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A-Z of crowdfunding

A-Z of crowdfunding

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Published by Crowdsourcing.org

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Published by: Crowdsourcing.org on Feb 24, 2013
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09/14/2013

 
A-Z of crowdfunding
I’ve read a few top 10s and A-Zs of crowdfunding - so I thought I’d producemy own to support people developing their campaigns. Anne StrachanCrowdfundUK.organne@crowdfunduk
A
sk
- this is the essence of crowdfunding - you are asking people for moneyor support. You need to look them in the eye, smile and bring them with you.Look at it from their point of view - why should they give any money away toany project at all; why should they even consider looking at your project andwhy should they give you any money. Crowdfunding is about the donor or investor more than it is about the project.
B
udget
- have you drawn up a realistic budget that you think you can raisefrom your social networks. Is it open and transparent? Have you added in thecost of rewards and commission? Think about what can be in the budget.When a potential investor questioned a startup looking for funding the owner said they were going to pay themselves a salary of £35k in year one.Needless to say they did not get funded.
C
reative
- the pitch, the plan and the ask needs to be innovative and fun. Itshould make people want to be part of your project - from your colleagues topeople you don’t know. A deadly boring pitch with poorly thought out rewardsfollowed up by a couple of tweets and impersonal emails won’t make your project fly.
D
onate
or invest in other crowdfunding pitches yourself. We’re very good atasking for money but not so good at giving it away. The more people whodonate to projects beyond their immediate social networks - the more projectswill be funded. What goes round comes around.
E
ngage
you social networks - not just tell them about your project. Your pitchneeds to not only tell a compelling story but engages the reader in the project.They should be excited and moved by it. Again - look at it from their point of view - what would interest them enough to be involved? The more involvedpeople are - the more they will spread the word.
F
riends and
F
amily
- most donations come from the project owner’simmediate social networks. They will have to donate 40% plus of the targetbefore the campaign widens to looser social connections. It seems that weinfluence to three degrees - i.e. your friends, friends of your friend’s andfriends of friends friend’s - and then our influence stops. Try to get your friend’s friends involved so that they communicate their enthusiasm about theproject - rather than just forwarding your email.
 
G
enuine
- show yourself, be passionate, be credible, be thankful - andabove all be genuine. People give to people if they believe in them. Theywon’t give to a project, however worthy or innovative, if they don’t trust themaker. And you have so little time to build this trust. Use your past work,social capital, friends and family to build this trust for you.
H
umour 
- however worthy your cause, a light touch helps. If you makepeople smile they’ll like you and you’ll have half won them over. We give topeople we trust - and like.
I
nvestment
- business ideas for gadgets, films and music work well for thedonations and rewards model of crowdfunding. But service based startups or established business looking for growth capital might look to equity-basedcrowdfunding. In the UK and Europe this is happening successfully with anumber of platforms. The US will have to wait awhile longer. For campaignersmost of the tips remain the same with the addition of a robust business planand financials. The motivation of donors is different and though they will investwhen moved by or connected to a proposition they will be also be looking for a financial return on their investment.
J
argon
- check your pitch that it is jargon free. This is common in non-profitand technical campaigns. Ask someone outside your business sector to readyour pitch - ask a child of 13 - ask anyone. The more people are involved atthe start helping you - the more they will have an attachment to the campaign,
K
eeping
momentum throughout the campaign can be difficult. The usualpattern is that there is a flurry of donations at the beginning and ends of thecampaign and a lull in the middle. Unless there is significant movement in thisperiod the campaign will stall. This period can be demotivating. Plan inadvance what you will do - add another reward, stage an event or stuntbringin a celebrity?
L
aunch
with at least 20% pledged immediately you go live. When othersreach your landing page they will see the project is viable. We have a herdmentality - we like to join in when we see others have and are wary of donating first. If you think about it - if your friends and family won’t support you- why should anyone else.
M
ore
than just the money - if you see crowdfunding as just a way of raisingmoney and by implication your donors as just providers of this money - youare missing the point. Yes you can raise money but crowdfunding is aboutconnections and engagement - it can build a customer base, raise your profileor awareness about an issue, test ideas, act as a team building catalyst andinvolve your community in making something happen. Broaden your aims andthen even if you don’t reach your target you’ll have learned and gained a lotmore.
N
on-profits
- grants are more competitive than ever, loans have to be repaidand major donors and corporate support are drying up. Some non-profits
 
might struggle to use crowdfunding because it means involving the wholeorganisation in the campaign. You can’t leave it up to a single fundraiser emailing the same database over and over again. Crowdfunding works for anagile, flexible and innovative organisation who can mobilise a team of dedicated volunteers for a new specific tangible, visual and exciting project.
O
ffline
- online social networks work when they reflects real world socialnetworks. Think beyond social media - everyone might miss your tweets andnever see you Facebook updates. Also not everyone likes to donate online. As personal connection to a project is the key reason why people donate howcan you build face-to-face activity into your campaign?
P
areto principle
- the old 80-20 rule can apply to crowdfunding - 80% of your donations need to come in before you tip to get the last 20% - that’smaybe obvious but if that 80% of your donations come from 20% you mustfind, connect and continually engage that 20% as a priority. It may besobering but it might be that only 20% of you social networks will support you.We then have 20% of total donors donating 80% of your target. Who arethey?
Q
uirky
- you have a creative pitch with a light touch. But you might benefit if part of your pitch is off the wall and edgy will sell - particularly for film, musicor digital projects. Non-profits should look at communicating their message ina different way - to reach a new audience.
R
esonate
- Seth Godinasked these questions of startups which are applicable to crowdfunding: Who is your project for (i.e. your crowd), whichsub group of your crowd (the 20% above) What do they believe? Have theyever done something like this before (easier if they donate online or havecrowdfunded themselves etc)? Do they know about your campaign? Do theytrust you? Will they trust you enough to listen to your story? And finally doesthe story resonate enough for them to invest or donate? The resonation is themost important - it’s about them, not you.
S
hort
- short campaigns of 35-40 days appear to be the most successful. Thelonger the campaign the harder it it to maintain energy and commitment. Keepyour pitch and video short and punchy. Videos should get the key ideasacross in 30 seconds and be no longer than 2 minutes. If you want to saymore - put it in an update. Don’t have reams of text on your landing page - no-one will read it. But have the information in updates or links so they can findout more if they want to.
T
eam
- the more the merrier. Everyone in an organisation needs to beinvolved - from volunteers to trustees or directors. If it’s left to one person itwon’t work. Who should be part of the team? The person who spends all thetime tweeting in meetings - get them involved. The colleague who sneaks onFacebook at every given opportunity - get them involved. The person whocould charm you into buying a used car - definitely get them involved! Your friend’s child who makes YouTube videos - get them involved, and their 

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