Thinking about crowdfunding as a way to finance your farm?
STOP… Read this first.
In a previous article, I highlighted some of the reasons to consider crowdfunding as way to fund your farm.
Like I mentioned before, Upstart Farmers — by their very nature of having a unique growing style and transparent communication style — have some serious advantages when it comes to standing out and attracting a crowd.
When done correctly, crowdfunding is a powerful platform for financing an initial farm build or a farm expansion. (Especially when you draw a local crowd who stands to gain from the high quality produce you grow.)
So how do you do it correctly?
This article outlines what a successful crowdfunding campaign looks like before and after launching, plus mistakes to avoid, all based on insights from my own experience and a few interviews with the experts.
If you’re seriously considering running a crowdfunding campaign as a farmer, you should spend 10 minutes reading these insights and tips.
If you build it, they’re not going to care…
…Unless you make them, that is. In case you haven’t noticed, people today are incredibly distracted.
And as I discuss in Upstart University, if you want to play ball in today’s distracted marketplace, you have to harness the power of your uniqueness, or what Seth Godin calls your “Purple Cow.”
So let’s get clear one thing before we go any further…
If you’re an aspiring farmer wanting to start a profitable farm and grow food for your community, you have to capture attention.
You have to be thinking about what sets you apart, what makes you unlike anything else at the supermarket, farmers’ market or even in the kitchen of a local restaurant, and use that to your advantage.
The same goes for a crowdfunding campaign.
If you think you can simply type a few lines of text, promise an “email thank you note” as a reward, and click launch on your crowdfunding campaign, you are dead wrong.
You will never find the funding you need to launch, grow or sustain your farm with this type of attempt.
Understand that you’re risking your reputation and the relationships of all your donors. If you want to reap the rewards after the campaign is over, you have to be willing to put in the effort on the front end.
Which brings me to my favorite crowdfunding model: “The Iceberg Approach.”
BEFORE Launching:
The “Iceberg Approach” to Crowdfunding
80–90% of an iceberg’s mass is under the ocean’s surface.
From my own research, interviews, and experience running the Bright Agrotech Kickstarter campaign a few years ago, I’d say this is a great metaphor for the time that you spend on a crowdfunding project.
In order to increase your chances of success, you need to spend 80–90% of your time BEFORE the campaign even begins.
There are five major tasks to accomplish during this pre-launch period:
1) Find the right crowdfunding platform
As crowdfunding becomes more and more popular (more and more crowded), standing out requires capturing the attention of the right audience. Bigger platforms have larger, more diverse audiences. This lack of focus can be good for some projects like the Pebble Watch, but it often means the smaller, more niche projects/products never get noticed.
This is why it’s important to find a platform you can leverage to maximize your exposure to the right audience. You want active and engaged supporters, not just eyeballs!
Which crowdfunding site should you choose?
At the moment, there a few big name crowdfunding sites for you to choose from. I would highly suggest you do your homework before picking your platform.
Before choosing a platform, you want to research the following:
- What are the rules for each platform? Make sure you read the fine print!
- What are the site’s commission/fee structure? They’re all typically around 5% with between 3–5% for payment processing. It’s not awesome, but it’s the price of using their platforms.
- How have projects like yours done on this platform in the past? Finding out historical project data may give you some insights into how your particular project will do on this platform or if you should go elsewhere to find a more focused audience to increase your chances of success.
- What kind of resources does each platform provide to ensure you reach your goals? One really cool thing I learned in my interview with Eileen Gordon of Barnraiser is that their team is heavily invested in the success of every project on their platform. In much the same way as my team at Bright Agrotech devotes a considerable amount of time helping our farmers succeed with their ZipGrow towers, Eileen’s 8-person team goes above and beyond what you normally see from some of the bigger crowdfunding platforms.
At the end of the day, you’re going to be investing a lot of your own time, energy, and even financial resources into bringing your project to life so don’t skip this crucial research when starting to plan things out. It’s important you find the platform that fits best with your funding and audience goals.
Here are a few of the most popular crowdfunding sites:
Kickstarter
The one everyone and their grandma has heard of is Kickstarter, a crowdfunding platform designed with the creative in mind. While it has it’s advantages and disadvantages, depending on your specific project/goals, Kickstarter definitely has the “first mover” advantage when it comes to crowdfunding. One thing to remember with this site is it’s “all or nothing” when it comes to funding a project. Either you meet/exceed your funding goal, or all those pledges vanish (i.e. your backers credit cards are not charged… and you don’t get paid).
IndieGoGo
Another popular platform is IndieGoGo, a platform that’s gotten big because it doesn’t follow the traditional “all or nothing” model. You can basically throw a project up on this platform and whether you make your goal or not, you’re still bringing home the bacon. That DOES NOT mean you evoke your inner Steve Miller and take the money and run. You are still very much accountable to your supporters and they trust you. Don’t start or scale your farm on mistrust.
Barnraiser
You may have not heard of Barnraiser before, but don’t rule it out! If you’re a farmer trying to fund a project to start or scale your operation, this up and coming crowdfunding platform puts the power in your hands. From pre-launch counseling, to partnership opportunities, to a robust dashboard with built in social and email sharing tools, Barnraiser invests heavily in the success of all their farm projects. If I were launching a crowdfunding project for my farm, this is the platform I would use.
2) Create a compelling vision
It’s human nature to want to be a part of something great and bigger than ourselves. If you want some serious buy-in, you need to clearly define what
that thing is.
- What is your vision of the future?
- What does life look like after a successful crowdfunding project?
- Does your idea of the future of this project make people want to be a part of it?
More than likely the people you attract are sick of (already, or when you show them) a crappy product at the grocery store or off the back of a Sysco truck.
Take this time to verbalize the end goal of the funding, and then start to craft your pitch for why this matters to your potential supporters.
Figure out your story, both as a farmer and a farm, and why this story is important for potential supporters to hear.
Then test your vision and story for clarity with the help of family and friends, and refine and rephrase it in a way that is absolutely clear.
This is the first step in your crowdfunding campaign!
3) Communicate your story in a compelling way
So you’ve got your vision and your story. Let’s start thinking about communicating that.
Going back to standing out in an increasingly distracted marketplace, let’s think about getting your purple cow in front of people.
You might have an incredible story and a compelling vision, but if you can’t communicate it to your potential supporters, you’ll drastically reduce your chances of success.
The best way to do this these days is through a combination of clear video, context-giving text, and if you’re feeling a little crazy, even a few animated GIFs.
Out of all of these, I personally believe the most powerful and effective means of sharing your story is through a concise, yet substantive video.
Now… it’s possible to drop a few thousand dollars on a professionally produced video, but it is NOT necessary.
All you need to do is grab your iphone (preferably on a non-windy day) and introduce yourself, show potential supporters around your farm, and tell the story of what life could be like once your farm is funded.
Again, this doesn’t have to be a major motion picture, but you do need to make sure your audio is on-point, the camera is steady and the lighting and focus is good to go.
In addition to the video, try to write up just enough text to fill in the gaps and give additional context to your video and funding goals.
I don’t want to recommend a specific word count on this as all projects are different, but feel free to test it on several different people to see whether or not they truly understand your vision. If not… well, good thing you haven’t launched your campaign yet!
Test and refine until you’re satisfied with the results.
Now let’s talk about the real reason why people crowdfund… The rewards.
4) Craft Compelling Rewards
This is one of the biggest areas I see crowdfunders skimp on.
Rewards are not just “thank you” cards and writing someone’s name on a farm vehicle. In the crowdfunding world, they are something given in recognition of a funder’s efforts in moving your campaign forward.
While $50 for a “thank you” note sounds like a great deal for you, don’t forget that people are NOT just donating to your cause. These nice people are investing their hard earned money into something they believe in, in something they want to support.
That said, at the end of the day, their financial support should still elicit a value-for-value exchange… They give you a little money to help you fund your project and you provide them with a reward that reflects the value of their pledge.
5) Prepare a promotion plan and assemble your pre-launch network [This is huge!]
Once you’re feeling good about your platform, your pitch and your rewards, it’s time for the most important (and in my opinion, the most fun) part of the Iceberg Approach to Crowdfunding: Putting together your pre-launch plan and assembling your network!
Your promotion plan is just a framework/outline for how you’ll begin spreading the word about your project.
Your promotion plan should include:
- What actions you’ll take before the project launches
- Who is in your pre-launch network
- How you will active this network once your project launches
- How you will keep your launch network engaged throughout the project
- What actions you’ll take once the project launches (i.e. social media, interviews, etc.)
- How you will communicate with supporters throughout the campaign to both keep their trust and get them to share the project with their friends and family
Don’t plan out every hour of every day during the campaign, but do try to create a robust plan to guide you throughout the duration of your project. It is very important you stay agile while the project is going on as you never know what awesome opportunities (or unfortunate events) could come your way.
Once you’ve got a rough outline of your promotion plan in place, it’s time to build that pre-launch network.
What’s a pre-launch network, you ask?
It’s a combination of early supporters, media outlets, and anyone else who have pre-committed to helping you amplify your project’s reach however they can.
Assembling this network BEFORE your launch means you remove or at least reduce the stress of trying to pull this all together during your project. That means instead of hitting “launch” and going to find potential supporters or people to help expand your reach, you do the prep work ahead of time by forming relationships and getting people to commit to helping you succeed, whether that be through an early pledge or a well-timed write up in the local paper.
These early wins could be the difference between hitting your goals and coming home empty handed… Or at least the difference between a fun, relationship and reach-building experience, and developing stress ulcers…
Typical pre-launch networks include:
- Existing farm customers
- Community members
- Family and friends
- Bloggers and relevant media outlets
- [Local] newspapers and TV stations
- [Local] Businesses and organizations
“We find that the number one thing we can stress for people is start to build a community and audience now. It doesn’t necessarily have to be all digital…” (Read more from my interview with Barnraiser’s Eileen Gordon here.)
Remember: When you build a truly excited network before your project launches, you gain the advantage of early wins and you’re less likely to be scrambling throughout the remainder of your project.
DURING the campaign: Make some money.
So, you just launched your project. Congrats!
If you’ve followed the Iceberg Approach, you just spent several weeks (if not months) refining your pitch, casting your vision, and assembling a bulletproof pre-launch network.
Now it’s time to make some money!
Here are my tips for staying active and agile throughout your crowdfunding campaign. Consider this the part of the iceberg above the water.
1) Activate your pre-launch network
It’s game time!
Let your family, friends, and media partners know you’ve launched your project and it’s time to do their part.
2) Share on social media
Hopefully you’ve already built a solid following on the social media channels of your choice (i.e. the ones most relevant to your audience/customer base), because now you can start stepping up your social game.
When it comes to social media posting, remember it’s not about quantity as much as it is about the quality and variety of your posts.
Try to post often enough to keep people engaged with what you’re doing, but not so frequently that people get sick of seeing you on their newsfeeds.
Your posts should also have variety! They should highlight all different parts of your current business, your team, and your vision.
Your posts should NOT simply be reminders about your project saying “Please give me money!” This type of promotional vomiting on social media platforms will lose you trust and attention in a hurry.
3) Use social proof
People want to know who else is taking action and why they’re doing so.
This is why you look at the reviews on Amazon before you buy, or why sites like Yelp are so popular.
People want to know what others believe the correct behavior is so they can ensure their actions reflect it.
During the campaign is a fantastic time to show your potential supporters who has featured your project and/or already jumped on board by supporting you financially.
The screenshot below is an example from the recently insanely successful Flow Hive Project on IndieGoGo.
Notice how they highlight the notable magazines, newspapers and media sites who’ve featured them. This is some serious social proof!
While the bigger and more recognizable the reviewer or organization is, it’s not necessary to be featured in Wired Magazine. However, they should be relevant to your crowdfunding goals and target audience.
In this sense, demonstrating your project has been featured in a local paper or on the local news is almost more powerful if your project’s goals are more localized.
4) Communicate with supporters and potential supporters
As I mentioned in the promotional planning section, communicating
Make it a goal to post an update to your project page at least one day a week, or whenever you have something of value to say.
5) Stay agile!
However long you set your campaign for (the average is 30 days, by the way), be on the lookout for opportunities to expand your reach!
Leaving the door cracked for serendipity is a good rule of thumb for almost anything in life, and it works well for your crowdfunding project too. You never know what opportunities for interviews, writeups, partnerships, etc. will come your way so be ready!
Other things to consider before launching your project
You’ll have to pay Uncle Sam (don’t forget the taxes!)
Unless your campaign is raising funds for charity (these are actually forbidden on Kickstarter), the pledges you’ll receive will be treated as income.
CrowdfundCapitalAdvisors says: “If the rewards issued are tangible and comparable to what the market price would be for that good, then it is a business transaction, and any profit derived from the sale is considered taxable income.”
That means the majority of your reward levels will be considered a business transaction and you’ll have to pay Uncle Sam.
However, depending on the platform you choose and what kind of reward incentives you create for potential pledges, there are special cases where you may get by classifying them as “Non-Taxable Gifts.”
One such case might be if a generous contributor gives you cash but chooses not to receive a reward. This goes for almost any download or digital gift as well. If that’s the case, you’re off the hook! Better remember to send them a nice handwritten “thank you”note.
Another special case is if someone shells out a large pledge in relation to the reward (e.g. a $100 contribution gets you a coaster or a decal.) This is seen as a [lame] gift, not a transaction.
For more detailed information on taxes for crowdfunding, including the best and worst times to launch a campaign for tax burden’s sake, I highly recommend Pay Caesar Hi Due by Glenn Fleishman.
Mistakes to Avoid When Crowdfunding
1) Not proactively planning (the Iceberg method)
If you take away anything from this article, remember successful crowdfunding is 80% preparation and planning before you launch and 20% action during the campaign. There is no such thing as “if you build it, they will crowdfund.” You must think realistically about your project’s overall timeline and what it will take to achieve success weeks, if not months, in advance (i.e. your pitch, media, and launch network).
2) Not selling the vision
If you’re pursuing crowdfunding as your primary (or even secondary) method of funding and you want a successful outcome, you better realize you’re a marketer now. Your vision for why your farm should exist is an important one and it needs to be clearly delivered in a compelling way for you to receive the startup funds you need to bring it to life. Your farm and your future customers are all riding on your ability to sell your vision. One thing that will really help you sell the vision is if you can demonstrate your unique growing style ahead of time. Whether it’s a couple of towers in your backyard or a 7,200 square foot living wall at the World’s Fair, a picture (or video) is worth 1,000 words.
3) Thinking it’s a personal fundraiser.
While there are sites out there like GoFundMe that enable anyone to raise funds for almost anything you can think of, the crowdfunding you’ll be doing to launch or scale your farm cannot be a personal fundraiser. Remember, crowdfunding IS NOT A DONATION. It must be a mutually beneficial outcome whereby a successful project means you AND your supporters gain. It’s a value-for-value exchange. This is why Kickstarter implements the rewards system.
4) Relying too much on social media
If you’re rely solely on Facebook posts and tweets to grow awareness of your crowdfunding project, you’re going to have a bad day. Please don’t think a few social media updates here or there, (or worse… posting a link to your campaign 3x a day) is enough to get your potential supporters on board with your vision. Keep your project promotion fresh and constantly varied.
5) Bad timing
There is such a thing as a bad time to launch your crowdfunding project. For instance, and this is a personal lesson, launching a campaign that involves the production of a product right before Christmas is not a great idea. Why would someone want to use their holiday spending money to invest in something they won’t receive until several months later? If you’re thinking about launching right before Christmas, do yourself a favor and wait a few weeks! Oh, and remember there are also tax reasons for being smart about setting that campaign launch date.
6) Too many rewards or weak rewards
Please think strategically about your various reward levels. There are so many opportunities to get creative with how you incentivize supporters including fun partnerships or unique experiences only you and your farm can provide. Having too many rewards (i.e. over 10) is just as dangerous as having boring rewards. Pick a variety of rewards that accurately reflect the value of the pledge and make them awesome! Don’t assume people will donate out of the kindness of their hearts! Sure, your mom will probably be an early supporter (I know mine was), but that doesn’t mean everyone else will follow suit. Spend some time before your launch to brainstorm ideas with friends and partners to come up with the most enticing rewards you can.
A Tip from the Pro
“There’s a lot of simple tips that can make your project more successful. Creating your project and your goals in such a way where your tipping point is set appropriately is a really big one. Making sure you have stretch goals as opposed to putting your original goal into one big number that may be harder to attain.”
— Eileen Gordon, founder of Barnraiser (Read full interview here.)
Want to learn about how to create a successful crowdfunding project?
