Actually, crowdfunding IS the only way some projects can come to fruition, despite the objections of some who claim, “If the product is any good, someone will make it happen without crowdfunding.” More than that, some really great projects happened thanks to Kickstarter, Indiegogo, and the like.
Even though Kickstarter isn’t even a decade old yet (it launched on April 28, 2009), and similar platforms are just as young, a few constants have emerged for users and funders alike, not all of them good ones. The first major challenge comes from the fact that if you are leveraging a capital-raising platform, you are probably filled with the entrepreneurial spirit. This isn’t inherently a bad thing, but it certainly indicates your risk tolerance is higher than the average individual’s — specifically, the individuals who will be plunking down money for your speculative product. The need to manage expectations responsibly is paramount because not only do you want to run a clean campaign now, you want to create good will so that, should you choose to run another campaign, you can bring along the people who you connected with the first time around. Your project is your passion but your campaign is your brand, and you don’t want to blow it up before it has even gotten to the launching pad.
I recall reading about one crowdfunding effort. The guy was absolutely ablaze with passion for his idea and it was infectious. And he did everything wrong you can imagine when it came to the execution, not because he didn’t intend on doing his best, but because everything got the better of him. He made it across the finish line, but only barely. He did not budget properly and his extra goodies cost him far more than he planned. The manufacturer he contracted to make his item had financial problems of their own and eventually filed for bankruptcy before fulfilling the work. The creator, embarrassed and despondent, refused to comment on what was happening and kept his funders blind. He eventually returned all their money because he could see no way forward.
The guy was not a crook. He was just not ready for the responsibility of promised transactions, and that’s exactly what crowdfunding platforms do. They allow you to broadcast your promises in one convenient location. Following through is still up to you.
So let’s be clear about this: if you’re looking to bilk people out of a sum of money, counterfeiting is a heck of a lot easier. Crowdfunding is done by people who really want to make their product happen and would really like you to be happy with it. Any belief that it is anything else does not jibe with the evidence. The difference is that some folks do it better than others and are prepared for pessimistic possibilities, rather than being delirious on optimism and stumbling into traps.
Here are some ways to make your next campaign a little more successful, as aggregated by users of such platforms.
1. Nobody really needs your product. Every now and then a product is marketed on a crowdfunding platform that is meant for the greater good. It could be an innovative strainer that can help purify water to acceptable levels in impoverished communities. It could be a test that will help people with conditions like diabetes identify blood sugar spikes sooner than current and clunky equipment can. But mostly, crowdfunding presents products of “want,” not of “need.” Keep this thought in mind when you are writing up your copy for the advertising blurb. You are appealing to a desire for fun and/or nostalgia, and not because your project would change anyone’s life. Expect that people need to prioritize their discretionary spending, and try to appeal to how they will enjoy the product, not that the project will save them in any significant way. It won’t, so play fair.
2. Pricing. So let’s say that you are coming up with money to budget out an independent film. Like so many crowdsourced projects, you’ve offered extra goodies as perks to help drive people to pony up the bucks. It’s a useful tool, but several creators have gotten in way over their heads on the perks side forgetting that not only do they have to pay for the production of these trinkets, they also have to pay for the shipping and handling of said trinkets. They haven’t factored in the time required to manufacture the add-ons, nor the time to personally autograph each one like they promised. Any good perks package should compliment the final product, not compete with it. Intangible perks like getting one’s name in credits are also terrific additions and come with very minimal costs. But whatever the costs are, you must add that to whatever your final goal total is. Getting all the money you need to carry your dream forward is great, but not so great that you should go immediately bankrupt afterward.
3. Pricing part two. A typical scenario with crowdfunding is that the last two weeks of the campaign are murder and terribly unhealthy for the people who bring it forward. That’s because everyone who has signed on are already pre-existing fans, friends and family, and the occasional curiosity seeker. Those last two weeks are owed to the real public, the ones who don’t know you from nothing, and are those you have to sway on the merits of the project itself. The amount of money required to pull you across the finish line is typically not too far from the goal, so that flapping piece of tape is tantalizingly strung before you if only you could get people to move.
Here’s a piece of tough-love for you. If you are not prepared to put up 25% of your total out-of-pocket or don’t know an angel investor who will swoop in at the last minute, you’re not prepared to do the campaign. Some crowdfunding sites let you keep whatever you raised even if the campaign technically falls to failure. A lot don’t. In either case, if you’re serious about making this happen, you need to expect the public is not going to pay it all for you. You must still be a majority investor in your venture. If your project catches fire and you are suddenly on-track to meeting goal well before the end of your campaign, congratulations! That’s terrific! Rare, but terrific!
4. Keep talking. Creators do a lot of dog-and-pony prior to the launch of the campaign. That’s good. That’s what you need to do. You are your own best spokesperson. But far too many creators clam up when the campaign is going, and way too many go radio-silent afterward. This creates an air of distrust for your backers. You were all at once Chatty Cathy and now you’re practically in the Federal Witness Relocation Program. No one says you need to respond to every question individually. Seriously, who has the time, especially when 80% of the questions are “When will I get my thing?” But you do need to address the underlying questions being asked in some way. You are now your own customer service department and, as such, you must treat your customers with the same consideration you’d expect if you were in a brick-and-mortar store.
An idea: weekly updates. I know that sounds like a lot, but if 80% of those questions are “Where is my thing,” then one carefully worded post can calm 80% of your investors in one shot. And not all questions are alike. Someone will ask something from left field that you never considered. The fact that one person said it doesn’t mean only one person thought of it. A weekly update assures your funders that you’re in it to win it, from the moment you start the process to the last package going out. If you’re not prepared to have that level of communication, you also need to ask if you are ready for this responsibility.
5. Oh, and when will I get my thing? Another issue that keeps coming up against creators is that they mark their deliverables being delivered far, far too early. In any manufacturing condition, bad things happen. Machines break down. Supply chains dry up. Delivery companies botch the works. But at the same time, campaigns that promise delivery on the sooner side do better than those that have conservative completion dates. It is human nature to want everything sooner than later but resist the temptation. My suggestion is that you should determine the date you plan to finalize and complete sending out materials and then tack 365 days on that.
You heard me. One year. I can’t tell you how many times projects have extended into the anniversary territory, not because the creators weren’t sincere in their efforts to complete — they most certainly were — but because stuff happens and Murphy is name-dropped for a reason. You are now thinking, “Oh my lord, that means fifty-two weekly updates, doesn’t it?” That could be. But in providing a highly-conservative delivery date you can accomplish one of two things. 1) You keep expectations reasonable. If you promise the moon in two days and it takes two months, your customers will probably forgive, but they’ll probably not forget. Why do that to future prospects? 2) Your project likely won’t take a year to complete. Imagine what a hero you will look like if, out of the blue, you told people that they will get their stuff in September rather than December as you projected? Better than vice-versa, right? But at least if you give yourself that one-year cushion, you afford yourself the prospect of positive outcomes rather than always needing to fight negative ones.
Nobody I know of goes into a venture like a crowdfunding campaign lightly, and they don’t do it with the intention of angering the clientele. On the whole, people want to make great things happen and they want the user base to like the process, if not love it. Sometimes that requires the “vegetables” of longer lead-times, longer delivery times, and more out of your own pocket than you think. Yet these tips will give you firm footing when it comes to execution, will keep your new customers engaged in your success, and will likely keep them in the loop for your next venture.