How to set up a crowdfunding campaign
There is so much more to crowdfunding than the name suggests, solely raising funds should not be the only aim of your crowdfunding campaign. Granted a successful crowdfunding campaign could give your new venture or project the right financial kick-start if executed right. In order to do so, you’ll need to invest time and effort preparing a realistic roadmap and finding the right crowdfunding platform.
This start-up guide will lead you through the key aspects and stages of a campaign to help you plan coordinate and execute crowdfunding successfully.
A Clear objective
Your campaign starts with a goal that everyone; potential funders, staff and partners can easily relate to. It needs to be an objective that is clear, concrete and very specific. A successful crowdfunding campaign gives your funders a sense of ownership, they should be able to touch, see or maybe even smell the final product. This might sound straightforward, but it’s not.
As a start-up naturally, you would like to cover your overheads, or list all your aims and objectives, but the key is to focus on one objective and seek the finance for that. Try to focus and build your project, business or organisation up from there. Think big, but find a manageable concrete project or part that could serve as starting point. Last but by no means least; do not be afraid to ask for assistance from a specialist.
Set your funding target
Finding the right amount you would like to raise with your crowdfunding campaign is important. It has to be an amount that is pragmatic; trying to raise 100,000 Euros to design a table sound like you haven’t done your homework and neither does 5,000 Euros for opening a new restaurant. To begin with, calculate all your costs by drafting a financial plan defining your exact financial requirements.
The actual target crowdfunding amount might differ from the total budget needed.
Armed with a financial plan, clearly outlining your funding targets will be made easier and you will then be able to identify which types of crowdfunding would be best suited to your aims:
Each of the above types has its own funding limit. And they all have their own specific characteristics. Donation based campaigns on average are limited to 30,000 Euros, where as Reward and Pre-sales campaigns generate more on average, closer to the 50,000 Euros mark. If you want to raise more than 50k then Lending and/or Equity crowdfunding would be your choice. With these types of crowdfunding you can bridge (what we in the industry call) your circle(s) the equity gap between 30k and 150k.
Also be aware of the risk when crowdfunding campaigns are set on all-or-nothing.
Audience (target group)
Once your financial targets are set for each objective, the onus now shifts to your target audience. Having set out your objective, honing in on the demographic best suited to your goals will be made much easier. Your goal has to appeal to a certain community or demographic, it cannot be too general it needs to be specific, because only then will your campaign go viral!
You need to know how to make your target group smile; by using incentives to tempt them you can convert them into bigger funders. A key point is to make sure your rewards or perks appeal to your target group. If you’re crowdfunding based on lending or equity the perk will be of a more calculated and rational then emotive E.g. a competitive interest rate will be essential to win your investors. To make your proposal realistic do some in-depth research in the conditions for these crowd investing products. Having done your ‘homework’ you might be able to easily convert your target group into investor…but remember you’ll have to pay back these loans with interest.
Along with the right rewards, you will have to prepare a pitch in which your potential backers can read why you are running the campaign, who it’s for and when it well start. It is critical to be transparent and honest about your costs, forecast budgets, workflow and operations. Do not be afraid to connect with your backers to garner feedback and valuable input. In the long run these people can become your ambassadors or life-long clients. This is the added value of crowdfunding. Read more about how important it is to treat your backers well in our chapter The added value of crowdfunding.
Many platforms demand you also make a video about you, your organization and your project or product. The video should be a direct ‘translation’ of your pitch. Keep it brief and do not embellish the details. You can provide details in supporting documents or via your website. Make sure that the campaign site (not necessarily your website) focuses on the specific objective and converting visitors into donors or investors.
Plan – failing to prepare, is preparing to fail
Before going online make sure you have a marketing and communication plan which should include amongst other points; a roadmap, task lists for you and your team, media requests from news hungry journalists and events and much more to create a buzz around the campaign.
Do not assume that all your communication efforts should be done online; you can also use traditional offline marketing tools. Most importantly, no matter whether on-or-offline, be prepared to communicate intensively with ‘the crowd’ and especially your inner circle i.e. personal network. Because remember, no news is bad news, keep your crowd posted on the progress. They are heavily involved and will want to help you out as long as you keep feeding them, and remember, this is part the fun.
Once the basics are clear it is time to put your campaign online. This can be done in various ways. You can opt to create a campaign site with crowdfunding and payment tools. Make sure you know about the specific regulations applied to a certain type of crowdfunding as well as your region/country.
An easier and faster way to start your crowdfunding campaign is to register on an appropriate online platform. The type of crowdfunding you choose will determine which platform is most suitable. Here’s a link to give you an overview ofcrowdfunding platforms in Europe. (Please note that each platform has its own terms and conditions.)
Registering on a new platform can take some time and even with all the basics written out, this is not guaranteed that the platform of your choice will accept your proposition. So you might want to get in touch with more than one platform.
After your campaign is over the real fun starts! Assuming you’ve reached your funding target you can finally launch your project or start production. Keep your backers involved during this process. Remember they are your most valuable clients. So do not forget to keep them posted.
What if you haven’t reached your target and you have to cancel your project? By no means should you forget to inform your backers -be honest and tell them what your next step is. You’ve won over a heavily involved support network. If you are still willing to carry on with the project let them know and ask for further help. Someone might offer to top-up the remaining account. Alternatively through their network (bigger inner circle) and experience, they might know another way to get your venture started.