Crowdfunding in its current form has been around for close to a decade. In 2015 alone it has been estimated that over $34 billion was raised through crowdfunding. Basically, crowdfunding is kind of a big deal.
There are two main types of funding for businesses. There’s ‘equity’ – where a backer gives money in exchange for shares in a company, and ‘reward’ – where backers pledge money and are rewarded with something physical. In this post we’re going to look specifically at reward-based crowdfunding.
Step 1: Choose your platform
There are loads of platforms, which means that you can find one that’s suitable whatever your goal is. If you want to go the traditional route, you won’t get the money you’ve raised unless you’ve hit your target amount. There’s a slightly more pessimistic option on many sites where you can keep any money you’ve raised for a higher commission fee. There are also industry-specific sites, depending on what your company is doing. You’ll need to think about whether your potential backers will be willing to use a less well-known website, or if they’d prefer to trust a famous one like Kickstarter.
Step 2: Set your amount
Since you’re an expert on your chosen industry you’ll probably have a vague idea of how much money you need to raise. But humour us, and spent an afternoon sitting down and working through all of the figures. If you create a product, how much will it cost to produce? How much will it cost to send rewards out? How much will you need to pay for any staff or external services you use. Make sure you ask for all of the money you’ll need because you won’t be able to change your campaign target once you start crowdfunding.
Step 3: Decide on your rewards
If you launch a new product, will you send out the first run of those as backer rewards? If you run something with a membership, will people be able to access this if they back you? Maybe you’re funding a creative project like a film or a show, but will you still make a profit if you give away tickets as rewards? Make sure the excitement levels of your rewards increase with levels of backing, and make sure you don’t overdo it with the funding levels – it doesn’t matter if you don’t hit every £5 increment.
Step 4: Promotion, promotion, promotion
Now that you’ve got your campaign more-or-less planned, how will you let people know? The first place to start is with your personal network. The public won’t contribute to an otherwise-empty campaign, so make sure you’ve got some mates primed to chip in as soon as you launch. Send press releases to let the media know what you’re up to. Make sure you’ve got lots of content going out on social media to draw attention to what you’re doing.
Step 5: Keep up the momentum
Once your campaign has started, you’re going to be tired. It’s best to accept that now. You need to be posting content every day and hounding people at every opportunity. You’re going to annoy people and you’re going to feel bad about it. To give yourself something new to talk about, try adding some new perks midway through to keep people interested. You also need to stay in touch with the people who have backed you to let them know how you’re getting on.
Step 6: Keep in touch
Once your campaign is over, give yourself a couple of days to recover. Thank everybody who put up with your constant crowdfunding talk. After that, you need to keep in touch with your backers at least until all of your rewards have been sent out. After all, these people are your customers now, and have trusted you to come through. If there are delays with sending out their rewards let them know, and if anything changes definitely keep them informed.
This is just an overview of some of the things you should think about when launching a rewards-based crowdfunding campaign. For more in-depth info, or to answer specific questions, check out HowNow for classes to help you along the way.