Welcome to our three-part series on crowdfunding your dream project! Our sustainable fashion start-up raised $26,000 through a Kickstarter campaign in November 2016 (across two hemispheres and multiple airports, but more on that later). We decided to put some of our experiences down on paper for all you would-be crowdfunders, to give you a glimpse into what it’s like before you dive in headfirst. Forget about going viral, start strategizing and hit the crowdfunding scene like the entrepreneurial legend that you are!
It’s an exciting moment when you decide to crowdfund your dream project. You’ve got something that the world needs to see, and the internet is gonna go bananas for it, right? Possibly. But please do yourself a favour - forget about the V-word (viral… ugh). Create a great campaign, work hard at getting the word out, and reap the rewards. Unless you plan on joining the majority (aka the crowdfunding campaigns that don’t reach their goal), you’re gonna have to grind it out.
What do we mean by 'grind it out'? Great question, and why we’re writing this post. At TAMGA Designs we ran a Kickstarter campaign in November 2016, and worked our butts off to make it successful. By the time we were finished, when everyone was expecting us to be “celebrating” for some reason, we looked like sleep-deprived zombies with PTSD (not quite, but we did have pretty bad jet lag). It’s not a month of sitting back watching the money flow in, it’s an accelerated customer acquisition boot camp. You will do at least three months of work in one, and you will learn a whole lot in the process. Here are some tips.
Picking your platform
You’ve got choices when it comes to crowdfunding, but think first about your goals. If you’re ambitious and think your campaign is the s***, use Kickstarter. It has the highest success rates in the industry (currently 35%), and its all or nothing approach gives you the magic ingredient of urgency. It’s exciting for people to support a product, an idea or a business that they believe in, and watch it grow. Kickstarter also has a massive network of people checking the site daily, and if they select you as a 'project we love', you get even more exposure (more on that in part 2).
Other platforms like Indiegogo and Crowdfunder are great but we just don’t see the same momentum behind projects. If you’re raising funds for charity, Crowdrise is a great option – I used them to raise money for a school that I support in Bangladesh, and their fees can’t be beat (3% max).
Setting your goal
At TAMGA, we can tell you how important the question of goal setting is, because mid-way through the campaign we were ready to kill each other over it (we actually love each other, but there were some impolite words). We’re an ambitious bunch, so we set the goal at $25,000 CAD. What we didn’t realize is that the media loves success, and some of our fellow campaigns reached 'success' in a matter of days with much lower numbers. After two weeks, the nagging feeling of “we could have already reached our goal if it was lower” was very real. We ultimately got there, but feel that we could have gotten some more media coverage midway through the campaign had we set the amount a bit lower.
But above all else, you need to think about the minimum amount of cash you need to make your project work. Then, add 10% for Kickstarter fees (a 5% fee plus 3-5% payment processing fees). Finally, figure out if you will have to remit sales tax, since it will come out of the amount a backer pays (Kickstarter doesn’t deal with sales tax).
Again, 65% of Kickstarter campaigns fail. The majority of successful campaigns (69%) raise under $10,000, so if you only need some exposure and a bit of seed money, don’t go too high. Only 17% of successful campaigns get above $20,000. If you’re going to be in this minority you’ll need a solid plan, great product, and a standout campaign. Do your homework, look at hundreds of campaigns that were successful and not, and think about how you can do better!
Be Wary of Agencies
We probably don’t need to tell you that crowdfunding PR agencies are big these days. If you’ve ever visited the website of one, you’re probably being re-targeted by their Google and Facebook ads on the daily. We spoke with a few agencies before launching our campaign, and were quoted fees as high as 35% of revenue (plus a $3,500 fee for ad testing). If you’re running a big enough campaign to justify these types of costs, then you’re probably not reading this. For anyone else, add on the 10% Kickstarter fees, potential taxes, shipping costs and cost of making your goods, and… pretty safe to say the math won't work out.
There are agencies that can help you put together a video, design an attractive page and reach new customers through online advertising, so I would recommend talking to them as a learning experience. Even though we didn’t use one, we got a better idea of what to focus our time on after hearing their proposals.
Design a Kick-Ass Campaign & Video
We are a design-driven company, so luckily we have the in-house talent to put together an attractive page. But just like everything in the world of crowdfunding, there is no magic bullet. We spent hundreds of hours looking at other campaigns in the lead-up period, then testing our page layout on different devices. Kickstarter also allows you to share your page design with people before you launch for feedback – make sure you do this. Even though your friends and family won’t always be brutally honest, you’re guaranteed to get some useful user-experience improvements out of it.
Finally – we’re gonna give you some tips for your Kickstarter video. It’s probably the most important element of your campaign. Be creative, but get to the point. We had a great time traveling around Bali, visiting our suppliers and taking landscape shots, but it was hard work. We had a freaking amazing videographer that gave us a 'start-up rate' because he believed in our brand – but don’t be discouraged if this is out of reach. Get your founder(s) to talk to the camera and explain what you’re doing, and back it up with some lifestyle shots of the product in action. Look at this project’s video – it’s not at all a big budget production, but does a great job of getting the point across.
Ready to jump into the absolute madness that is an active Kickstarter campaign? Do you like excitement, sleep deprivation, self-doubt and mood swings the size of the grand canyon? Keep an eye out for Part 2 next week – we'll cover our experience with PR, bloggers, online marketing and all those companies that claim to get you more backers. We also had a motorbike stolen, adopted a kitten, had to visit the Indonesian hospital and flew halfway across the world before the campaign was over (things got crazy).
In the meantime - have a look at the products that got us to $26,000 on Kickstarter.
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