Most entrepreneurs I speak with do not really realize what it takes to run a successful crowdfunding campaign. This article is about rewards based Crowdfunding, really one of the more difficult Crowdfunding types to run (versus equity, cause, or debt based Crowdfunding).
At a high level, Crowdfunding, like developing and putting on a play such as ‘Cats’, requires 80% preparation and 20% execution. If you think of what it takes to develop and launch a Broadway show, there is an immense amount of preparation including developing the entire play, sets, musical scores, months of rehearsal, and then a launch or opening. Actors, musicians and other crew may rehearse 10 or 12 hours per day for months to get ready, and then execute the play each day or night.
Crowdfunding, done correctly, has similar 80/20 ratios (although much shorter in duration than a Broadway play). A successful crowdfunding campaign will have 30 days of planning, 45 days of outreach, and then about 35 days of actual Crowdfunding. Planning is key as all outreach, content development, strategies, and goals need to be set prior to any execution. Next, a solid crowdfunding campaign will have up to 45 days of outreach to constituents including building audiences on social media, connecting on email, talking with friends and family, and other partner outreach. Media outreach is essential as well letting the press know about your upcoming campaign. If you look at the most successful campaigns, you’ll find that there was a lot of outreach to the media and they secured articles with online publications, print media, and even interviews on TV and radio.
The Crowdfunding Platform is only the Venue (Theatre)
Most people I speak with have the false belief that there are thousands of people trolling Kickstarter and Indiegogo for interesting campaigns in which to invest. While there are some people that spend time looking through various companies and products… like a Broadway play, if you want people to buy tickets and attend, you need to reach out well before opening night with a ton of marketing to make sure that you fill the seats. You need to generate your own audience to attend your crowdfunding production.
Think about it. If you were going to develop and launch a Broadway play, would you spend years of time developing and preparing the play, months and months of rehearsal, hundreds of thousands of dollars to build sets, and then simply open the play at a given venue?
Of course not. You would make sure that you reached out to all of the important media, sites, and people to ensure they would attend your play. You would like to see pre-purchased tickets that would fill the venue for a year or more. This would give you confidence that on opening night and through the next year, you would have enough audience to support your efforts.
There Is No Audience Unless It’s Your Audience
Crowdfunding is very similar in that the platform (like Kickstarter) should be considered an empty venue where you will bring your own audience to attend your crowdfunding campaign. This is critical to know. Many crowdfunding sites want you to believe that they have tons of people looking for companies or products just like yours in which to invest. However most crowdfunding campaigns fail because they don’t know that they need to fill all of the ‘seats’ with people they bring to the venue via a ton of outreach prior to opening night. I see so many crowdfunding campaigns that raise zero, or very little, because the companies or individuals did not build their audiences prior to launch.
Broadway Critics Can Be Brutal – Crowdfunding Is Unforgiving
And since most rewards based Crowdfunding campaigns run about 35 days on average (best practices), once the campaign launches, it’s too late to make adjustments. And worst of all, like a Broadway play, you have one launch to get it right. On Broadway, if the critics tear up your play, it may be hard to recover. In crowdfunding, it’s nearly impossible to launch another campaign and make it a success if the first one failed.
Here’s what to do:
- Assess all of your lists and contacts before considering Crowdfunding. If you don’t have a lot of social media followers, or large email lists, you may have to acquire these in order to have a successful crowdfunding outcome. You may want to consider running Facebook ads in order to get people interested in your product or service while letting them know you launch a crowdfunding campaign soon.
- Study crowdfunding campaigns and look at the strategies they used. You can reverse engineer nearly any crowdfunding campaign by simply looking at all of the steps they took, the types of rewards they listed, the communications they executed and the press they achieved. If you believe that you can come close to hitting the types of communication numbers of a successful crowdfunding campaign, then you at least have an opportunity for success.
- Once you believe that you have a chance at crowdfunding success, put a plan together and outline all of your strategies, rewards, timing and communication first. Once you have a plan in place, then you can begin execution.
- 45 to 60 days prior to launch, you need to begin outreach to all of your constituents, and let them know that you are planning a crowdfunding campaign that will launch on a certain date. Note that you will need your website up and running so that people have a place to refer back to after they receive your note. Additionally, you want to contact all of the media who could be interested in writing about, are interviewing you on your product or company. You want as much press as possible prior to crowdfunding launch.
- If you executed the above, you might have a few thousand two even 10,000 followers, fans, friends and likes, ready to support your crowdfunding launch. You just filled your theater for your upcoming production. Congratulations. (note this article is high -level – there are dozens of sub-tasks that need to be executed as well for a successful campaign).
Running a successful crowdfunding campaign, like a theater play, is not for the faint of heart. Do your homework, planning, preparation and massive outreach prior to launch. Then, if your product, service or company is interesting, your audience will show up and you should achieve crowdfunding success.