The Top 5 Crowdfunding Mistakes Startups Make
My production company’s top-grossing startup video clients, RippleBuds, and JumpSport, recently pulled in $750,000 and $133,000, respectively, in crowdfunding capital. And as I’ve followed the democratization of the fundraising space through these crowdfunding platforms, I have observed a huge influx of entrepreneurs with big expectations for their campaigns.
For every one Kickstarter success story though, there are at least double the failure stories. Everyone wants to fund their product, or startup idea, but there are 5 key crowdfunding mistakes I see startups and entrepreneurs make over and over again.
And here they are:
1) BUILD IT AND THEY WILL COME MENTALITY.
Many entrepreneurs follow the flawed thinking, that “if I build it, they will come;” that they should be able to just launch their campaign page and the donations will pour in.This is the number one most disastrous mistake you can make with crowdfunding. Your campaign needs a solid foundation of marketing, PR and social media outreach in order to succeed (as well as an incredible story video; check out some examples here). Listing a good campaign page is important, but certainly not the sole thing that will cause you to succeed.
For most cash-strapped startups, I recommend the DIY marketing approach. If you’re going to run a crowdfunding campaign, get ready to roll up your sleeves and do some serious work. The DIY route requires months of groundwork laying to organically build up your social media following, email list and press contacts.
When it comes to crowdfunding, there is no silver bullet to a successful campaign. Generating buzz is about bringing your campaign directly to an interested and engaging following’s attention vs. launching and hoping people will find your campaign among a sea of others.
A rough outline of the work required pre-launch for a successful crowdfunding campaign includes:
A. Foundational Steps
- Research the most (and least!) successful crowdfunding launches
- Compile a list of 10 campaigns in your niche and reach out to the campaign managers to see if you can speak with them personally about their campaigns
- Learn everything you can about crowdfunding; ecourses and content on the subject abound on the internet.
- Follow blogs with case studies about successful campaigns and how to launch a winning campaign (Our Medium account is a great place to start *hint, hint*)
- Know your target audience and how to reach them (ie. where they engage online and where they do not).
- Compile information on your audience’s demographics.
- Build a document planning how you’ll position your marketing and campaign to reach this audience.
- Research press contacts you have written articles about campaigns or products similar to yours and capture their email to reach out when your campaign launches.
Reach your target audience:
- We highly recommend Krowdster‘s research and engagement tool for all crowdfunding campaign. Krowdster is the first big data powered, cloud hosted crowdfunding analytics, optimization and promotion software. This software is available for a low monthly fee, with a 1 week free trial, and allows you to analyze, optimize and then promote your campaign to over 300,000 active crowdfunding supporters.
- Establish an engaged social following; this can include some combination of Facebook,Twitter, Pinterest, Instagram, etc.
- Create a website or landing page of some kind for your product, idea or cause where you can capture prospective donors’ information.
- Maintain consistent social media profiles & engage authentically with your user base.
- Build an email list.
- Research niche sites/ forums related to your target market.
- Start blogging & contribute guest blogs to sites that will establish your voice as an authority in your respective niche.
- Create a timeline for your campaign (pre, during and post-launch phases).
- Choose a marketing budget.
- Select a reasonable fundraising goal
B. Setting Media Goals
- Search for your ideal media contacts and press outlets (niche-specific and that have promoted similar ideas or causes to yours in the past).
- Identify blogs that have covered similar projects.
- Find relevant forums and niche-specific fan sites.
- Evaluate your sources and select your top 10.
- Reach out to your top 30 media outlets pre-campaign launch.
C. Creating Branded Marketing Materials
- Write your campaign page copy.
- Hire a professional production company to create a compelling pitch video.
D. Selecting a Crowdfunding Platform
- Select a platform with the funding mechanism best suited for your fundraising goals. (Kickstarter = all-or-none funding; Indiegogo = keep what you raise).
2) ASKING CREATIVES TO MAKE YOUR STARTUP VIDEO FOR FREE.
A quality video, with an emotionally-evocative, highly creative storyline, is often the only authentic connection buyers and investors will have to your brand. It is absolutely crucial to your success, and while most startups know this, they are boot-strapped for cash. Of all the possible places to cut corners budget-wise through, video production is not the area to do it. And asking a production professional or film team to create an iPhone commercial quality video up-front for free for is completely unrealistic.
Creating a video is actually quite like building a house, with up-front costs for locations, actors, crew, graphics and equipment. And no one builds houses for free. If you don’t do what you do for free, don’t ask film professionals to either.
As a ballpark reference, you should be expecting to pay the following for startup and crowdfunding videos:
A. The solo shooter (low-quality): $2,500 to $4,000.
Expect a single camera operator for a half day shoot and some very basic editing with little to no pre-production storyboarding or creative conceptualization.
B. Small team(medium quality): $5,000 to $7,500.
A full shoot day with 1 or 2 camera team, a rough storyboard, edits and some light graphics work.
C. Niche creative team with proven track record (highest quality): $8,000 to $20,000.
At this price point, you can expect an integrated team approach with niche experts in the startup and crowdfunding space, with a portfolio of pieces that have raised capital and accomplished clear call-to-actions. Multiple storyboard creative pitches, a full crew for 2–3 shoot days, editing and high quality motion graphics and compositing. (If you were wondering, yes, this is the level we specialize in at Ripples Edge Media).
3) INCORRECT PACING.
Most crowdfunding campaigns that fail, start off too slow and often lose steam through the process. Failing to line-up as much press and marketing for donations in the initial launch days is as huge mistake, as
Let’s break this down a bit more. What attracts a crowd? A crowd attracts a crowd! If you want to hit your fundraising goal by the end of the campaign, you should focus on raising 30 percent of it in the first two or three days. Research shows this is what the most successful campaigns do and this is your best shot at getting featured on a crowdfunding platforms home page.
There is so much work that goes into successful campaigns, but be sure not to lose team half way through. Keeping your backers up to speed with updates and information throughout the campaign is critical as well.
4) UNREALISTIC DEADLINES = STIFLED CREATIVITY AND PRODUCTIVITY.
The single best way to short-change your team’s time and financial investments in marketing and video efforts for crowdfunding? Set immovable, unrealistic deadlines. I see this time and time again. Startups that reach out and have their heart set on a launch deadline two, sometimes even one, week out. In short, that is simply not enough time.
Video in particular is a creative endeavor at its core; and creativity needs two key ingredients: 1) room to breathe; 2) time (30–45 days, ideally). And likewise, marketing and PR for a campaign is typically months and months of prep work (see #1 above).
If you’re considering crowdfunding, understand the process and don’t cripple the abilities of your contractor’s to execute with unrealistic deadlines.
5) SLOPPY PERKS.
You know how it feels to get a gift card as a present from a close friend? Unthoughtful. Please don’t do the same to your backers.
When someone backs you, they are not buying a product, they are investing in you, believing in your idea. It’s a leap of faith and they expect to receive a thoughtful gift in return. Sloppy perks we often see include: t-shirts, mugs, generic thank you letters, and products that are priced sky high ($200+ donations only).
Use perks to connect your backers to your process, to make them feel included in the success of your product or idea. Your perks should be a relationship-building exchange. Yes, offer your product, if you have one, but also think of personalized photographs, or videos, signatures etc. Here’s a great example from the project: Build a barn, name a goat.
For $150: “Name a Poplar Wood Farm 2013 baby goat (or kid in goat language).” This also comes with two photo updates, so you can show your parents how your kid is progressing.
In short, crowdfunding is no longer a strange, risky endeavor, but one of the primarily mechanisms by which startups give their ideas wings. To succeed, learn from the mistakes of failed campaigns. Wield the knowledge of our top 5 lessons here and be sure to let us know how much you raise!
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If you have an exciting idea, are launching a startup, or want to learn more about crowdfunding video storytelling, please go to http://RipplesEdgeMedia.com and contact us today.
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