Easy Money with Crowdfunding! Not So Much…

So you’ve got this great idea, and everyone around you loves it. Inevitably, someone will say something like, “You should put that on Kickstarter, it would do so well!” And then you do a little research and find out that nearly 60% of Kickstarters fail to make their goal. Also, you’ve got to find some way to make a reasonably quality video. But in the end, it’s another case of, “It’s not what you know, but who you know.” Or maybe in the world of crowdfunding, it’s more like, “It’s not what you know or who you know, but how many people you know.”  It’s called CROWDfunding for a reason, and if you don’t know, or have access to, a large enough audience, your campaign is going to be pretty tough to run.

Last month a couple friends of mine asked me to help them with their Indiegogo((For those of you that don’t know, Indiegogo is pretty much just like Kickstarter. The only major difference is that Indiegogo allows for “flexible funding”, which means if you don’t reach your goal, you still get to keep the money raised. There’s still a penalty, though, in that Indiegogo keeps 9% of your funds as opposed to 4% if you do meet your goal.)) campaign for a new coffee shop and bakery they plan to open in Maplewood, MO this fall. To better get a handle on the work to be done, I broke down the campaign into 3 parts: positioning, informational video, campaign content and rewards, and PR.  We only had about three days to accomplish all of that… I recommend setting aside at least a couple weeks.

Positioning

Since most crowdfunding campaigns are for new businesses, it’s essential that the business defines a clear market position internally. Obviously, with a large company, this would take a lot of planning and some serious time investment. But, since we only had a few hours to hash this out, we worked through a quick brand mantra exercise. ((There’s lots of information about brand mantras out there. I recommend Coursera’s Marketing 101 course to learn more.)) Different from a tagline, the brand mantra has three main parts: Point of Difference, Point of Parity, and Point of Reference. Basically, what makes you different, what makes you comparable, and what you are.

Informational Video

The video can be one of the biggest barriers to entry when crowdfunding. If you plan to market a product, hire a good firm and make one hell of a video, it’ll be worth the money. But, if you’re opening a new, local business, find a friend a with camera (like me!) or a college film student. Although it would be nice to have an incredible video, the reality is that locally focused campaigns focus far more on connections than on the video. Here’s the one I made!

Campaign Content and Rewards

Don’t skimp on this part, particularly the rewards. Hopefully if you’ve done the positioning portion already, the content portion of the campaign should flow pretty easily. The rewards, however, are a whole different beast. With a single product, it’s pretty easy, just offer the product at a slightly reduced rate from the planned retail price. For a coffee shop, there’s more to think about. Find a way to offer an exclusive experience for your backers at a variety of price ranges. By far our most successful level was our “VIP Package”. At $100, the VIP Package gave backers a chance to see the cafe first, taste the coffee and various bake goods, and be on a small list of people that would be invited to future tasting events. Make your backers feel special! They deserve it for supporting your vision.

Now what?

So you’ve launched your campaign, and now the hard part begins. You have to talk to everyone, and I mean everyone. Connections are everything here, and you never know if your Dad’s friend’s college roommate is the editor at the biggest magazine in the city… Good luck!