8 Keys To Crowdfunding Success For Social Entrepreneurs
This post was originally produced for Forbes.
Crowdfunding means different things to different people, but it almost always means raising money from the public. For social entrepreneurs, it is all about changing the world.
There are lots of ways to change the world but only three relevant ways to crowdfund.
Donations: while most often used by nonprofits, mission-focused entrepreneurs with a profit motive can ask for and receive donations via crowdfunding—they just can’t promise a tax deduction.
Rewards or presales: like other entrepreneurs, socially-minded ones can offer rewards (posters, t-shirts, mugs) or presales of products you are planning to launch (albums, films, apps and gadgets).
Equity: industry short-hand for raising money via the sale of investments in a business is “equity crowdfunding” but many–if not most–such crowdfunding campaigns don’t offer equity. Instead, they offer notes, royalties or promises of future equity.
The first word you think of when you hear the word crowdfunding.
Regardless of how you are raising money for your organization or enterprise, there are some keys to success that together can be the difference between success and failure.
The crowd is your crowd. Entrepreneurs sometimes miss the point that the crowd is your crowd. The people who will donate to, support or invest in your campaign are people who know you and want to see you succeed. These include family, friends, customers, prospective customers, colleagues, people with whom you are associated in trade associations and literally anyone else you know.
Video is vital. Over the years, we’ve seen a dramatic increase in the quality of crowdfunding videos. Be sure you are utilizing quality video. Your phone may be all you need to shoot adequately effective video. Invest time and/or money in getting a short video ready.
Start before you start. Getting people requires getting those closest to you to commit to funding the campaign before you launch the campaign. By getting 50% of your funding goal committed before you turn on the public campaign, you get a running start and avoid ever having a distant prospective donor land on your crowdfunding page to see you’ve raised only $25.
One-on-one beats one-to-many. While most crowdfunding sites publish statistics related to the value of a share on Facebook, they don’t publish their methodology. I suspect their metrics exaggerate the value of social sharing. Calling a friend on the phone, sending a personal email or text will always be more effective than social sharing. The key here is a genuinely personal ask. Sending a bcc email to everyone in your email list or just sending a donation link in your newsletter won’t work.
Don’t spend more than you make. This sounds easy and while it may be obvious it really isn’t automatic. If you spend $1,000 on a video, $1,000 on professional service, and then offer stuff you must buy and ship it isn’t hard to end up raising $5,000 and still lose money in the end. To avoid this, keep your costs low, spend on marketing only after you start seeing success (and then cautiously) and be sure to calculate your margins on your rewards carefully before you launch.
Media attention is money. Repeatedly, I’ve seen the key to a successful crowdfunding campaign is media attention. When a trusted media outlet shares your campaign, you get to borrow its credibility with its audience to raise more money. Be deliberate about reaching out to reporters and bloggers who may be interested in your social mission, your technology or your team. You can be just as effective doing this yourself as with professional help—if you devote the time to do it right.
Don’t forget social media. I know, I said that one-to-one beats one-to-many but that doesn’t mean you shouldn’t be all over social media with your campaign. Facebook, Twitter and Instagram are all essential. LinkedIn is underrated for crowdfunding—people on LinkedIn have something important in common—money. If you don’t have a presence on all of those platforms, use your campaign as an excuse to launch the missing ones.
Have a ball. Launch your campaign with a party. Most importantly, make the event fun. If you’ve launched with 50% of your goal committed as suggested above, you’ll see some excitement. At the party, give everyone an excuse to share photos on social media with a hashtag. Give them something to take a selfie with, like a celebrity, a movie cutout or an antique car.
There are no shortcuts for crowdfunding success. You must do the work to get the reward. These tips will help you do the right work to maximum results.
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