Back in the day – you know, ten years ago or so – if you wanted money for something, you had to earn it yourself, go to the bank and ask for a loan, find an angel investor or ask your friends and family to pony up. But these days, you can go online, set up a web page and get strangers to give you money!
I’m talking, of course, about crowdfunding. Sites like Kickstarter, Indiegogo and others allow anyone to create a campaign and collect money. Campaigns may raise money for all sorts of things, like:
- Cutting an album
- Putting on a photography show
- Creating a prototype of an invention
- Paying medical bills
- Funding the dreams of a sick child
- Rebuild after a home fire
- Starting a business
- Making a $55,492 potato salad
…And much more
How crowdfunding platforms work (in a nutshell)
Let’s say you want to raise money to publish a book of illustrations you’ve created. You create a campaign and set a target amount of money to raise by a certain date. Individual donations are typically small, but together they can add up to a lot. Then you promote your campaign and wait for the money to start rolling in.
Most platforms are all-or-nothing, which means that if you don’t raise your target amount by the deadline, you don’t get any of the money. That’s why it’s important to have a great campaign!
So what do you want to raise money for? If your story or your project is compelling enough, you’ll inspire strangers to open their wallets and you’ll make your dreams come true. Here are some crowdfunding tips to make that happen.
5 Critical Components of a Crowdfunding Campaign
You must have an awesome video.
There’s no denying that video is an amazing way to build instant rapport with someone you’ve never met. Campaigns with videos have a higher success rate of achieving their goals compared with campaigns with no video. Even shooting a simple video of you discussing your project and why you’re passionate about is better than no video at all. But if you can afford to put a little money in your campaign upfront, spending it on the video will give you the best bang for your buck. Look at successful campaigns and see how they did theirs.
You have to offer great incentives.
Most platforms tie a donation amount to a reward for the backer. So, say you want to raise money to write and publish a cookbook, a reward for someone who gives you $50 might be one copy of the book, and $200 might be 3 copies plus 1 signed copy. Think about offering different rewards for the same level, too. Maybe someone doesn’t want 4 copies of your book, but wouldn’t mind a mug with your logo on it. Communicate with people during your campaign and ask what they’d like – then add those options.
You should inspire your backers.
Backers want to contribute to a campaign they believe will be successful, so give them a reason to think yours will be successful. Most campaigns that are successful raise almost half the money within a few days, according to Indiegogo, so ask the people you know will back you (like friends and family) to donate early on in the process to create some momentum.
You must leverage social media.
You can’t expect success without getting on social media and letting the world know about your campaign. Get on multiple channels and use Facebook, Twitter, Instagram – any platform you’re on – to get the word out. You can even create a hash tag specific to your campaign to keep track and promote it. Tell your story, share your passion and ask people to check out your video.
You should try to attract the media.
If you can get some media attention, that will help your campaign. Even a small blurb in the local paper can attract some new attention, and you can use that to say that you’ve been featured in a publication and then snowball that into bigger media markets. Remember that media outlets are always looking for interesting stories, so if you’ve got something unusual, don’t be afraid to get in touch!
3 Things to Watch Out For
Actually do what you say you’ll do.
If you promise your backers something, be prepared to deliver. And if you make the money, then follow through on your project.
Communicate with your backers.
These platforms allow you to post updates and tell everyone where you are in your project. Do so regularly and you may get them talking about you on social media, which, depending on your campaign, may help you in the future.
Avoid legal pitfalls.
If you’re using this to raise money for a business venture, you might want to talk to a lawyer before proceeding to make sure you’re safe and not liable for anything. And no matter what your project is, check if you need to pay taxes on the money you receive. It may be considered personal gifts, or it may be classified as taxable income.
So go start your campaign – and good luck!