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Is Crowdfunding right for your Business?

Lee Decker
Lee Decker

Lee Decker and Mark Thimmig were able to join the CSUF Startup Incubator on Wednesday night to give a talk on crowdfunding at the CSUF Startup Incubator. In a nutshell, undertaking a crowdfunding campaign is a big undertaking but it can be an ideal way to raise funds for your business and you can also use it as a clear proof of concept for your idea. If you weren’t considering a crowdfunding campaign you might want to think about making a pivot and do one (we will be hosting a talk on Pivots next week, details here).

Here are some of the key insights I had:

  • Do a crowdfunding campaign for PR and to get feedback on your product/service
  • Crowdfunding is unpredictable and it doesn’t matter if you have a $1,000 campaign or a $1,000,000 campaign, there’s no guarantee of success.
  • Emerging Inventors and Entrepreneurs are the ideal people who should consider doing crowdfunding campaign
  • Unique products do much better on crowdfunding campaigns
  • When creating a campaign, you should give special attention to the copy of the campaign and to the awards people can purchase
  • To drive pre-orders you should make a limited amount of them available and then have a second tier pre-order level that is a little more expensive
  • Finding influencers on social media is important (influencer = someone who has 100,000+ followers)
  • You need to get 30-40% of your goal in the first few days of your campaign otherwise you most likely will not meet your goal – You should be prepared to ask for friends, family, and others you’re close to fund your campaign; if not, you should seriously reconsider doing a crowdfunding campaign
  • Crowdfunding is a legitimate way to validate your idea and it’s quick, which is a good thing
  • For the 60-90 day period before your campaign goes live you need to promote your campaign in what Lee terms a “pre-raise”. This is the time to get soft commitments from people to get in on your campaign’s early bird special – this helps you to get a “fast start”
  • It can cost $10,000 to $20,000 to hire a professional firm to do a $100,000 campaign
  • For every 2,500 people you drive to your campaign you will probably only get one person who will make a decent contribution
  • Forego the t-shirts and other swag, that doesn’t drive people for most campaigns, instead package your product in multiple ways and make all your rewards for contributing relevant to your product/service
  • 70% of crowdfunding campaigns for apps fail
  • It’s absolutely critical to word your Rewards/Perks copy in a compelling way
  • Videos need to be very short, two minutes or less; if you too much content for two minutes then make a second video
  • $5, $10, $50, $75, $100 are the primary dollar amount you should use; don’t do a $1 level for Rewards/Perks because that’s not enough money to make a difference and people who are willing to contribute $1 are probably willing to contribute $5
  • There are campaigns that raise millions of dollars that started out with a $10,000 goal – you can also do multiple campaigns by making some simple changes but let some time pass before launching subsequent campaigns
  • Don’t set your campaign’s target too high, set it lower so that you are more likely to get to or, even better, exceed your goal
  • Great Campaign = Exceptional Video + Clear communication and graphics + Transparent use of funds and timeline + Viral marketing strategy and incentives + Fine-tuned press strategy + Email list generation and conversion (build website and Mail Chimp to do this cheaply) + Pre-raise of 40% of target
  • For press releases you need to get these out to targeted journalists and include a well written email introducing the press release – You need to tell a compelling story and tap into what the journalists are looking for (what they write about, what kind of story will get ratings/readers, etc.)
  • Here is a link to one of the campaigns that Lee and Mark are working on: http://bit.ly/1ECuS1p
  • krowdster.co is a crowdfunding analytics site that Lee and Mark use to research crowdfunding campaigns – this data can be very granular and you can look up based on the kind of industry the campaign is in and get back data like how many campaigns get funded and even what price levels for Rewards/Perks work the best – there’s also a way to send our press releases through this tool (there is a charge for sending out press releases)
  • CrowdMapped.com is another resource that Lee and Mark use – it’s a directory of all the crowdfunding platforms that are used globally – you can break this down based off of what these platforms focus on (i.e. industry, location, etc.)
  • Before starting a campaign you really need to do your homework, this means starting four or months before the campaign goes live, probably longer than that
  • Equity crowdfunding is still difficult and there is still a lot of regulation regarding that – almost all of the crowdfunding platforms are staying away from this – case law still needs to be figured out – can be very expensive doing equity crowdfunding – there are a lot of equity crowdfunding platforms out there

Overall, this was a very informative event and gave everyone in attendance a lot to think about when considering launching their own crowdfunding campaign.

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More info on the CSUF Startup Incubator: http://bit.ly/csufstartup

More events for the CSUF Startup Incubator and Center for Entrepreneurship can be found here: http://bit.ly/CSUFEntrepreneurEvents

Published by CSUF Entrepreneurship

We teach, coach and lead the principled, cross-disciplinary practice of entrepreneurship. We believe that, through determined practice, leadership and team work, our students, faculty, clients, volunteers and alums can systematically recombine the new and the old to forge new ventures, create an entrepreneurial culture, and dramatically benefit our community.

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