Crowdfunding has steeply risen in popularity over the past few years, prompting many businesses to jump on the bandwagon and attempt to not only raise the funds for an idea, but also spread awareness of their brand.
Crowdfunding has steeply risen in popularity over the past few years, prompting many businesses to jump on the bandwagon and attempt to not only raise the funds for an idea, but also spread awareness of their brand.
But despite recent popularity, one of the earliest and most successful crowdfunding endeavors was in 1884. The American Committee for the Statue of Liberty ran out of funds to construct its pedestal, so newspaper publisher Joseph Pulitzer called for the American people to donate money to finish its construction. He raised over $100,000 in just six months.
Modern day crowdfunding has exploded in popularity thanks to two of the biggest platforms, Kickstarter and IndieGoGo. To date, both have brought together hundreds of thousands of willing investors to assist the funding of movies, causes, fashion, publishing, technology, and so on. In exchange for lending the money for an idea, the backer can receive anything from a simple “thank you” once the project is finished to a reward with a clear monetary value that equates to a pre-order of a product or service.
When studying the successes of certain crowdfunding ideas, it’s no wonder marketers want to get their hands on some of the action. The Pebble smartwatch, a watch that gives users instant alerts of missed phone calls or emails, originally started through crowdfunding. In its first 48 hours, it earned $1 million, with an overall accumulation of funds of $10 million. And don’t forget the Veronica Mars movie that was recently released; the goal for the movie was to raise $2 million, but due to the passion of the fans, they raised $5.7 million.
But with so many inspiring stories of crowdfunding success, there have been many, many failures as well. So how does your business ensure that your crowdfunding idea will be a success?
Idea Generation
The most obvious first step would be to have an idea that is both practical and will interest people. Many crowdfunding ideas stem from an idea that will solve problems on a small or large scale. Without this fundamental basis, there’s a good chance your idea may not get off the ground.
Preparation
First and foremost, a startup idea can cost a significant sum. Ensure that your business (or your own pocket) can support your idea. From there, take the time to develop your idea to match the amount of funds you have before asking for the amount needed to continue the project.
Get a general opinion on your project through friends, family, and even the internet. Receiving feedback can be an integral part of the process, as you can then tweak and solidify exactly what your project is and what you are offering for it.
Generate initial marketing as well prior to launching your campaign. If you see an interest in your project, it will be easier to hit the ground running and produce your product once the funds have been raised. This includes having already establishing a website for your project, a way to store and distribute a product if your project is a physical item, or a customer database for managing and fulfilling orders. This is another crucial step, as once the campaign begins, you will have little time to focus on preparations, as there will more than likely be a multitude of questions to answer from potential investors.
Campaign Success
Setting the funding target can be critical to the success or failure of your crowdfunding campaign. The lower the goal, the quicker and easier it will be to achieve that goal. You will need to find just the right number amount to ask for your campaign so it can be realistically reached, as well have the financial stability to deliver the product.
Prepare and deliver a presentation to accompany your project that will allow your campaign to stand out. The more unique and helpful your project is, the easier it will be. Add to that a presentation that is short, quick, and to the point, and you may have a noteworthy campaign.
If your crowdfunding campaign is successful (or even if it isn’t, but you still honor your backers), your brand could see an influx in potential investors as well as future customers. And sometimes creating a campaign is simply all about awareness and getting your brand out there. It is also a great way to gauge interest in your products, as well as gain insight into further marketing techniques.
Image: Rocio Lara: https://www.flickr.com/photos/analogica/