “Why (Some) Kickstarter Campaigns Fail,” author Seth Godin advises people to scale their Kickstarter projects to the size of their social networks. In other words, unless you have 10K followers on Twitter and Facebook, don’t expect to raise $10K on Kickstarter.

As for your timeline, throw the short ball for better results. According to Kickstarter’s own data, 30-day projects have a better chance of being funded than 60-day projects. A shorter campaign is easier on you as well, since you’ll want to have a marketing plan for every single day. Beyond just getting the word out, have time set aside for creating updates for your critical backers and reaching out to bloggers for media coverage. If you have some funds, experiment with some advertising on key sites and on social media to reach people interested in the niche your product or service fills. And make sure you’ve laid out and scheduled a full social-media calendar to keep your followers engaged.

Labovitz, from Indiegogo, has a great catchphrase to keep in mind: “Never turn off.” Once you’ve launched, your campaign will be your new fulltime job, so make sure you’re ready to spend the whole month working with your family, friends, and social media followers every single day.

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STEP 4
HAVE A BIG FIRST DAY

Campaigns that have a huge “Day 1” fundwise are the most likely to get noticed and featured by the site’s editors. Even more important, Mollick’s research found that 97% of projects that were able to raise at least half their funds from already established contacts went on to succeed. Get to that crucial 50% mark by tapping people you know, and you should be golden.

Before you launch your campaign, add up your likely sources of funds from family, friends, co-workers, anyone you know well enough to ask personally—and make sure your goal seems feasible. Take the time to get commitments up front from all your interested supporters. Ask them how much they’re willing to give and if they can commit to backing you on the first day of the campaign. Don’t start promoting your campaign until these funds are locked down— that way, when it makes its way through the social media rounds and strangers start checking it out, they’ll land on a campaign that appears to have promise.

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STEP 5
DON’T BE AFRAID TO FAIL

In his study, Mollick notes that a failed project can be a great way to market-test an idea. “A lack of demand makes it easy for founders to ‘fail quickly’ if they see little interest in a project, without the need to invest additional capital or effort,” he says.

In a Fast Company article published last year, titled “Why a Failed Kickstarter Might Be Your Key to Success,” writer Jane Porter interviewed Zach Supalla, an entrepreneur whose campaign for a product that connects lightbulbs to the Internet only made it halfway to its $250K goal. His next campaign for a similar device raised more than half a million dollars. 

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Mario Armstrong, a digital lifestyle expert, appears regularly on NBC’s Today and CNN.