3 Things You Need To Know Before Crowdfunding Your Startup
More and more startups and entrepreneurs are turning to crowdfunding these days and not just equity crowdfunding (i.e. Wefunder), but rather, perk crowdfunding (i.e. Kickstarter and Indiegogo).
Crowdfunding can be a great tool for startups and provides much more than just funds (e.g. market validation, a loyal customer base, early adopter market, etc.), especially for younger, unproven (Millennial/Gen-Y) entrepreneurs.
As I get further into my own attempt at crowdfunding a startup, I’ve found three key takeaways that entrepreneurs, or anyone else, considering crowdfunding need to know.
1) Personalization = Obligation
The less personal your communication is, the less others will feel they need to give or support you. "Obligation" may sound like a dirty word in this sense, but if we’re being honest, that’s the feeling you need to convey if you want people to give.
Asking in this manner and creating that obligation may feel uncomfortable, but it’s what is needed to successfully crowdfund the 99 percent of cases that don't go viral without help. So, if you just can’t bring yourself to doing that, crowdfunding may not be for you.
Additionally, it often takes more than one interaction to create that "obligation" (an old marketing adage suggested it takes being exposed three times to something before it sets in).
2) You Are Underestimating The Time Commitment
Unless you’re the one in a million exception that goes viral without you doing anything, you’re underestimating how much time your endeavor will take up.
It will be your life; you will have to email, call, text and private message everyone you can think of several times, then panic and build more lists of people you can reach out to. And repeat.
When your crowdfunding campaign is live, it will completely consume your life (if you want to succeed and reach your goal), so don’t plan on being productive in any other realm.
3) Impressions Have Little, If Any, Value
This one I learned the hard way. I thought by getting impressions and views on our campaign, it would drive donors and help us go viral.
The first week, I spent hours and hours posting it to Facebook groups, Google+ communities, forums and anywhere else I saw fit. I don’t think a single donor came from any of that work.
Just getting eyeballs, or impressions, has little to no value if they aren’t your target user and have no obligation to support you (once again, increasing the importance of personalized communication).
Don't waste your time, energy or resources focusing on gaining mass impressions.
Bonus Takeaway: Plan Precisely and Exhaustively
Plan out ahead of time exactly where your money will be coming from, and how much you expect from each avenue (e.g. family, friends, coworkers, Twitter engagement, etc.).
Although it's nice to hope for anonymous givers and bumps from press or going viral, you can't count on these things. So, it's important to set a goal according to what you believe you can raise, and know exactly where you expect that money to come from and how much you expect to come in.
This also makes tracking your progress much easier and allows you to see where you're on track, and where you may be falling behind.
If you are coming up short from any avenue, make sure you have a plan B, C and D in place because once the campaign starts, it doesn't slow down and will be over before you know it.
Our Kickstarter campaign is still going on, but I’ve already seen so many things I should have done beforehand or differently. If you’re considering the crowdfunding route, please take these pointers to heart, and also check out the zillion other resources online before getting started.
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