What’s your crowdfunding challenge all about?
I get a lot of people reaching out to me asking, ‘Can I crowdfund this? How do I go about it?’ So, I thought I should just lay down a challenge: in twelve weeks, can you go from zero to fully funded? I’ve run successful campaigns in less time. And if you’ve got someone leading the way and giving you the steps, it should be possible.
What are those steps?
With crowdfunding, there’s two places where people fail. The first place is in the preparation, the second is midway through the campaign when you get all these nasty feelings and you give up.
The challenge is really about addressing those two problems. For the first eight weeks, you go through quite a rigorous preparation process: How much money do you really need? Who is your target audience? What does crowdfunding typically look like?
We all hear about these projects that get funded very quickly and go on to reach massive success, but that’s a very small percentage of projects over all. Most projects follow a typical pattern, where they reach 10-30% in the first week, with 30% being a tipping point, 60% by week three and in the final week they’ll fund. So making sure people know what their expectations should be.
Also, really diving into what makes a good crowdfunding video, because it’s amazing how many bad ones are out there. Then starting to look at promotion, approaching media, looking at the fact that crowdfunding isn’t a story, you need to have an actual story. And then how to do updates, what social media to use. And then really nailing down what the first week is going to look like because that’s the only week you can really plan, after then, you just have to roll with the punches.
What are people’s biggest misunderstandings about crowdfunding?
You can really divide failed projects into two categories: those that prepare and then something happens or they get those bad feelings halfway through and they give up, or people who just think the money comes out of nowhere.
I saw a project the other day that was one picture, about twelve words in the description, and one ten dollar reward. It was completely ill-thought-out project – no preparation, no research, and it was just simply not going to fund. They were just looking for $10,000 from nowhere.
I’ve worked on a bunch of campaigns. I’ve partnered with Givealittle’s company Two Tails and helped run a coaching program for its platform Spark My Potential. That coaching project showed how having someone hold your hand along the way really helps boost success. I think it reached a success rate of 76% before ending.
I’ve worked with PledgeMe on their equity launches, David Farrier’s Tickle King project, Otis and Sarah Frizzell on Lucky Taco, Dick Frizzell on Cooking 4 Change. So I’ve been diving in and focussing on helping people raise money and honing the ideas I came into this with.
Two years ago, I was pretty green. I knew all the theory but I’d never done it. Now I’ve done it nearly 50 times. What I’ve really realised is that the emotion behind the campaign owner really makes or breaks a campaign. That was one of the first things I learned when I launched my own project, just how much emotion gets in the way of things, so a lot of my business is just emotional support.
What’s changed in crowdfunding in the last two years?
Well, we’ve had the advent of equity crowdfunding, so that gives people more options. When I launched it was all rewards and donations, and equity helps fund things like software and apps especially, that are not really suited to rewards crowdfunding because they often need large amounts of money, and with an app you’re lucky if someone wants to pay 99c. Getting them to pay $25, which is the amount most backers will give, is pretty damn hard.
People are also less likely to back a project now. We’ve had the massive failure of Zano on Kickstarter. So we’ve had massive failures which are making people think twice. It’s not necessarily this magic thing that happens where people give their money and the project delivers on time. Kickstarter commissioned a report which said that 60-80% of projects deliver late. The Coolest Cooler for example, while they’ve communicated well and the backers are mostly happy, they’ve been hit with workers strikes in China, delaying production.
So projects can be delayed by manufacturing delays, unforeseen circumstances or poor management. You just don’t get an idea of a person’s business acumen based on an exciting three minutes video with a drone following them around.
Multitude’s free 12 week crowdfunding challenge begins 1 February 2016. Sign up here. It’s free!