Six Key Steps to Crowdfunding Success
by William Loopesko, THE CLIMB Spring 2017 Finalist
Crowdfunding campaigns can be a great way to raise money for your physical product company without having to go through the pains of raising equity capital from angel investors. Beyond the fundraising benefits, crowdfunding campaigns can also help to validate your product, sell it, and build up hype for your company. Angel investors are increasingly looking for physical product companies to have a successful crowdfunding campaign before they will even consider looking at a deal. That said, building a successful campaign requires hard work and making sure many pieces fall into place.
My company, PuppTech, is an early-stage “internet-of-things” company based in Denver. Our vision is to offer traveling dog owners the same experience on the road that they enjoy with their pets at home. We chose crowdfunding as a cost-effective way to begin educating our target audience and to provide the capital for manufacturing the first units for our customers.
Here are some key points to keep in mind to make sure your crowdfunding campaign is as successful as possible.
Choose your platform and your goal carefully
Crowdfunding platforms have different requirements. Kickstarter places many conditions on the companies it accepts; Indiegogo is more flexible in its requirements. Make sure that you understand the “rules of the road” before you get started. We chose Indiegogo because of the marketing assistance it offered, as well as its partnership with Arrow Electronics – our components supplier. Make your goal one that you are confident you can reach; failing to reach your goal can be a major obstacle to subsequent investor financing.
Don’t launch before you’re ready
Part of preparing for a crowdfunding campaign is coming up with your launch date. Once you’ve determined this date, you might feel obligated to stick to it, but being inflexible can be a mistake. If this campaign is your first, you will most likely underestimate how much work needs to be done (just like we did). Remember: you only have one chance to make a first impression for your campaign, so you want to do it right. Our team at PuppTech began preparing for about seven months before our final launch, but we ultimately pushed our campaign’s launch date back three more months to finalize all last-minute details before launching.
Launch big
What is a “big launch”? Ideally you should be able to raise 30 percent of your crowdfunding campaign’s goal in the first three days and then hit your campaign’s goal in the first week. This will position you to crush your goal in the remaining three to five weeks of your campaign. Reach out to everyone in your personal network and ask them to back your campaign on the first day, because strangers won’t typically back until a campaign until it has raised 30 percent of its goal. Before PuppTech’s campaign launched, we spent a month building an email list of 5,000 potential backers. That list, plus our personal outreach efforts, is what allowed us to reach our goal in just three days.
Plan for the entirety of the campaign
While you might reach your goal in the first week of your crowdfunding campaign, it’s important that your campaign continues to be successful for the four to six weeks after the launch date. It’s almost inevitable for a campaign to lose momentum after the initial launch excitement, and most people who visit your campaign page won’t feel any urgency to back the campaign until a week or so before the end. Since most of a campaign’s backers come in through advertising and public relations, you want to have a plan to keep backers steadily contributing funds through the end of the campaign. If PuppTech would have done one thing differently, we would have made a more detailed plan for building on the momentum created during the campaign’s first 72 hours.
Communicate effectively
Successful crowdfunding campaigns live and die on effective communication with your backers both during and after the campaign. You will want to give an update to your campaign backers at least once a week after the campaign launches to keep your backers posted on any product news, company accomplishments or press mentions. You might also want to introduce a funding “stretch goal” to your backers as a way to get them even more excited about supporting you. After the campaign ends, it’s important to send regular updates so that your backers are up-to-date on the progress your company is making to deliver their units.
Make your campaign page look good
Your crowdfunding campaign page should be interesting and look great. Show and don’t tell. Include far more (high-quality) images or animated GIFs than blocks of text and take the time to invest in a professional video. Your backers want to see your product in action and know that it actually exists and works.
Remember, a successful crowdfunding campaign requires preparation, patience, hard work and perseverance. Understanding the commitment and mobilizing the resources before you start are critical success factors, and failure could most likely mean death for any startup that is seeking outside funding. Crowdfunding offers a way to address your potential customers directly and prove to investors that a market for your product exists – and that you know how to address that market.
Need some more crowdfunding inspiration? Check out these three campaigns we love:
