Crowdfunding is fast becoming a popular strategy to raise funds, test an idea, and attract customers. Some businesses have recently drawn so much attention from their crowdfunding campaigns that they could barely keep up with demand.
On the flip side, not all crowdfunding campaigns succeed. The Intuit Small Business Blog recent spoke with Danae Ringelmann, co-founder and chief operating officer of the crowdfunding platform Indiegogo, who offered a behind-the-scenes look at the types of campaigns that work — and those that don’t.
Here are three tips for running a successful crowdfunding campaign:
1. Don’t expect to raise all your funds at once. Sometimes businesses erroneously think that they have to raise all the money they need in one campaign, Ringelmann says. Instead, businesses should consider multiple campaigns. “People think it’s a place to raise 100 percent of funds that you’ll ever need for your business, all at once,” she says. “It’s not. It’s a way to secure capital and engage your customer and community to get to the next stage.”
For example, if you’re looking to introduce a new product and need money to manufacture it, you can pre-sell the product through a crowdfunding campaign. Supporters get early access to the item, and you get a good estimate for demand. Emmy’s Organics raised $15,000 last year to expand from selling gluten-free macaroons locally to distributing them to stores around the nation.
2. Do make an awesome video. When it comes to attracting supporters, it’s all about the pitch — and a good video makes a difference. On Indiegogo, campaigns with a video raise 114 percent more than those that don’t have one.
“Talk about not just what your idea is, but also who you are as a person, why you’re the right person to be doing this, and what the impact on the world is,” Ringelmann says. “People fund people. They don’t just fund ideas. They have to believe in you.”
3. Don’t think your job is done once you’ve created your campaign. In fact, creating your campaign is just the start. Now you need to tap into Facebook, Twitter, and other social media to spread the word. Most successful campaigns raise the first 20 to 30 percent of their goal from their friends and family. Don’t expect supporters to stumble upon your campaign and fork over their hard-earned money.
Indiegogo uses a proprietary algorithm to decide which campaigns to feature on its website, Ringelmann says. It measures how much you’re reaching out to supporters and how much they’re responding. That’s why it’s important to get your friends and family to support you first. The more interest you generate, the more likely your campaign is to be featured on the website and to attract funders you don’t already know
“People always ask, ‘How do I get on the homepage? If I send you cupcakes, will you put us on the homepage?’ The answer is nope. No cupcakes are necessary,” she says. “All the power is in your hands, not mine.”
To build trust, you should also update your campaign regularly and keep in touch with donors. Campaigns with regular updates — at least once every couple of days — raise 100 percent more than those with no updates. Have you started renovating your storefront? Are you about to test your prototype? Share your progress with the people who have a stake in your success.