7 Crowdfunding basics: The guide to a better campaign
Gone are the days of looking for angel investors or groveling at the feet of bankers to get a loan. Crowdfunding has become the popular and simpler way to fund for startups and creative projects.
Getting started can seem like a daunting task, but with just a little bit of creativity and energy, you can grow your funding and your audience of supporters. Start with these seven basics of crowdfunding and you’ll be on your way to building a great campaign.
Create Your Funding Goal
Deciding your funding goal is the very first step to funding any project. Your funding goal should be the minimum amount you’ll need to finish your project and fulfill the rewards promised to your supporters.
To create a funding goal, start by making a list of every expense you could possibly have in order for your project and campaign to be successful. For large expenses such as production costs, research the best prices and stick with them. Remember to also include minimal expenses like stamps, shipping tape, and boxes. Once you’ve listed everything and their prices, add it all up and then tack on a 10-15% buffer for the unexpected things that are bound to come up. Don’t forget to include the service fee, transaction fee, and influencer compensation in your calculations. Taxes will also apply to each project differently.
Then think about who is in your core network (i.e. friends, family, co-workers) and social networks (i.e. followers on your social platforms). Make a conservative estimate of how many supporters you can bring in on your own through these networks. If you increase your social following prior to the campaign, you are likely to bring in more supporters. However, stay realistic when deciding on your funding goal. People will be less likely to donate to your campaign if it seems unlikely to succeed.
After finalizing a funding goal, create separate stretch goals. Once you’ve launched your campaign, you cannot change your funding goal. Having stretch goals keeps your momentum going by giving supporters an incentive to continue donating to you even after you’ve reached your original funding goal. You can explain your stretch goal plans in your campaign descriptions. Your stretch goals can include unlocking new types of rewards or further developments for your project with each new milestone that is hit. Whatever stretch goals you choose to add, make sure they are making your campaign or project better and not just creating new irrelevant things.
Tell your story
Your story should tell people who you are, why you’re creating your project, how you will bring your project to life, and what your project is. Telling people who you are and why you’re pursuing this project is the most important when inspiring them to follow and support you. People never just support great ideas, they look to support great people and great causes.
When explaining how you will bring your project to life, include a very detailed schedule and budget. By having deadlines and goals, you are allowing supporters to keep you accountable to your plan. Without these details, supporters may feel you are not prepared to carry out your project and are less willing to donate to you.
Telling your supporters about your project should be relatively straightforward. If it is a simple project, images of the product and short descriptions will do the trick. If your project is more complex, a video demonstration and clear detailed explanations will be necessary.
Remember that your campaign page should not be just a long wordy story about your project. It should include images, gifs, graphs, and/or videos to help convey the story in an interesting and engaging manner. Having a short introduction video is very effective in grabbing a viewer's attention. According to Indiegogo, a campaign with an intro video raises 4 times more funding than those without.
In this intro video, you can quickly explain who you are, why you’re creating this project, and what your project is. A key to a good video is natural lighting, quality audio, clear concise dialogue and being yourself. There is no need to invest in fancy equipment to create this video. All you need is the sun, any smartphone and you. This is the best way to add that human aspect to your campaign.
Now, this is the part that makes HyperFundIt special! As you probably already know, HyperFundIt is not just a crowdfunding platform, we are also a networking platform for influencers and crowdfunders. According to the PEW Research Center, 63% of donors reported having donated to a friend of a friend or acquaintance, as opposed to the 28% of donors who have donated to someone they did not know personally. It is clear that reaching out to potential donors beyond the inner circle is a large obstacle crowdfunders face.This is where influencer marketing comes into play on HyperFundIt.
What is influencer marketing? Influencer marketing is simply the use of influential people to help market and drive your brand. In this case, you will be able to connect with influencers in your niche who will help promote your project to their followers.
HyperFundIt will ask you the max number of influencers you want to work with, where you want these influencers to post their content (YouTube and/or Instagram), and which payment model you will choose to compensate your influencers.
To figure out what influencers are the best fit for your project, you will need to research the niche or community your project is in. Some questions to consider are: Where is my niche located on the Internet? Is my targeted audience more likely to watch YouTube videos or scroll through Instagram feeds? How many influencers will be most effective in marketing my project?
Example: Jenny is raising funds to open up a restaurant in NYC. Foodie influencers tend to be more active on Instagram and therefore she chooses to work with only Instagram influencers. She decides it’s best to work with influencers who are also in NYC so they can take pictures of her food. After some research, she concludes that 3 influencers with approximately 10k followers are sufficient in reaching enough supporters to meet her funding goal.
After determining what type of and how many influencer(s) you’d like to work with, you will need to decide on how you want to compensate the influencer(s). HyperFundIt provides four payment models - Hyper Funding, Heavy Marketing, Half & Half, or Custom. In all four payment models, you will see there is a set service fee and PayPal fee. The difference between the four payment models is how much of a percentage of your donations will you give as compensation to your influencers. Keep in mind the more popular an influencer, the higher the percentage they will look to work for. The percentage put aside as compensation will be split amongst the number of influencers that work with you. It is not the percentage each influencer takes away.
When choosing between the different payment models, consider whether you are focused more on marketing/brand awareness or funding for your project. Keep in mind how many influencers you want to work with. Having more influencers may be appealing at first, but this also guarantees more coordination and complexity. Avoid having too many influencers as this can make your project less appealing to work on since the percentage set aside for influencers’ payment will be split amongst the group. Again, the key is to research your industry and target audience so that you can make accurate plans for choosing and coordinating with influencers.
Example: Rose has a near-complete prototype and wants to focus on building brand awareness rather than funding, in this case, it makes more sense for her to choose Heavy Marketing. This model distributes a larger percentage of the donations towards influencers which gives the more popular and experienced influencers incentive to work with her campaign.Seeing that Rose raised $40,000 for her project, her fiancé Jack may be inspired to crowdfund for his concept but would need almost all $40,000 to build the product he has in mind. He would choose HyperFunding since this model funnels most of the donations into the project itself and sets aside a smaller percentage of funds for influencers.
Having a social presence and reaching out to your target audience is the number one way to bring in donations for your project, therefore HyperFundIt always recommends you have some sort of marketing strategy in place and why we work to make influencer marketing more accessible for you.
Now for the fun part! Having great rewards create strong incentives for supporters to donate to your project. Your rewards should relate to your project, be relatively equal in value to the amount donated in exchange for that reward, and be feasible to produce and ship out in large numbers. Rewards can be tangible items (ie. items with your brand logo, the product you’re funding to create, posters, etc.) or intangible items (ie. coupons for your service, thank you’s, digital downloads, etc.). Stay creative because supporters who browse crowdfunding platforms frequently, probably have a dozen t-shirts from multiple campaigns already. Keep in mind that there are guidelines for what you can give out as a reward on most crowdfunding platforms. In most cases, alcohol, drugs, and explicit materials are banned. For HyperFundIt’s guidelines visit The Campaign Guidelines.
Don’t forget to plan your budget and how you will make and ship out these rewards. Be prepared for the possibility of your campaign going viral! You may have a difficult time making and shipping out thousands of rewards so always set a limit on the available quantity of your tangible rewards. If you do end up with an unmanageable amount of supporters, let them know that shipments may be delayed and what your plan is for making sure everyone gets their rewards.
If you decided to give away tangible rewards, fulfilling these rewards will be your main priority after a campaign ends. Tackling this huge task can be tricky. The important thing is to have a plan.
Before you start your campaign, you should have decided how you will be fulfilling your rewards. You can fulfill them yourself, with a team or hire a fulfillment center. If you’re fulfilling the rewards by yourself or with a team, you should calculate the time that will be spent physically boxing a single product from start to finish and factor this into your delivery date, when informing your supporters.
Having a budget for fulfillment is also important. It is recommended that you work with a team when fulfilling rewards. Do not underestimate the amount of time it will take to prepare shipments and package products. When budgeting, keep in mind the international shipment fees, shipment material costs and the time spent. Time is also a valuable asset you will be using up. Because of this, it is recommended not to have too many tangible rewards as it can quickly become overwhelming to fulfill.
Communicating with Supporters
It is extremely important to keep an open communication line with your supporters before, during and after your campaign. HyperFundIt has a tool for you to post updates on your campaign page, which you should put to good use. Also, remember to connect with your followers and supporters through your social media accounts.
Before your campaign starts, get your followers excited about your upcoming campaign so they will be ready to donate when your funding phase starts. You can do this by being engaged on your social media - have countdowns, create a teaser clip, update your followers on your preparations. Don’t hesitate to ask your followers to share your content as well, so you can grow your following base.
If you don’t have a following, get one! You can easily build a following in 2-3 months on Facebook, Twitter or Instagram. Even though you have the opportunity to work with influencers during the campaign, it is extremely important to start strong with your own following. Campaigns that start out strong and end strong have a much higher percentage of reaching their funding goal.
During your campaign, keep your supporters updated through the campaign page’s update feature first and foremost, then invite them to follow you on your socials. Majority of your supporters will look at your campaign page first for news on your progress. It is important to let your followers know every step you’re taking and milestones you’ve reached. This encourages new supporters to donate and lets supporters who’ve already donated know you’re working hard to achieve your goal.
After the campaign ends, don’t stop updating your campaign page! Keep your supporters in the loop about when the rewards are being shipped out and how your project is coming along. By keeping your supporters up to date on your progress, you are keeping them interested in your product/service so that when it launches they will be ready to purchase.
The last basic component of your campaign strategy is deciding on the length of your campaign and the launch date. Proven data shows campaigns that run for about 30-days are more likely to reach their funding goal. This short period of time builds a sense of urgency for supporters to donate to your campaign.
HyperFundIt takes this into consideration and implements 30-day long campaigns only. Every campaign has a 30-day Hype Phase where the host connects with influencers who are looking to help promote your campaign. This period is more of a preparation phase. Then there is another 30-day Funding Phase, this is the “regular” launch period where supporters can donate to your campaign. This period of time is also when influencers will be promoting your campaign to their followers on their social media platform to bring more traffic to your campaign page.
When choosing your launch dates, keep in mind the 1st or 15th of any month are the best days to start your Funding Phase. This is because these are the days that the majority of people get their paychecks. To coordinate your Funding Phase launch date to land on one of these days, simply add 30 days to the Hype Phase launch date you have in mind and adjust from there.
As mentioned before, having a strong start and a strong finish is crucial to the success of your campaign. According to Indiegogo, 42% of funds are raised on the first and last 3 days. Avoid starting or ending on a weekend because the most traffic into crowdfunding platforms are on the weekdays. You want to choose a start date that falls on a weekday to help you gain momentum early on, while having an end date that also lands on a weekday to help you finish strong.
On Your Mark, Get Set, Go!
Once you’re ready to submit your campaign to HyperFundIt, you will need to fill out a simple campaign request form and wait for an approval letter. An important thing to keep in mind is that you must finalize your campaign prior to submitting your campaign request form. You won’t be able to edit your campaign once submitted as to ensure the integrity of your campaign.
The following images illustrate the process for starting a campaign:
Now that you know the basics of crowdfunding, set forth to build the best campaign you can. Good luck and we’ll see you on the other side!