There are so many questions around crowdfunding, but don’t fear, here’s a few answers to help.
IS MY COMPANY SUITABLE FOR CROWDFUNDING?
When it comes to crowdfunding, there are specific platforms that are suited to the different projects. For businesses offering equity, the crowdfunding sites, such as Crowdcube, Seedrs and The Syndicate Room, are quite particular in their application process and we recommend researching these options in as much detail as possible. For businesses wanting to offer rewards only, there are also some restrictions you need to be aware of, for example, Kickstarter won’t allow you to raise money solely for charity, or for tech projects that don’t have a working prototype. Indiegogo are less strict, but still have some restrictions you’ll need to think about.
WHAT EXACTLY DO CROWDFUND CREATIVE DO?
We’re not to be confused with a crowdfunding platform and we’ve got a page explaining what we do right here.
HOW DO I SET MY TARGET?
Setting your target is not simply picking a figure out of the air, it needs to be substantiated with a plan of what the money is for and how it’s going to be used. There are many financial and logistical aspects to think about. You need to calculate a realistic valuation of the company and if it’s an equity campaign, how much equity you’re willing (or can) give away. Research is the best way to gauge how other businesses in your sector have performed and their success rates. Plus think about the stage your business is in and apply that to your crowdfunding strategy…as don’t forget, you can do multiple rounds of crowdfunding and venture into it as part of your planned business growth.
CAN I RAISE MORE THAN MY TARGET?
Yes! Your campaign doesn’t stop when you hit your target and you should aim to surpass it, plus overfunding can generate great press for your campaign! It’s important to be strategic with your target though and know your limits, as overfunding means more equity or rewards to give to investors, so have your overfunding contingency plan set before you launch and stick to it.
WHAT IF I DON’T ACHIEVE MY TARGET?
Any entrepreneur will know that you win some and lose some and whilst we’re confident that every campaign we work on will be a success, we know some things don’t always work out. If you don’t reach your target you still have plenty of options. Some platforms can give you an extension and more time to reach your target. Some platforms allow you to keep whatever money you’ve raised, whilst those that don’t give you a valuable campaign experience and potentially vital contacts to be useful on your second attempt.
DO I NEED TO REFUND MY INVESTORS IF I DON’T REACH MY TARGET?
This is a question for your chosen platform, but in our experience many platforms are a success-only based, this basically means it’s all or nothing and if you don’t reach your target then no money is taken from the investors and you don’t necessarily pay commission fees to the platform. For those that are not success-only based, then just have a plan ready for different levels of funds raised, i.e. 25%, 50%, 75% etc and make sure you communicate clearly with your investors to make sure they stay on board with what you’re trying to achieve.
WHAT DO I NEED TO GET READY BEFORE I START MY CAMPAIGN?
The weeks and months before your campaign’s live launch are the most important of the whole project. You need to create an attractive proposition for your audience from day one, so spend time building your campaign in the best way possible. You will need a good deck, an engaging video pitch, exciting planned events, ramped up social media and many more campaign tricks up your sleeve. The first day of your campaign is vital, so it’s important to have a good social following in place before this. Plus you also have a business to run, so ensure you have your team in place to commit the time to the running the campaign. Of course we recommend our campaign coordination services for this, so drop us a line if you’re interested.
HOW DO I ATTRACT INVESTORS TO MY PAGE?
We see “the crowd” as three parts that overlap. First you have the platforms crowd, so make sure you look at how many registered investors the platform has, as you’ll be tapping directly into them. Secondly you have your crowd, which is made up of family, friends and existing followers who are all great to help spread the word and get on board to support the campaign as early as possible. Thirdly you have everyone else, your potential customers! You have to bring these supporters to your page yourself, or use an agency to identify your audience and build up a strong following. Social media is one of the most important ways you can bring an audience to your campaign and we recommend spending time before you launch, developing an engaged audience that you can depend on when the time comes to launch your campaign.
WHAT IF I DON’T HAVE A SOCIAL AUDIENCE TO START WITH?
If you don’t have a great social audience and don’t have the time to develop one, we recommend working with an agency to quickly identify and engage a new audience. We also recommend to have ‘Talking Heads’, these are the people you should always try to identify ambassadors for your campaign that you can rely on. They may have possibly invested into your business already and will help give future investors confidence to get involved. Where possible, partner up with relevant companies and individuals who do have a strong social following and ask them to spread the word of your campaign, it all adds up.
DO I NEED A WEBSITE OF MY OWN?
Yes, we would say so. Investors want to see you have an online presence, even if you’re in start-up stage. It’s also a good way to direct investors to your platform page and potential investors will want to be able to find you online. A website is also a great way to capture followers and generate a mail list.
HOW DO I GET ON THE FRONT PAGE OF THE CROWDFUNDING PLATFORMS?
You should try to get your platform to work hard for you, but you need to stand out from the crowd and have an eye-catching, well-constructed campaign with an exciting proposition. Launching and then letting your campaign run itself is not going to work. You have to continuously work very hard to generate excitement through events, social and content. Showing early success is very attractive, so have plenty of people ready to back your campaign before launch and try to work towards a 30% funded stage in the first few days, some platforms like Crowdcube call these ‘cornerstone’ investors.
HOW MUCH TO THE PLATFORMS CHARGE IN COMMISSION?
All the platforms have a different commission rates and vary in levels. Many are based on a % of the amount raised. For example, Crowdcube is 7%, with Seedrs charging between 7%-2% depending on the amount raised. Kickstarter and Indiegogo are 5% and some also have processing fees too. Make sure you know all the fees involved from your chosen platform before committing to them.
HOW CAN I GET MY PROJECT WRITTEN ABOUT?
There are so many crowdfunding campaigns launching every day that getting noticed can sometimes feel impossible. Journalists and bloggers get hundreds of emails every day about new campaigns and most are completely ignored. To make sure your campaign is featured in all the right places, we recommend working with people who have the right contacts, like us!
HOW DO I AVOID A SLOW PERIOD?
Sometimes, there is a period after the first few days of your campaign where things may seem to slow down. This is where the excitement of your launch has passed, and your deadline isn’t quite yet close enough to make investors feel the pressure. You will find that your progress slows during this period, and that you have to work harder to attract investors. Building and planning your campaign properly before launch will help avoid this and make sure you’re generating exciting content to distribute across all your channels. We have all this in hand on the campaigns we coordinate.
WHAT ARE THE REWARDS FOR INVESTORS?
Depending on the type of crowdfunding you choose (reward/equity), you can offer different things to your investors. With reward crowdfunding, investors should get interesting experiences, memorabilia, and/or merchandise (to name but a few). Equity offers investors investment in return for their contribution to your business and this can be combined with rewards (as above) too to help incentivise their investment.
WHEN DO I GET MY MONEY?
This varies depending on the platform and can take between 2-6 weeks. It’s important to not get caught out by this and make sure you include this in your business growth plan and not commit your generated funds until you have the money in the bank!
WHO DISTRIBUTES THE REWARDS/INCENTIVES TO THE INVESTORS?
Once your successful campaign has ended, your platform will give you all the investor information and it’s important that you collate this quickly and efficiently into the different rewards that they qualify for. You then handle all the distribution yourself, the personal touch is important to your backers.
ARE THERE ANY RESOURCES ONLINE THAT I CAN USE TO LEARN MORE ABOUT CROWDFUNDING?
Yes. There are a number of great crowdfunding resources that are full of information. We would recommend doing your homework and start following current live campaigns and watching them carefully, also looking at completed campaigns too. You can learn a lot from what other people have done right or wrong! Our Workshops are also available for anyone looking to start a campaign where we teach you what you need to know to run your own campaign.
CAN I START PR AFTER MY CAMPAIGN HAS ALREADY LAUNCHED?
Many of our clients begin PR after they have launched their campaign, but we recommend getting the ball rolling as soon as you know your platform launch date.
DO YOU GUARANTEE MY CAMPAIGN WILL GET FUNDED?
We can guarantee our commitment and expertise to your campaign, but we can’t guarantee that it will reach its target.
I STILL HAVE MORE QUESTIONS TO ASK YOU, HOW CAN I FIND OUT MORE?
No problem, our Workshops provide in-depth training on how to run an effective crowdfunding campaign and will tell you all you need to know, whilst answering all the questions you have face to face. Feel free to sign up.