Being able to pre-sell a product and create that product with that revenue is the dream.
It’s why crowdfunding can be a great way to fund your project.
You bring people who want something together with people (like you) who are happy to make it. It’s a win-win.
There are a few other reasons for crowdfunding:
- To get validation for a product idea
- You can’t find funding through other channels
- You don’t want to be broke for years during product development.
Why doesn’t everyone crowdfund their products? It’s rarely as easy as it sounds.
Most crowdfunding campaigns fail. Just 26% meet their funding goals.
That’s why it’s important to know what you’re getting yourself into so you can be prepared to overcome the challenges of crowdfunding.
The rest of this guide is an overview of crowdfunding. I’ve gone into as much depth as possible given that it’s a general guide. I’ve also provided many links to further helpful resources so you can dive deep on the parts that really appeal to you personally.
- Step 1: How Do You Know If Your Idea Is Right for Crowdfunding?
- Step 2: Pick the Right Crowdfunding Platform
- Step 3: Planning Your Crowdfunding Campaign Page
- Step 4: Creating Your Promotional Plan
- Step 5: What to Do During Your Campaign
- Step 6: Delivering on Your Promises
- Wrapping Up: What Are Your Next Steps Now?
Step 1: How Do You Know If Your Idea Is Right for Crowdfunding?
For a crowdfunding campaign to be successful, you typically need a large number of people to be highly invested in the solution that you’re offering.
A backer is a person funding you. Think of it from their perspective. They’re buying the product knowing that the earliest they’ll see it is in several months. They have to really want your product.
Alternatively, some crowdfunding campaigns are vessels for donations. Again, there needs to be a lot of desire to support your specific cause.
Here are the most important questions that you need to answer at this stage, that all influence how much a potential backer will desire your product:
- Does a product like yours already exist?
- What makes your product unique?
- Are users of similar products hungry for a better solution?
- Are there enough hungry users to fund your project?
Truly understanding your target market is the only way to have a high degree of confidence in your answers above.
It’s crucial that you do understand your potential backers because you’ll be tailoring your entire campaign around them.
Step 2: Pick the Right Crowdfunding Platform
There are hundreds of crowdfunding sites these days, but a few stand above the rest.
They have different sized audiences, demographics, and campaign options.
Let me break them down for you one by one.
Kickstarter has been one of the biggest names in crowdfunding for years.
You can offer different rewards to backers to entice them to fund you.
It has millions of visitors per month and has raised over $3 billion for projects (and counting).
That traffic can be great for you. If you get featured in your category, your project will be exposed to a ton of people, generating a lot of extra backers.
The problem is that it’s difficult to get featured, and you can get lost in the sea of other campaigns.
One final factor is that Kickstarter projects are all or nothing. If your campaign doesn’t at least meet your funding goal, the money is returned to your backers. You need to be confident that you’ll reach your target funding.
Indiegogo is another huge crowdfunding site, but not quite as big as Kickstarter.
That comes with the same benefits if you get featured, but the same risk that you’ll be passed over.
While Indiegogo started by focusing on music, it’s expanded into similar categories as Kickstarter. Travel and technology products are the most popular.
One big difference is that you can select either fixed or flexible funding for your campaign.
If you choose flexible funding, you still get the money even if you don’t fully reach your goal. You are, of course, expected to deliver on your promises as normal.
Fixed funding is the same as all campaigns on Kickstarter. Reach your funding goal or the funds are returned to backers.
Fixed funding is good when you’re trying to test demand and don’t want to follow through unless there’s enough interest.
The campaigns on GoFundMe, however, are quite different.
Instead of focusing on products, GoFundMe campaigns are donation-based, focusing on causes and nonprofits.
If you run a nonprofit, or are trying to raise money for a cause, this is the platform to focus your efforts on.
Along with the giant crowdfunding sites, there are smaller, niche-specific crowdfunding platforms.
Publishizer was made specifically to help authors crowdfund their books.
If you are an author, you could certainly still use Kickstarter or Indiegogo, but Publishizer gives you the benefit of having a specialized audience that supports authors and books.
Patreon was made to help artists and creatives of all types crowdfund their projects.
Backers commit to funding a certain dollar amount per month. Just like Kickstarter, you can set rewards for your backers to enjoy. The more they fund, the more they get back.
Step 3: Planning Your Crowdfunding Campaign Page
Once you’ve decided that you’d like to try crowdfunding, and you know which platform you’d like to use, you need to plan out your campaign page.
The first thing you need to do is to research.
This should look something like:
- Find similar projects on your chosen platform
- Analyze what is working well on highly funded projects
- Analyze what isn’t working on failed campaigns.
Let’s go through a quick example. Here’s the scenario:
I’ve decided to crowdfund my “bunny ear headphones” on Kickstarter.
The first thing you do is to search for “headphones” on Kickstarter.
Then, create a spreadsheet and start recording data from the results. Get as many results as you can. It should look something like this:
It should look something like this:
What you’ll see is that certain types of your product are more popular than others.
I was able to quickly see that most headphone projects failed or had a limited number of backers. Even successful projects usually had only a few hundred backers.
The average backer, however, paid around $100. You can use this data when setting goals, which we’ll get to shortly.
On top of your research, there are some things that every successful campaign page needs.
Title: Be Clear, Not Clever
Do not approach your title like you’re writing a blog post.
The only people who will see your title are people who are interested in backing projects in your category.
If you try to be clever with a “clickbait” title, most users will skip over you because they’re not sure what your product or project is actually offering.
To write a good title, keep it very simple. There are 3 components to this:
- Your product or project name
- What is your product or project in plain terms
- What’s unique or attractive about it.
For my headphones examples above, here are my answers:
- Looks like bunny ears.
Now put those all together with as few other words as possible:
Hoppy – Headphones that look like bunny ears
Remember that if you’ve identified that there’s a desire for headphones that look like bunny ears, there’s no need to be clever.
Make sure that anyone with that desire will know that you can fulfill it if they read your title.
Video or Written Pitch
Even if someone is interested in the idea you’ve come up with, convincing them to give you money for nothing tangible (in the short term) is not easy.
On some platforms, like Kickstarter, you mainly tell your story through video. It’s the first thing people will watch when they land on your page. On others, like GoFundMe, the story is usually written out.
It’s not easy to create a convincing pitch, and your first few will not be perfect.
However, there are a few things you can do to put your pitch quality at a high enough level to get backers on board:
- Be transparent: It’s an unwritten rule for successful crowdfunded projects that the creator should be either in the video, or at least providing a voice over. No one’s going to give money to someone in advance if they don’t even know who the creator is.
- Be clear: Just like the title, if someone can’t easily identify the 1-3 most attractive features of your product quickly, they won’t continue watching. You can’t count on people watching long videos, make yours as concise as possible.
- Have a quality standard: You don’t need to hire some $10,000 per day video production company. But, you also can’t have a shaky camera and interference in your audio.
So how do you make a good video? Entire books have been written on this.
To save you the time of reading them all, I’ll point you towards the best resources I’ve come across.
First, start by checking out these examples of highly successful crowdfunding videos:
- The Coolest Cooler – raised $13,285,226
- Super Troopers 2 – raised $4,600,803 for a movie
- Fidget Cube – raised $6,465,690.
Next, to actually create your own, go through these resources:
- A Simple Guide to Creating Amazing Explainer Videos
- How to Make Your Own Explainer Video
- A Simple Guide to Creating Amazing Explainer Videos
- 7 Ways to Get Professional Quality Video from Your Smartphone.
Setting a Reasonable Goal
Set a goal too low, and you might now maximize your funding, especially if your cause is charitable. Potential backers see that you’ve hit your goal and don’t contribute.
But set your goal too high, combined with too slow of a start, and it scares off backers who don’t think you can reach your goal.
You need a happy medium.
To set your goal, you need to consider:
- The minimum amount you need to start producing
- Would more than a certain number really help?
- How does your goal compare to similar projects?
If you’re on an all or nothing platform like Kickstarter, be conservative. Many projects in the past have wildly exceeded low goals.
For example, Seth Godin set a goal of $40,000 for one of his books and raised $287,342 on Kickstarter.
Step 4: Creating Your Promotional Plan
If you don’t promote your crowdfunding campaign, it will fail.
Why? Because no one will see it.
The only chance at getting featured on any of these sites is if you show that there’s a significant interest in your offer.
You have 3 main options for promotion:
- Paid advertising
- Build an email list
- Get press.
Options 2 and 3 are the most common and effective for most crowdfunding campaigns.
How to Build an Email List
Having an email list of people who are likely interested in your product is the best way to generate some early backers and get some momentum going.
The most common approach to building a list like this is through content marketing. In short, create valuable blog posts about related topics and collect email addresses of readers.
For example, if you were selling headphones, you could create content around music and sound quality.
I’ve read hundreds of content marketing guides over the years. Here are the best I’ve come across if you’d like to build an email list:
- An Advanced Guide to Building an Email List
- 17 Insanely Actionable List Building Strategies (That Work Fast)
- The Advanced Guide to Content Marketing
- How You Can Build an Email Marketing List as Quickly as Possible.
How to Get Press for Your Crowdfunding Campaign
If you’re building your own email list, you’re essentially creating an audience from scratch.
The alternative is to get your campaign in front of audiences that others have built. Typically, bloggers and journalists.
In order to be successful with this, there needs to be something unique about your product that is intriguing.
Here are the best resources to start with that deal with both finding influencers to contact, and effectively pitching them:
- Blogger Outreach: How to Get Influencers to Promote Your Content for Free
- How To Pitch to Journalists: Expert Tips From Techcrunch, NYT and more.
- The Definitive Guide to Influencer Targeting
- 7 Tools for Finding & Connecting With Influential Bloggers.
Step 5: What to Do During Your Campaign
Once you have your campaign page ready, an email list to promote to, and potentially press contacts, you’re ready to launch.
The majority of your funding will come from the first few days and last few days.
You should promote your campaign to your email list on day one. Emailing them the day before to build some anticipation often works well.
You can’t control when any press comes, but you can tell them when you plan to launch, and request that they post about you as close to the start as possible.
When your campaign is nearing the end of its duration, you’ll see another spike from people who weren’t quite as excited about your product. They may have liked the idea, but were skeptical about whether it would actually get funded.
As long as you’re reasonably close to your goal (60%+), you should see a significant spike in backers in the last few days.
Do not stop trying to get press during this entire time period.
Step 6: Delivering on Your Promises
If you successfully get backed, the work has only just begun.
Of all successful Kickstarter campaigns, 9% never actually deliver on their promises. Don’t be one of them.
Instead, keep emailing your backers while you develop your product and keep them updated on your progress. Don’t have them feeling worried about whether or not you’ll actually deliver the product.
This is so important for your future funding efforts. If you fail to deliver, not only are you going to be starting your next funding campaign from scratch, but those initial backers won’t trust you.
However, if you communicate well and stick to your promises, those same backers will be eager to fund your next project, and it will be much easier to reach your goal because of their support.
Wrapping Up: What Are Your Next Steps Now?
Realistically, it takes weeks of planning and work to launch a crowdfunding campaign.
Go through each step that I’ve included in this guide, and make sure you understand how they all fit together.
If you’re not ready to start planning your crowdfunding campaign right away, you can still start building an email list at any time that will be invaluable when you launch.