The Experiential Crowdfunding Handbook: A first-hand guide to crowdfunding
After the crowdfunding industry doubled from 2011 to 2012 from $1.5 billion to $3 billion, thousands of entrepreneurs, artists and organizations in every industry imaginable have pitched their ideas directly to their prospective supporters and customers. Some, such as the famous Pebble watch or OUYA game, which hit Best Buy shelves this month, met with legendary success, while thousands of others close each day with unmet expectations. Crowdfunding is not without its challenges, and success demands as much--or more--time, planning and hard work as any other capital resource. Active crowdfunding requires daily hours of networking, interaction and marketing to keep the momentum rolling and pre-launch projects have no chance of success without a careful strategy and a well-developed and articulated concept. Even with a desirable concept, reaching out to “the crowd” can be challenging. Approximately 44% of projects on the Kickstarter platform will succeed and the bulk of crowdfunding’s growing numbers is concentrated in a small amount of highly-successful projects (One study found a top 1% of Kickstarter projects accounted for 36% of funds raised). Many worthwhile ideas get overlooked from lack of proper marketing or development while many frivolous concepts get funded through carefully planned exposure and outreach strategies.
Chatty Kidz, an Ipad app that provides engaging learning for children through a worldwide
After negotiating with investors with a previous enterprise he founded, Taggart was determined to keep Chatty Kidz independent for as long as possible. Through careful planning and marketing strategy, Chatty Kidz saw a great launch, earning approximately 30% of its funding goal in 3 days. Taggart researched crowdfunding extensively before launching and followed many of the parameters and tips crowdfunding authorities have advised. All the same, Taggart, like all project organizers, has acquired his own experiential handbook of crowdfunding tips and tricks.
The 30% Rule
Taggart leveraged his personal contacts to assure his project was guaranteed to be 30% funded in its beginning stages. This initial funding helps to assert the project’s position and instigate the “herding effects” in which other backers support campaigns they believe will be successful. Kickstarter reports that “81% of projects that raised more than 20% of their goal were successfully funded.” Though some crowdfunding columns assert that this 20-30% will help the project drive its own momentum, Taggart was quickly disillusioned to the effect. “You think it’s definitely going to get a life of it’s own through the kickstarter community” said Taggart, though it’s difficult to engage Kickstarter backers unless the project is elected to a popular space on the homepage. Continuous engagement across a variety of spaces is key to keeping the momentum rolling.
Project Development
The Chatty Kdiz app is already available for download, allowing families to connect and learn together in its current stage. This initial utility is paramount to prove to prospective backers that the project is not only legitimate, but that the team behind it is effective and the project will deliver on its promises. This capability assures backers that their donations are in good hands and gives a platform for the project to stand on. Articulating this initial capability clearly and concisely through descriptions or, better yet, through an engaging video, is equally as important as the utility itself. Assuring donors understand the project in its first stage helps them understand the direction the project is going and exactly what their donations are buying.
Social Network
The project organizer’s social network is square one for the campaign, and influences the direction of the campaign. According to a study conducted by the Wharton School of the University of Pennsylvania, “a founder with 100 (facebook) friends would have a 20% chance of success and one with 1000 friends would have a 40% success rate”. However, the size of the network is only one component of online outreach. “One of the biggest things I took away from the campaign was the power of twitter and how many people you can reach,” said Taggart, “However, the return from twitter is a much smaller, limited interaction” and doesn’t necessarily translate into site views or pledges. The reliability and familiarity of online friends to the project (and to the organizer) is another key aspect. To spread outside the organizer's own social network, the project needs bannermen, friends who are completely familiar to the project and enthusiastic enough about it to tell others. Informing as many people as possible helps solidify bannermen early on and extend the reach of the message.
Public Relations
Researching the project’s industry and reaching out to as many affiliates and authorities in the space as possible opens the conversation to an extended family of interested and passionate parties. For Chatty Kidz, Taggart located active members in the e-learning field willing to carry the message. To help make the project clear to educators, writers and bloggers, Taggart issued press releases detailing the project and campaign. Making information clear and easy to locate is vital to engaging online gatekeepers such as bloggers, journalists and social media aficionados. How the information is carried, however, varies across projects and, especially, across areas of interest. Though Chatty Kidz’s information was professionally distributed via PR organizations and agents, Taggart says it’s difficult to gauge how effective the press has been in turning readers into backers, and his own efforts using other social networks have yielded more measurable results.
Early Ignition
Crowdfunding campaigns are heavily reliant on momentum. Some debate exists between risking initial momentum by advertising the project before luach versus riding the initial spike in activity through an aggressive launch strategy. It’s true that the initial spark of activity upon launch is crucial to starting the campaign, however the short duration of crowdfunding campaigns make extended awareness difficult without an early start. Breaking out of the project creator’s own social network can take weeks by itself, and even longer to reach unrelated groups. Crucial message carriers such as bloggers and journalists also need weeks to fit the feature into their schedule and then write, edit and publish a piece. “get your project out there and show it to as many people as you can as early as you can,” Taggart advises, while also making an aggressive pitch for the start of the campaign, which contains the most noticeable spike in activity and interest.
Chatty Kidz has currently attracted more than 75 backers and $6,000. Taggart continues to generate support for Chatty Kidz and remains optimistic about crowdfunding, regardless of the outcome. “I could see myself using crowdfunding more,” said Taggart. “I’ve learned so much, but still know so little”
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