I like to think of crowdfunding as a social form of IPO (initial public offering). In the traditional IPO, you take a business to the public in order to raise funds for it by selling part of the business to the public. The same thing sort of happens in crowdfunding—you go to the public to raise funds for your business’ project or even a personal idea.
Unlike in an IPO, the people who you raise funds from don’t get any part of your business. They simply contribute to help you realize your business’ objective or a personal project.
The concept of crowdfunding is very straight forward and it brings with it the hope of easy money. This hope is reinforced when you hear about madly successful crowdfunding projects like Gosnell Movie, Sondors Electric Bike and Kite Patch which were able to raise over $2 million, over $6 million and over $500,000 respectively.
As anyone who has done any crowdfunding will eventually find out, there’s a method to the madness. There’s a way to go about a crowdfunding drive that will determine its success or failure.
I ran a crowdfunding project in 2015 when we wanted to launch our online agribusiness training school. We didn’t raise the amount we needed to start the online agribusiness training school so the fundraising was a flop.
Despite not reaching our funding goal, we were still able to launch the online agribusiness training school and I learned some very important lessons in the process which I want to share so that you can have a better crowdfunding project than mine:
1. Prepare Extensively
From the time you consider doing a crowdfunding drive to the actual launch of your crowdfunding, you must spend a minimum of 3 months preparing for it.
This preparation should include studying both successful and unsuccessful crowdfunding projects. You need to know why successful campaigns were successful and why unsuccessful campaigns weren’t successful. Leave nothing to chance or luck!
Your preparation should also include creating awareness among the people whom you will be approaching for contributions. You need to let them know in advance that you will be soliciting funds from them.
I learned this from the crowdfunding team of Brooklyness Urban Mobility. They wanted to raise about $30,000 for their electric bicycle project and they raised the amount in a few days! They even exceeded their funding goal by 154% and ended up raising over $47,000
When I contacted their media coordinator, she informed me that they had spent some time building a community of people interested in their project.
They even went as far as building an email list of their interested community such that when they launched their crowdfunding project, they sent an email blast to the community members and they hit their funding goal in a few days!
In my own case, I already had an audience that was interested in learning about farming but I didn’t actively engage them and carry them along on the project. I spent less than a month sensitizing them about my crowdfunding project. Though I was able to get some of them to donate towards the project, I could have gotten a higher donation rate if I had spent more time engaging them.
I should have built a special mailing list, separate from my general website audience and kept them updated via regular emails about the status and progress of our crowdfunding project.
2. Get Influencers on Board
This could have been included under number 1 but I feel it deserves a separate category all by itself. This is because having an influencer on board for your crowdfunding drive can play a very decisive role in whether you reach your funding goal or not.
An influencer is someone who is well-known, liked and respected within the industry or sector within which you want to run your crowdfunding project in. Such a person usually has a very large following on social media and is an authority in his or her field.
For example, if you want to raise money for a project that has to do with girls or women rights, it will make a super difference to your campaign if you could get the buy in and support of a famous girls’ rights advocate like Malala Yousafzai. She would automatically give your project legitimacy and many people and organizations will support your project by contributing to it just because you have her endorsement and not because of the nobility or worthiness of your project.
As you can expect, many people are aware of the power and celebrity status of influencers to make a crowdfunding project successful. As a result of this, these influencers are constantly being bombarded with request for help and favour in attracting donors to a crowdfunding project.
However, you shouldn’t let this fact discourage you. What you can do in this case is to stand out to the influencers in the field or sector you want to raise funds in by building a genuine, real and organic relationship with them.
You can use a tool like Krowdster to identify major influencers in your area of interest. Then you can follow them on social media. Engage them on twitter by retweeting their tweets and replying to some of them with candid, well-thought-out and original responses. If they have a website, post comments on their blog posts. If they have a Facebook page, post regularly on their page as well.
After some time following them, you’ll get a sense of the things and topics that are of high value to them. When you find resources or blog posts on the internet that you know will be of interest to them, mention it to them on Twitter/Facebook or send a mail to them with a link to the blog post or resources.
I’ll advice that you do this with all the influencers you can find in your field months and years before you may need their help for anything. In fact do these things consistently whether you want to do a crowdfunding or not. Doing this will help you build a relationship with someone who could help you in more ways than you can imagine.
This is one of the things that I failed to do with my own crowdfunding project. Having the help of one or two influencers could have helped overcome some of the concerns that our potential donors had with our campaign.
3. Choose the right platform and funding option
Owing to the rise in the popularity of crowdfunding, there are several platforms on the internet which you can use for your crowdfunding drive. The most popular platforms are GoFundMe, Kickstarter and Indiegogo. They are the top 3 international crowdfunding platform. There are some Nigerian crowdfunding platforms as well such as Funda Solva and 234Give.
Each of these platforms has their own unique functions, features, rules and regulations. For instance, if your crowdfunding project isn’t going to create some type of product, you can’t use Kickstarter. If you want to be able to get any amount you raised, then you must use Indiegogo. Find out the unique features and rules of all the several crowdfunding platforms before choosing the one to use.
I ran my crowdfunding project on Indiegogo because they don’t place geographical restrictions on their platform. They accept all types of crowdfunding project from all over the world. I also chose Indiegogo because of their Flexible Funding option which lets you get any amount you raise even if you don’t reach your funding goal.
This Flexible Funding option is very important and some people who didn’t select this option have regretted it. For example in 2015, during the Greece debt crisis, Thom Feeney started a Greek Bailout Fund project on Indiegogo to raise money to pay off Greece’s debt. He was able to raise over €1 million but because he didn’t select the Flexible Funding option, all the money he raised had to be returned to all the contributors because his campaign didn’t reach the funding goal of €1.6 billion.
So before you embark on your crowdfunding drive, research all the available platforms and select the best funding features on the platform you eventually use.
4. Accept all forms of payment
This one factor was solely responsible for our crowdfunding project not hitting our funding goal. Let me explain.
When people want to make contributions to your crowdfunding project, they have several options of paying: credit/debit card, PayPal and Bitcoin. Of these three methods of payment, card and PayPal are the most common payment methods that people prefer.
All the major crowdfunding platforms accept these two common payment methods. However, the people who want to contribute to your project may have their own preferred way of making payment. Some may prefer paying with their cards, while some may prefer contributing via PayPal. You never know which payment option your contributors will prefer so it is best to have your campaign setup to accept all types of payment method. Not doing this may see you missing out on many potential donations.
Let me show you how this affected my campaign. We knew from research and analysis that most donors to crowdfunding projects reside in the U.S and UK.
We arranged to get serious amount of traffic from these countries as you can see from the table below:
However, despite putting our campaign in front of these people, most of them didn’t contribute. The feedback we got from them was that since it was a Nigerian campaign, they were more comfortable contributing via PayPal. They didn’t want to risk their card details falling into the wrong hands.
They liked our campaign, the shared it on social media and they loved our campaign videos but they didn’t want to risk their card information being compromised by Nigerians.
I don’t blame them; Nigeria has a bad reputation in the international community for advanced fee fraud activities.
Our campaign was restricted to collecting contributions via cards only because the project was created on Indiegogo from Nigeria and PayPal hadn’t approved Nigerian PayPal accounts to receive funds. We could only accept contributions via card and so we missed out on many contributions.
Whichever platform you choose to use for your crowdfunding campaign, ensure that it can accept all forms and methods of contribution even if it means partnering with someone who lives abroad to open the crowdfunding project on your behalf so that you don’t miss out on any contributions.
5. Offer tangible perks and rewards
Your crowdfunding project may be for a good cause, it may be noble or it may be trying to make a difference in the world but that alone won’t make people contribute to it. In order for your project to receive contributions, you must appeal to the selfish and vain side of people.
Granted some people may contribute because of the nobleness of your project, but the great majority won’t contribute because your project is noble. Most people will contribute only if they can see what advantage, gain or benefit they will derive by contributing to your crowdfunding project.
Therefore, you have to provide rewards and gifts that will encourage people to contribute. You have to also structure your campaign message in a way that will appeal to the selfish side of people. You have to make people see what is in it for them before they will contribute to your campaign.
The place where you can effectively do this is in the rewards and perks you offer people who contribute to your campaign. Because most people will respond if they see what is in it for them, make sure your rewards and perks for contributing to your campaign addresses this selfish side of people.
Make sure you offer physical and tangible gifts in order to motivate people to contribute to your project. Physical and tangible gifts like mugs, tee-shirts, posters, ticket for events etc. encourage the most contributions from people.
Our crowdfunding campaign didn’t offer any tangible gifts and rewards but only intangible rewards. Although I contacted several foreign manufacturers to produce and deliver branded shirts, mugs and posters to our campaign contributors, many of them didn’t respond to my requests. The few who did gave us outrageous quotes. We had little or no choice but to stick with intangible gifts and rewards.
To give your own crowdfunding campaign a realistic chance of hitting your funding goal, make sure you have physical and tangible gifts and rewards in place for your potential contributors. The higher the amount you want people to contribute, the higher in value your gifts and rewards should be.
Those are the five main lessons I learned from my unsuccessful crowdfunding campaign which I feel you can improve on if you want to raise funds through crowdfunding.
The good thing is that though we didn’t reach our funding goal, we were still able to raise publicity and awareness for our online agribusiness training school and as a result I got several influencers and verified account holders to follow me on Twitter.
I hope this article helps you launch a better, more successful campaign that mine.