Crowdfunding is a popular way to finance early-stage startups, particularly for hardware projects. It can provide significant exposure, invaluable feedback, product/market fit validation and of course financing.
Yet crowdfunding is no silver bullet and most campaigns fail to reach their objective. This is particularly true for technology projects on Kickstarter where success rate currently stands at 19,75%, the least successful category. And overall, 14% of all campaigns fail to raise a single dollar. While reasons for failure are aplenty, good preparation can help mitigate the risks and increase chances of success.
At SmartHalo, we’ve been contacted for advice by dozens of startups trying to finance themselves through crowdfunding. By writing this piece, we hope we can help others run successful crowdfunding campaigns.
1) Plan in Advance
You’re reading this piece – good. To deliver something awesome, you’ll need to plan months in advance. We worked for over a year on SmartHalo before launching the campaign. Remember: you only get one shot at this. On Kickstarter, unsuccessful campaign pages are kept online forever – a permanent stain on your brand.
Not all projects are meant to be crowdfunded, such as hyperlocal projects, because the pool of potential backers is simply too small. The ideal campaign’s reach is the entire planet.
Some rewards are not a good fit for crowdfunding or too expensive. The most common pledge on Kickstarter is 25$, so try not to ask too much, even for tech projects. (Our Kickstarter reward was priced at 99$.) Some campaigns succeed with high-priced items, but it is less common.
For hardware startups, simply give out one unit of your product. But avoid adding frivolous perks like mugs or t-shirts as they end up distracting you from your actual product.
2) Email, Email, Email
The most important thing you can do to prepare your campaign is to get the email of potential backers.
If you haven’t done so already set up a landing page, a simple pitch of your idea. This might seem obvious, but it must look awesome. If you’re not a web designer, I would suggest hiring a freelancer, or if you’re really cash-strapped, asking a friend. Well-designed landing pages convert higher.
The objective is to capture the email of your visitors, so the box should be front and center. Give visitors an incentive to join – try to think of something else than “Register to our newsletter”. Do not bother asking for a full name, address or phone number for now – just get that email.
You cannot assume that more than 5% of your list of subscribers will convert into backers once your campaign is live. How many emails do you need to reach 30% of your objective on the first day? If you don’t get there, it will be very hard to succeed. The safest way is to collect enough emails to reach 100% on Day 1. Better postponing the campaign than launching without enough emails.
3) Drive Traffic to Your Landing Page
Facebook Ads is one of the most cost-effective way to drive traffic. But instead of running a single ad and waiting to see what happens, try AdEspresso. It lets you A/B test different ad copies and audiences to optimize conversions. Think of it as a tree with many branches: you choose images, texts, headlines and audiences creating up to 250 different combinations. Compare the performance of each branch, then repeat by testing new stuff against your best ad.
Another powerful tool is Facebook’s Lookalike Audience. It allows you to import a list of emails to match them with actual people on Facebook and generate a similar audience to your initial leads. Use it in combination with AdEspresso to get incredible results.
4) Video is Your Best Argument
It is almost impossible to run a successful campaign without a good video. And just like web design, you should work with professionals. Writing, shooting and editing take time – plan in advance.
Cut to the chase. The most popular videos on the internet are short, just like people’s attention span. At the very maximum, keep it under 2-3 minutes. Shorter is better.
Do not release your video in advance. We wanted to build momentum by sharing it a few weeks before the official launch, but our friends at Brinc advised us against it. You want your campaign to break the internet when people can actually convert. Your video is your best argument, so don’t blow it too early.
5) PR and Media Strategy
Don’t spend too much time reaching out to media outlets before launch. A crowdfunding campaign is highly speculative – it is essentially a promise that something will happen in the future. Asking journalists, weeks in advance, to write about a campaign that will be online eventually, concerning a product that will exist at some point makes no sense. In the grand scheme of things, everything is more newsworthy than that.
It might seem like a classical chicken and egg problem: media won’t talk about a campaign without traction, and you won’t get traction without media. The best way to get attention is by being successful in the first place using the emails you collected. Media can only amplify what you’ve already generated. The stories will be about how you’re taking Kickstarter by storm.
If, somehow, you do manage to get an interview before launching (through personal contacts, for instance), ask for an embargo: nothing should be published in advance. You want to create a thunderstorm at launch and not space it out over weeks.
Remember that journalists hate to be pitched. They want to discover things by themselves, not feel like they are part of a spreadsheet. If you have to pitch them, it needs to be super personalized and explain why they’d want to cover you.
6) Create your crowdfunding page and launch it!
Some crowdfunding platforms take a few days to approve your page. Kickstarter forbids 3D renderings, so avoid using them. Indiegogo is less demanding in that regard. If you’ve committed to a launch date (which you should), this could be problematic.
While you’re building the campaign page, share the preview link with friends and family to gather feedback.
When you launch the campaign, get close friends to pledge immediately so subscribers will see there is already some momentum once they arrive on the page. Send it at 8AM in your main market timezone – most people check emails in the morning. Don’t hesitate to send again at 12PM, 4PM, and 8PM. Hey, they’ve subscribed to your list for a reason.
Don’t forget to remind them what this is about. You’re thinking about your product 24/7, but they’re not. Start with your one sentence pitch again.
7) Run ads during the campaign
When posting your campaign link on Facebook, a thumbnail video will be automatically created. This might seem like a good thing because people immediately see your video. But it will not be clear to users that they can click through your campaign page and you’ll lose some of that traffic. Create a static page, something like www.yourwebsite.com/ks, which redirects to the Kickstarter page – this buffer prevents Facebook from creating the video thumbnail and instead use exactly what you provide.
8) Cross promote with successful ongoing campaigns
A free way to get visits on your campaign page is to partner with other like-minded projects to get their backers to also back you. Each campaign posts an update containing a link and a short paragraph about the other. Use Google’s URL builder to properly tag and track incoming visitors. You might want to also check out this guide.
Easy, right? If you enjoyed this post, please share it! Got anything to add? Write us at [email protected]