Crowdfunding is the process of contacting potential investors to fund a business idea by them contributing a small amount of funding each. Crowdfunding is when businesses, organizations, or individuals fund a business with modest donations from a large number of people in lieu of traditional funding methods. By obtaining the necessary cash flow boost, these enterprises can launch new projects or get off the ground.
It is a method of funding that is particularly attractive to start-ups as a funding source offering monetary, as well as other, resources. The minimum requirements for you if you are looking to get crowdfunded is that you must have:
Developed a clearly defined product, service or solution.
Identified your audience.
Set your funding goals.
Developed and shared the story behind your product, service or solution.
Set out and promoted your campaign.
Crowdfunding Phases
Donation-based crowdfunding campaigns generally do not follow a steady pattern of collecting donations but instead have three phases.
In the first phase, usually the first week after the launch, friends, family and your social media followers are more likely to donate. The average number of donors, amount donated and amount per donor are highest during this period.
In the second phase, which takes place after the first week, usually with less than 70% of the goal met, potential donors are more likely to wait to see what others do before making a decision. This is known as the bystander effect, a decision to donate becoming more likely the nearer you get to reaching your campaign goal. After this, the third phase, is when more than 70% of the goal has been reached, potential donors are more likely to contribute because they find a campaign with higher cumulative donations more desirable or because their motivation increases as the campaign nears its goal. Their decision is based on following others and donate if many others are donating. This tends to create a herding effect and a large influx of donations.
The truth is that if your campaign does not reach at least 70% of its goal after three weeks, it is not likely to be successful. The good news is that those who were going to invest will receive an email informing them that the project was unsuccessful as it did not reach its target and they will receive a refund of the money they pledged and you will not be charged any fees. And there is nothing to stop you making a few changes and trying again.
Crowdfunding Phases
Write a compelling pitch
Your pitch should be concise and to the point. Tell reporters and bloggers how your product could interest them, and hit your most important points. Also include a link to your video, it is the quickest introduction to your product and can easily be embedded into a story or blog post.
Don’t stop pitching after your campaign launches. Writers are always looking for relevant, interesting stories, and the media has a soft spot for DIY successes. Do another round of media outreach once your campaign has some traction.
Platform promotion
Another way to promote your campaign is through the crowdfunding website itself. While you can and should do everything you can outside of Kickstarter, such as using paid ads and social media your most likely investors are people who are already searching on Kickstarter.”
There are a few ways you can reach these people:
Doing promo swaps with other campaigns
Become a recommended or featured campaign
Advertise in places where crowdfunding platform users gather
Start with a smaller campaign goal, then sending as much traffic to the page as possible in the first 48 hours. This will help improve visibility and drive more organic visitors from the platform.
Personal outreach
Attention on social platforms can be as helpful as media coverage. Use your personal network to create buzz in the days before you launch. Ask people you know to share details of your campaign on their social media feeds, blogs, or newsletters.
This initial traction can help you get additional press coverage and even grab the attention of your chosen crowdfunding platform, many of which often look for successful projects to highlight.
Do not forget to use your personal blog or social media feeds to reach your extended network. Don’t overwhelm with email blasts and group messages but send a few reminders about the campaign and personally contact anyone you think will help spread the word.
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