Crowdfunding is one of the coolest developments to democratize business in the last decade. It has enabled the average but mighty citizen to contribute financially to a business, artist or cause they believe in. The resulting investments have made it possible for innovations to go to market that probably would not have otherwise.
Having just completed a successful, yet misfit, crowdfunding campaign I am now expert in these things. Ok, not really, but I do have some lessons learned from crowd funding that I’m happy to share with you. Take them as you wish.
- There’s no such thing as sorta crowd funding – A few years ago I partnered with the local chamber of commerce for EntrepreNerds. They hold an annual total resource campaign where volunteers go out in the community to sell sponsorships, etc Anyway, in my newsletter I shared this opportunity saying that it was sorta like crowd funding….it was not successful. I have since learned that there’s no such thing as sorta crowd funding. You’re either doing it or not!
- Transparency is required – You can’t exaggerate or omit the truth with crowdfunding. You have to give honest, transparent progress updates. Which is why it really helps to have real time data. Because I did my campaign across a number of platforms I did not have access to real time data. Every time I gave an update I had to manually crunch the numbers. Ugh!
- It’s a lot of work – Double however much time and effort you think it will take to run a successful campaign. When done well, the preparation, marketing, communications and follow up all take a significant amount of time and resources.
- Building trust is a must – Contributors give because they trust you to fulfill on your word. Without that, people will not give. Trust doesn’t just happen though, you have to work to build trust over time. You know all that goodwill you have built over time? It’s time to cash in on it, you deserve that!
- Be clear about why – here’s a secret I learned, you’re not raising money you are raising believers. You can’t build your prospect list based on who in your network has the most money. That’s not the point of crowd funding. Believers, no matter their means, will contribute as long as you are clear about why they should act.
- Give specific calls to action – the most popular contribution for my campaign was $33.33 towards our scholarship fund. When I asked for support that’s what I specifically asked for, although I let people know other levels of contribution were greatly appreciated as well.
- Check your business model – I have seen people get overwhelmed by the gift backs because they require effort that has not previously been a part of their business model. Before launching look to see if you are drastically altering your business model for this one campaign and evaluate this opportunity against your long term plans.
- Starting strong – for newbies to crowd funding like myself be forewarned, you don’t just build a campaign, launch and see people line up to contribute. You have to call on your most staunch supporters to be early contributors. Getting a strong start gives you the resolve needed to persevere for a successful campaign.
- Having realistic expectations – pie in the sky thinking is good when you’re envisioning a world of possibilities. But when you’re doing crowd funding you want to set yourself up for success. Reality check your expectations. If you’re working towards a grandiose vision start small and make your way there over time. It might take more then one crowd funding campaign before you arrive and that’s ok.
- MVP Thinking – in lean startup MVP stands for Minimum Viable Product. Most every entrepreneur has a picturisque ideal of what they are going to build. Then there’s reality. The ideal is a lot of work, whereas the MVP is the least effort you have to do to test how you will create and deliver value. A crowd funding campaign gives you the perfect opportunity to not only test your minimum viable product, ultimately testing your minimum value proposition!
So, there you have it! I don’t mean to belabor the point, but crowdfunding is a lot of work. Like being an entrepreneur, it is also a roller coaster ride full of ups and downs. Over the course of my campaign I thought many times, “I’m never doing this again.” But a few minutes after reaching our goal that thought faded away and it all seemed worth it!