One thousand dollars may not sound like much, but to a bootstrapping entrepreneur, every dollar raised means there will be funds to purchase a website, a landing page, a logo, a domain name, create a pitch deck or an explainer video. This money will give you the resources to rally your support community for future fundraising and, most importantly, validate the idea.
These last two elements — or lack of — are the reasons that up to 90% of KickStarter and IndieGogo campaigns fail. The “magic of crowd funding” does not kick in if no one is aware of your campaign, or the idea just stinks. This article will help you avoid those pitfalls.
As an entrepreneur, I raised tens of millions of dollars of venture capital during my career. However, less than 1% of startups have raised money from venture capitalists. Fortunately, the early stage capital markets have rapidly opened up with the emergence of crowdfunding. The last few months I have been teaching a class on entrepreneurship at the Los Alamos Commerce Development Corporation, a community-building nonprofit in the high desert of New Mexico. My 10 students put together small for-profit crowdfunding campaigns, and raised over $15,000 among them.
How did they do it? There was no magic formula, nothing went viral, and they didn’t spend money on Google Adwords or Facebook Page Promoting. They just followed these five simple steps:
1. Make a video that stands out. Make it short, engaging, entertaining and fun. Yes, those last two points are redundant…exactly! People are constantly inundated with messages, ads and pleas for their attention and money. How do you cut through the noise? Speak from the heart, let the viewer feel your passion and also know that you have what it takes to realize your dream. One of my students, Leanne, raised $1,480 to start production on an adoption documentary — she was adopted, and her video was a tear-jerker.
2. Rally YOUR network. I did what I could to promote my students’ campaigns, but what really made the difference were the little things the students did to promote themselves. They posted links to our community’s Facebook pages and Meetup groups, emailed friends, family, and supporters, and asked for corporate sponsorships. Each student had a different approach, and each found success down a different path. One of my students, Gary, initially found no support, but then he sent an email to the members of his local church and his funding jumped to 66%. A day later he reached 100%, and the next day he finished at $2,735.
3. Speak to your customers. Marketing your crowd-financing campaign is the best way to find out who your real customers are, and then double down on that segment once you have identified them. One of my students, Cyndi, believed she knew what her market was and was disappointed to find no love from an email list of possible supporters. But she managed to identify a different group of supporters who made her funding of $1,515 possible.
4. Find one person who believes in you. Identify a champion who really understands you and gets excited about what you are doing and where you are going. This person is not afraid to stick their neck out for you, to lead your funding — or push you past the point of certainty. One of my students, Prisca, was able to close on $1,667 for her startup because of the belief of one such individual.
5. Learn from the experience, even if you lose. The Coolest project failed its first campaign, and the lessons went into making their second a blow-out success raising over $10M dollars! In my class, two campaigns failed. Both students had good explanations why they were not really serious about launching their business. The crowd can tell, and even though they did not succeed in raising money, you better believe their next campaign will be awesome.
So, my conclusion is that anyone who really wants to can raise money. It does not matter what the subject is, from breast-pumps to record-player-parts, I’ve seen it all. It is building up a community of supporters — whether that be on Facebook, your local church, clubs, or other networks, and bringing them a concept that both resonates with them and with you. We created LaunchLeader to allow you to align your support network and validate your ideas.