As Kickstarter opens itself up to UK projects on Oct 31st of this year, we thought it might be helpful to provide some tips on creating successful campaigns.
Launched in 2009 in the US, Kickstarter is now one of the largest crowdfunding platforms, boasting over 73,620 projects, with a success rate of 43.5 %, and $381 million in pledges. As a reward-based platform, there are no "investors," rather backers or donors. Here, monetary donations to projects are rewarded with the likes of movie credits, advanced copy of the game, t-shirts, or dinner with the producer. Landmark campaigns have included Tim Schafer's Double Fine, with over $3 million pledged and the Pebble e-Paper Watch, with $10 million pledged. After much anticipation, the creative community in the UK can now promote their projects right along side their American colleagues.
Kickstarter is not the first reward-based crowdfunding site open to UK projects. RocketHub and Indiegogo have already gone global, but there's no doubt that Kickstarter has been the media darling.
As each crowdfunding site operates under a different set of guidelines and business model, here are some things to keep in mind about Kickstarter:
- All or Nothing Pledging -- You don't reach your goal, you don't get the funds
- Projects are submitted for approval; 75% are accepted (turnaround time is 1-2 days)
- Projects must fit into one of 13 creative categories
- It is only for projects, not "fund my business" or "fund my life"
- Requires a prototype and manufacturing plan
- Limits rewards to single items (can be priced between £1-£5,000 in the UK)
- Takes 5% success fee of funds raised plus the pledge processing fees
- Claims no ownership of the works produced
- Most successful US projects raise, on average, $10,000, with an average pledge of $71/person
With these guidelines in mind, let's explore some helpful tips for launching a successful crowdfunding campaign. Crowdfunding for reward-based projects is quite similar to charity pledging and channel marketing programs. We highly recommend reviewing best-practices from non-profit pledge campaigns (think PBS pledge drives, Red Cross, Cancer Research UK ). The classic marketing principles of promotion, product, placement and price also apply here.
Research, Research, Research:
Before posting your project, make sure to research and select the right platform. Don't assume it's Kickstarter. Look at other sites and business models (equity, donation-based, lending, etc.). Make sure to read the fine print around terms, fees, IP rights, liabilities, average pledges, average number of backers per project, sectors represented, success rates, etc. Manage your expectations around this form of fundraising and the effort it will take. Remember that sharing information and being open is crucial to successful crowdfunding initiatives, so, if you are worried about any IP infringement, this may not be for you. Also, reward-based platforms are to fund projects, not fund start-ups or small businesses. This means that the mindset of your backer is different than that of an accredited investor, affecting pledge size and incentives.
Register as a donor on a few sites. Select 5-10 projects and follow them over the course of a few weeks. Observe their progress. How many backers do they have? Which are gaining momentum, when and why? Which projects would you invest in? How do creators position their projects and tier their rewards? How engaged are their "donors"? What is the pledge goal and minimum pledge? Who is the creative team (e.g. are they well-known in their industry, etc.) What development stage is the project in (e.g. is it in alpha or beta stage, do they have interest from customers?) Read the feedback and questions posed, throughout the project pledge.
Define Project Scope:
Once you have decided on a platform, carefully select, clearly and succinctly define your project scope. Review guidelines for project submissions. For Kickstarter, do you have a prototype and a manufacturing plan? Why is this project pledge-worthy? How is it unique? Do you have clearly defined milestone dates for this project; what is the estimated delivery date?
Set a 360 degree Project Timeline:
There's a lot of preparation that is required for any fundraising effort. Be sure to set aside plenty of time for pre-launch planning as well as time for post funding management. Think hard about the duration of your fundraising effort, and the timing, e.g. can you leverage seasonality, tie-ins with "hot" trends. The maximum project duration on Kickstarter is set at 60 days, but average duration tends to be 30 days (shorter time frames have shown to better position projects for higher success rates). Make sure you have assigned a campaign manager who will be responsible for initiating, managing, tracking and executing the campaign. Keep in mind that Kickstarter doesn't allow running more than one project at a time.
Set a Realistic "Pledge" Goal:
Create a worst and best case scenario all-in budget, including development, fundraising and marketing costs associated with the project, such as video shoot, marketing expenses, rewards and fulfillment (t-shirt printing, postage, etc). Then, add a buffer. Take into consideration average pledges per person and that the average funds raised. This is not to say that a great concept can't achieve the likes of a Double Fine, but we strongly urge you to have a Plan B if you are after funds that are above the average. Remember, Kickstarter is an all or nothing model, so if you don't achieve your goal, you get nothing. Equity-based crowdfunding platforms, rather than reward-based platforms, have proven to raise the largest amount of funds, in some cases over $250,000 for a project; this is understandable, as here, the "crowd," operates more as a classic investor, expecting a return, and projects featured are to fund small businesses or start-ups. Take a look at CrowdCube, Seedrs or Gambitious, if this is more in line with your objectives.
Offer Compelling Rewards:
Price you reward very carefully. Again, observe other projects. How do they tier their rewards? How do they limit the number of rewards per tier? How does it tie-in with the project; strategically staggering your tier levels makes a difference. Again, observe how donors react and pull in best-practices from the likes of film companies and FMCG firms. They've been doing this for decades. They've tested that people love limited editions, credits, etc. Don't dismiss offering compelling rewards at the lower bands, e.g. £5 or £10 pound range, for a "making of," or access to filming outtakes.
Tirelessly Promote (Project WebPage/Networking/Social Media):
The project page is only one half of the promotion vehicle. The copy, video, look and feel, your story, are all, of course, critical elements in engaging your backers. However, if no one knows you exist, your project will never get funded. How do you get them to your site? Just like any good marketing campaign, you need think about creating a buzz before and after the launch. Get the word out to your immediate network, via all online and offline channels; do it a few weeks before the official launch date of your project. This will help drive "first backers out of the gate," and help build momentum. At kick-off, update your backers regularly, drive that energy and passion home! If you don't love your project, how can you expect others to? Go out there and network. Some of your potential backers may not be on Kickstarter yet.
Also remember that at kick-off, the project is new and everyone wants you to succeed; the middle timeline is just as important as the beginning. You need to find new excuses to bring attention to your project. Consider providing substantial updates as you are nearing its deadline. Continue to do so, even after you've reached the goal. Why? Because you are further reinforcing to your backers all the great reasons they came on board, and creating more buzz around your project, for others to pledge. Remember that you can still raise money after your goal is reached.
Respect and Honor your Donors:
Reward-based donors are not VCs or Angels. These are large groups of friends you haven't met yet, everyday people like you and me, offering a helping hand to your project because they believe in you and your story, not because they are managing a portfolio of companies. As such, they need to be treated with respect and communicated to on a regular basis by answering them promptly or a Project Update/FAQ. There can be anywhere from several hundred to upwards of a few thousand donors on a project. Some are more vocal than others, and may ask you questions around technical specs, delivery dates, etc. To improve your chances of success, you will need to respond to each appropriate inquiry accordingly. Remember that "crowds," are public, and they are fickle. They can just as easily take you down as they can lift you up. Help them be your evangelist by keeping them engaged and a part of this creative endeavor. Be sure to thank them for their feedback, and honor all promises you've made. Where appropriate, consider thanking your backers publicly on FB or Twitter.
Success!... and Fulfillment:
Once you've reached your goal, congratulations are indeed in order! Yes, rejoice and get some much-needed rest but, don't take too long, as you have more work to do. Be sure to announce your success and thank your backers immediately, mail out the rewards, update your project site. Remember to keep the backers informed throughout the project's progress, as they are eagerly awaiting the finished product. Earlier this year, Kickstarter required all projects to list an "Estimated Delivery Date," along with information about the creators and their experience, in an attempt to reduce fraud and strengthen trust around the Kickstarter user experience. You have now inherited a few hundred or a few thousand fans, do not let them down; your backers of today may just be your backers of tomorrow.
Running a successful crowdfunding campaign is no easy task, but hopefully these tips can help improve your chances. Here's to happy Kickstarting.
Source: Kickstarter.com, Crowdfunding Industry Report 2012
Find more articles on: http://nxtgensme.wordpress.com/