26 June 2013

Crowdfunding

Using people power to generate start-up funding
Crowdfunding
Are you a start-up company looking for seed capital?  Rather than turning to venture capitalists, many start-ups are now turning to crowdfunding platforms.  Artists, filmmakers, would be writers and musicians  all apply for crowdfunding in order to roll out that first commercial project.  Crowdfunding is an ideal way to fund a creative project.  Creators do keep 100% ownership of their work but naturally there is a fee taken of the money raised, typically 5%.

Kickstarter
Kickstarter was the first of the crowdfunding platforms and appeared about 3 years ago.  Since then it has funded over 95,000 projects.  The most famous of these was the Pebble watch project which raised over $10 million when in fact they were only looking for $100,000.
Today there are scores of crowdfunding platforms each covering a different crowdfunding niche.
Here's a link to the alternative platforms.

How Does It Work?
The trick is to set a funding level that you realistically wish to achieve.  If you don't get enough interest to reach 100% of your funding you receive no funding at all. 
So how do you put forward your case?  You do this via a video of the proposed project, through graphics, informative text and FAQs.  The trick is to set up a stepped reward system for your backers.  Ideally the higher the investment in you, the more the backer receives in return.  You can see that it makes an ideal platform through which to generate advance orders.
Typically the fundraising takes place over a 30 day period.  The number of days remaining is displayed on the project page along with the number of backers to date and the amount of money pledged to the goal amount.

Things I have Noticed
  • Filling out your Kickstarter project page reminds me a lot of LinkedIn, that the correct content is vital to tell your story and promote your project. 
  • Remember its all about your "orientation" to the donor. 
  • The donors need to be able to identify themselves in the project that you are promoting.
  • Sell the benefits not the features.
  • People donate for emotional reasons.  Typically this will be the reason why or how your project came about.  This makes for a good opening paragraph
  • You need to promote this like hell using social media.  I noticed that the project videos received a lot of Facebook shares but very few tweets.  Personally I would rather see this the other way around.
  • I would suggest having a well built up social network before the clock starts ticking on your crowdfunding project.
  • Bring your offline contacts online and your online community offline.  Create a live event based around the project to raise awareness.  I would highly recommend a group photo of all of the participants, who can then be tagged on Facebook, so that your project Facebook page will get into the newsfeeds of all of their friends.

Zoobits
Cody Rauh, a colleague has launched a crowdfunding project to produce a series of children's therapy puzzles.  The purpose of these puzzles is to aid in the development of children with autism, patients with head injury, stroke victims and the recovery of war veterans.
Please give your support at  http://www.kickstarter.com/projects/codyrauh/zoobits
AND TELL YOUR  FRIENDS!



PS I just came across someone crowd funding for a new kidney.