Best Crowdfunding Strategies for Startups
Avoid a startup funding flop with proven strategies.
Crowdfunding has taken the world by storm, and successful campaigns have given us such wonders as the Fidget Cube, the return of Reading Rainbow, and the Exploding Kittens game. If you’ve read up on the pros and cons of crowdfunding for startups, asked these key questions, and decided it’s the way you want to raise capital to launch your new product or service, take a look at these strategies to achieve success.
Start With a Plan
It may be tempting to throw a quick pitch together on Kickstarter or Indiegogo and hope for the best. But that approach is sure to land you on a list of crowdfunding fails. For the greatest chance of success, you have to do your homework. Learn about the different types of crowdfunding, the rules and regulations, and take time to read about both successful crowdfunding campaigns and epic fails, too. Clearly define your target audience, and build a plan you believe will appeal to them.
Determine how you’ll spread the word about your campaign, what you’ll give the backers in a reward-based system, what will happen before, during, and after funding, what will happen if the project isn’t funded, and so on. The more well-thought out and detailed this plan is, the easier it will be to execute.
Compare Crowdfunding Platforms
Not all crowdfunding sites are created equally. Depending on the nature of your project, there may be more advantages to choosing a particular option over another. Spend time researching the best crowdfunding sites to determine which one you should use. Sometimes it’s not your product or service that’s a bad idea—it’s the wrong platform. If your target audience isn’t actively using a platform, it doesn’t matter how awesome your campaign is.
Tell Your Story
Weave the facts of your launch into a story to go along with your campaign. This will make it easier to develop an emotional connection with potential backers. If there’s no personal story to attach, share your vision instead. Detail the problem your product will solve with a personal tone to your messaging.
Do your research ahead of time and set realistic goals. Find the right platform that suits your needs. Craft valuable rewards that people will be interested in and promote your efforts online and off.
Crowdfunding campaigns are built on reciprocity. Backers will get something in return for their investment in your company—whether it’s free or discounted product at launch, shout outs on your website, or something else the audience thinks is awesome. As you build your reward tiers, think about what you would want if you were the consumer. Ask friends and family for their thoughts, too.
Create Marketing Assets
If you have a company website, build a landing page specifically for your crowdfunding campaign so people can go “off platform” to learn more about it or connect with you. Write a blog post about the campaign launch so your website traffic can direct people to back you. If you don’t have a website already, build a website just for your product launch. Design fliers you can print and distribute offline. Create videos to include in your campaign and host on YouTube. Don’t just copy what others have done—invest in professional help to create high-quality personalized materials that align with your project and its messaging.
Go beyond your total fundraising goal and consider timeline goals, production goals, and other goals that are necessary to keep the project moving forward. Simply saying “raise $100,000 by X date” isn’t enough. You’ll have investors to report to who will expect their rewards delivered in a timely manner. Knowing ahead of time what your production goals are will help you choose the right vendors who can meet your expectations once you have the capital available.
When there’s a limited supply of something people want, demand automatically increases. Build demand for your product or service by limiting your highest tier rewards to one or just a few. The inflated demand for those rewards will result in higher pledge amounts for your campaign.
Keep Investors in the Loop
During the campaign, communicate with investors through frequent updates. There’s no need to divulge all the details, but honesty and transparency go a long way toward building trust. After it’s funded, you’ll also be able to post updates to let people know where you are in the process and when they can expect their rewards.
Promote, Promote, Promote
After you’ve published your crowdfunding campaign, get people talking about it. Share it on your social media channels. Share it with friends and family, and ask they do the same. Offer to guest blog on relevant platforms to spread the word. Consider investing in targeted ad campaigns on Facebook. The wider your reach, the more potential there is for investors to see it and take a chance on you.
If at first you don’t succeed, try again. Making small adjustments in your campaign and marketing assets can make a big difference in the funds raised. If your project gets funded, be sure you follow through on your promises because this will keep investors happy and build credibility for future projects you may wish to crowdfund.
- Compare crowdfunding platforms and fees
- Compare similar past campaigns and see how to make yours better
- Seek feedback on your ideas from trusted friends, family, and colleagues