Oculus Rift. Pebble. Vi. They all started life as entrepreneurs’ longshot ideas, brought to life by crowdfunding millions of pounds from enthusiastic early adopters. Of course, that makes them memorable and for every Oculus Rift, there are several thousand products that collapse before delivery.
Organising a successful crowdfund is hard. Really hard. But it’s not impossible: if your idea is great, you do the right things and have luck on your side, there’s every chance you can succeed.
Last November, I attended a panel session organised by Indiegogo where experts discussed the potential pitfalls of crowdfunding. Whether you’re planning to raise funds on Kickstarter, Indiegogo or another platform, this advice is absolutely priceless. Good luck!
1. Plan it out
If you put your product on Indiegogo or Kickstarter without any preparation, you’re setting yourself up for failure. As crowdfunding consultant Samit Patel, put it: “A lot of projects come to us and say they’re going to hit a million, two million. Okay, well what pre-work have you done? ‘Oh, we’ve done nothing.’
“You need to do the pre-work. Okay, you might get lucky by being picked up by a national newspaper, but that’s very rare.”
Joel Hughes, head of UK and Europe at Indiegogo agrees: “One of the main reasons that campaigns fail from our perspective is they don’t do enough planning and preparation before they launch,” he explains. “You could have the best idea in the world, but simply launching that idea on a crowdfunding platform isn’t going to go anywhere at all.”
2. Build a buzz before launching
How do you do build a buzz? Well, knowing the market you’re looking to enter is important, of course, as is a little light research to find if your product is actually new and necessary. If a similar product exists, then you need a damned good reason for people to risk their money on something that may or may not materialise.
If you’re convinced there’s a market for it, then you can hit the ground running by approaching media outlets. If the product is as revolutionary as you believe, then try reaching out to publications that cover your niche. Here at Alphr, myself and others routinely publish a Kickstarter of the Week – and my email address is easy to find.
But it doesn’t need to end there. If you have a prototype, demonstrate it before launch. Get people to try it and film their reactions. Anything you can do to gain momentum ahead of launch is invaluable, which also means you should…
3. Hit the ground running with an email buildup
So you’ve got a pre-crowdfund buzz, and people are interested in your product. Great! Do not, under any circumstances, let them forget you exist. Get those email addresses and use ‘em.
“We know there’s a value to each of these emails you collect, and in the majority of the campaigns I see, emails convert 40% better than anything else,” explains Hughes.
Patel agrees: “A lot of people make this mistake: they get the sign-up and that’s it,” he explains. “You should be doing a drip campaign where you’re giving them a story: ‘hey guys, thanks for signing up, this is what we’re going to do: we’re going to launch on Indiegogo and you’re going to get 50% off’. And then the next email an hour later, you’ll get ‘why I created this crazy product.’ Try and connect that connection between you and the reader.
“If they’re excited, they’ll back you on day one, which usually gets you to your target of 30-50% where Indiegogo helps you out with an email for your project, it starts trending and they give you more space. That’s why it’s important to build up an email list yourself.”
That’s a big deal, and Hughes has the stats to back it up: “If you’re able to reach at least 30% of your goal in the first two days, statistically you’re putting yourself in such a strong position to reach or exceed your goal by the end of the campaign.”
4. Keep talking to your backers and work the perks
Those first few days are important, but they’re not the whole picture, and it’s important to keep talking to your backers, as well as those watching who are yet to commit.
Campaign updates are a good way of doing this, and, according to Hughes, more updates usually equates to more backers. “We know that, for example, if you post at least four campaign updates during your crowdfunding campaign, you’re going to be more successful – that’s what the data says on our side,” he explains. “And if you add new perks – particularly if you add 12 – after your campaign has launched, that’s a really good way of adding new elements to the campaign.”
5. Show you’re legit and mean business
When I’m considering whether to back a crowdfunding campaign and when I’m writing about them, I’m always keen to see proof that this isn’t a scam or a pie in the sky fantasy product. The bottom line is that there’s no way to prove this, but there are certain things you can do to close the scepticism gap. If it’s you can point to previous products launched, that’s a good start – and if you have a working prototype then you’re definitely onto a good thing.
If you don’t have these things, all isn’t necessarily lost. Phone case company Mous managed to raise $2,469,579 on Indiegogo, and its founder James Griffiths credits a lot to being able to show backers behind the scenes. “What took us to the next level was videoing us in the factory packaging products,” he recalls. “All of a sudden people were like ‘oh, this is actually real.’
“It’s all about looking legit in this environment, so real life stuff counts.”
6. Think about tax and duties early
Tax is probably the last thing you want to spend time on when you’re planning your launch, but as Richard Perriman, UK supply chain manager at Horizon International Cargo explains, it’s something you want in order well before you start. “Certain countries will need compliance that we don’t have in the UK. How do you know what the duty rates are going to be on that product?
He illustrates the importance of this point with an anecdote: “This guy had a very successful Indiegogo, but unfortunately he didn’t get advice at the beginning regarding compliance. What he didn’t factor in is that when you sell something in the UK, you have to add VAT to it. Also, if you’re not VAT registered when you import something to the UK, you have to pay 20% of that to the government on import. If you’re VAT registered you can reclaim that – if you’re not, you’ve lost it forever. This guy is going to be importing his stuff and paying 20%, and then paying 20% of the price he’s sold it for – so in effect, he’s lost 40% and completely wiped out his margin.”
In other words: think about tax, or your company is dead in the water.
Points 7-12 continue on page two.
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