Among the different forms of crowdfunding that are now available to entrepreneurs and creators, the reward-based option is presently the one most favoured by those working in the creative industries, with many tech products also finding their feet on reward/perk-based platforms like Indiegogo or Kickstarter. The reward-based option can be highly effective if you or those involved have an existing set of fans or subscribers to call on for funding when you plan to commence a new initiative. You can develop your own site to collect funds to avoid transfer commissions (except Paypal’s), use a white-label solution like Sparker, head to established generalists like Indiegogo or, if you think it will sharpen your focus, find a niche/country-specific platform. If you don’t mind the administrative headache that will likely follow, you can even just direct your people over social media/blog etc. straight to your Paypal account.
But what if your fan-base is little more than a handful of people who know that you’ve ‘been working on something for a bit’?
Sadly, unless you have a physical prototype that you can show with pictures (it doesn’t even need to work, but it should make people think they’ll be cool by having it), you are going to have your work cut out reaching any more than those people who know you’ve been ‘working on something for a bit’ – regardless of the reward-based platform you’ve chosen. Big and small platforms alike are principally an attractive and easy way to present your idea with efficient fund collection and management systems tied in. They might help you raise some unexpected funds from people you don’t know, but this will only occur once you’ve worked seriously hard for the platform. In short, your idea will probably not only tank, it will tank quicker than you can say Panzer.
Crowdfunding for exposure or funds?
The good news for non-tech creators who find themselves in the ‘unknown’ category described above is that there is something that all crowdfunding platforms can provide if you plan appropriately: A six week event that can bring you very affordable and potentially wide exposure. This is also the case if you already have a working prototype and want to market-test an idea before going full scale with it. Today’s post is principally about generating this exposure through reward-based platforms, partnering, and preparing failsafes if things aren’t where you’d like them to be. If you are successful in reaching a certain level of exposure, let’s call it the tipping point, you may see funds from outside your circle start to come in. Because our campaign is happening now, you can see for yourself whether the suggestions I make have worked on the final day of the campaign in terms of your desired objective – funding or exposure. Yes, I am warmly inviting you behind the scenes of a live crowdfunding campaign.
The Starting Situation
After focussing on the Addison’s Tales project for the last couple of years, I found myself in the ‘unknown entity’ position a week before our campaign launched on September 7. In a perfect world, I would have already alerted all those on my subscriber list a few times in advance to help ensure that 20% to 30% of my required funds would come through during the first few days. This is highly desirable to demonstrate early traction. Due to my focus on the product, however, my subscriber list consisted of me under the pseudonymous ‘Tester One’ and ‘Tester Two’, and a lovely teacher in Australia somewhere who probably thought she was subscribing to something else. A rounded average of 0 hits were being made to the company website, and our Facebook site was followed by 97% of people whom I either knew directly, indirectly or who had once wished me well.
Here’s the (very) low down:
So, how did we get that boost in hits on the day we began? Using Gimp, I managed to knock together a campaign image composed of excellent works from the 2D and 3D animators and post it on Facebook. Nothing groundbreaking, but I felt it to be clean and uncluttered, and it fitted within the ‘no more than 20% text requirement’ for boosted Facebook ads (600 x 315 pixels). The tip here is to ensure you prepare some really attractive visuals well in advance and make sure your accompanying text (typed into the ‘what have you been up to’ section) is no more than a sentence or two.
Soon after launching the campaign on Indiegogo I gave the post a $60 ‘boost’, targeting those I felt would respond best to our product. In the first day of the campaign, a Sunday when mothers in many countries are often home with their kids, it received around 1200 likes. Many of these likers did not visit the pitch page however, although many (roughly 80) did visit our Facebook page and like it – a fan increase of 55% in a day with a broader CPA of 5c. Incredible, I felt, until I saw that these likes were not converting into donations. Was it my fault for not activating the Paypal payment option thinking that I couldn’t accept $US donations to a Euro account? This after selecting Germany’s Indiegogo just for that purpose? Ahem …
Schoolboy Error 1: You can activate your Paypal account to receive the foreign currency you are collecting.
I quietly corrected that little d’oh on Monday. The good news was that many of my lost potential backers had nevertheless gone on to explore the company website, resulting in that first peak you can see above. Below is also a look at the Facebook figures:
Structuring your pitch and concept to aid partner search and acquisition
The first media well-wisher, PVC, came on board the following day, and you can read last Monday’s post here. I had already reached out to PVC to see if they would like to hear of my approach to digital storytelling and got the reply that the crowdfunding aspect would also be of interest, and also how we’d brought our social media partners on board. This approach boils down to 3 points:
- Who’s involved in the production of your idea
- Who’ll like it
- Who’ll like you
Under the first point, there will be quite a list you should be able to quickly determine. What software or tools do you use at each step and when moving between steps in the workflow? For example, we reached out to Wetransfer as we transfer files with this service. A discrete product placement at 2:02 in our pitch video shows our reliance on them. They also happened to fall into point two, since they have a strong art focus as well as being a fellow bootstrapped startup. We also use MuseScore to write our music, and again, because we are downstream in the supply chain and taking a fresh approach to stories and songs, we quickly found some affinity with them.
Point two can include local innovation centres, any potential multipliers (in our case teachers) and the organisations who will want to reach your multipliers and final audience. The point here is to explain how they gain: can they be featured in the video, pitch page, or in your project somehow, can they be early reviewers, audience, guests etc? You can try journalists here too but expect to send one or two follow ups during the campaign to receive a reply – they will often only come on board either after or towards the end of the campaign once they see it is of public interest. Instead, focus on tapping the powers of your partners’ social media initially, as this really is the modern broadsheet, and what you can offer your partners in return. For this you can even consider writing helpful pieces for accomplished online magazines with a specialised focus in your field ; )
The final point can include alumni, clubs, organisations and individuals associated with any competitions you may have won. Repeat this thinking for every person attached to your team.
Implementing failsafes prior to the campaign
This is possibly the most important factor for unknown creators who take the partnership approach. There is no reason for your crowdfunding campaign to tank, especially if you are using it to build awareness or market test or are using the flexible funding option where you pay higher commission if you don’t reach your first funding goal. The internet is both permanent and brief – permanent in that all casual observers will always see if your campaign succeeded or failed by glancing at the final figure; brief in that they rarely care to look any further to find out why. This means structuring your first reach goal to be a minimalist version of your bigger idea, or a component thereof. You should be able to reach this goal yourself via planned injections if third party funds don’t reach the milestones you set in advance. This may involve either putting aside your own cash for the purpose, or calling on your close backers who believe in you and your idea to transfer funds to your account in advance.
But isn’t that what the fixed-model of reward-based crowdfunding is designed for, also known as ‘all of nothing’? Yes, but there is a psychological component that this can’t really address. Because why would anyone give you anything when it’s not clear your project is going to reach its first goal? In most cases, people don’t want their money back once they’ve given it – they want to see the project completed. This is one of the aspect of the reward-based crowdfunding that some equity-based platforms partially address by assessing concepts before they go live. Nevertheless, you can address it yourself by showing people you back your idea by transparently putting your own cash into your campaign to bring it back up to speed at regular points if funding levels aren’t where they should be. Like having ‘skin in the game’ if you will.
Some campaigners might prefer to do this using the anonymous donation option. They needn’t, because this is an opportunity to use the update function to show that you, an unknown doer/maker/entrepreneur with a cool idea, are willing to underwrite your own idea to guarantee at least its minimalist version gets to those early backers who took the risk to back you at the very start. You should then aim to have the first reach goal passed by the third week (earlier if you choose), working all the time on building your exposure, and leaving sufficient time to reach the goals you want to reach. The more media partners you have on board prior to your campaign the less likely you’ll have to take this step, as your funding will be ‘organic’, but it should nevertheless be planned for.
This approach won’t help you get more backers if you can’t reach the exposure tipping point, or if the idea still needs sharper customer/audience focus, but it does send a clear message that you’ve done your homework and you’re thinking of your early backers (who may in many cases also be your friends), those on your team and your partners. All your subsequent reach goals above your first reach goal should also be set out clearly on the pitch page at the start of the campaign. At the moment, adding stretch goals is written into the body text and not entered into fields, so new goals don’t automatically ‘open’ upon the attainment of the last. This may be addressed in time, but for the moment, don’t fall into the trap of thinking ‘if we get this amount, we’ll put the next reach goal up’. That shows a lack of planning and the suggestion that you don’t expect to reach the first goal. Remember, if you must invest your own cash, at the end of the campaign you get that investment back minus the commission and potentially fx fees, but that commission is what you are paying for the exposure, the platform itself, and the bonus chance to be featured in the platform’s newsletter (usually activated when about a third of funding goal is reached and if your idea impresses the powers that be who make the newsletter). If it’s funding you’re after, then growing this exposure to the tipping point is really your aim, bearing in mind that you can use the buzz as part of your wider, more traditional capital-raising endeavours.
Now for the caveat. I have not seen this transparent approach before and I cannot guarantee how your potential backers will perceive it, but I do feel it can bring you closer to point where you’ll know your main idea was at least seen for you to better gauge the extent of its audience potential. The reason I implemented it in our campaign was that in the months prior to the start, we reached out to a number of potential sponsors we respected. The response was always the same: ‘nice idea but make it happen first’. So we needed a way to keep the door open for those sponsors we wanted on board, and for whom we had spent time crafting individualised pitches just in case (in a perfect world) all our sponsorship packs got sold and the campaign was a success. From there it seemed that by making a completely obligation free down-payment on behalf of some sponsors in the form of a ‘corporate reservation’, we would also help ensure our campaign remained on track if we detected any early warning signs (in essence demarcating ourselves as an underwritten campaign and not a ‘naked’ one) and thereby be able to use the campaign itself to acquire further partners to increase exposure.
To find out more about the project, check out the video below or visit our Indiegogo page.