How to run a successful crowdfunding campaign💸
Reach your goals and shoot for the stars with a great crowd-fundraising strategy🚀
For a crowdfunding campaign to be successful several key ingredients need to be present; from a marketing plan and budget to activated followers.
I wrote quite a bit on crowdfunding in the past and its value for investors and entrepreneurs alike:
Crowdfunding 101 - “Empowering entrepreneurs of all stripes with crowdfunding”
Deal sourcing - “So you want to invest in unicorns? 🦄”
Today, though, I want to zoom in on how to launch a successful crowdfunding campaign, as this is a key element for investors, advisors and obviously entrepreneurs.
I also really want to remind founders that crowdfunding is not just for tech startups, any business model and company stage can fundraise on online platforms.
As I mentioned in the past, only 5-10% of the deals submitted are approved for listing on crowdfunding platforms. I will focus here on what needs to happen once you know you will be launching a fundraising campaign.
Below are some of the different elements that will support you in achieving great success. Overall it is very important to approach your crowdfunding campaign the same way you would a VC fundraising campaign. Angel investors deserve the same respect and thoughts than professional investors. This is not free money. People have worked to earn the money they are entrusting you with. Contrary to professional investors, it actually is their own money! So, allocate the time, efforts, resources and energy as, if you do, it will yield you great results.
💸 Build a solid fundraising plan. Approach your campaign as you would if you were raising via professional investors. How much are your fundraising? What will be the use of proceeds? What are the key messages you want to convey? Take the time to craft a great story from your perspective, and more importantly from your future investors’ perspective. Why should they invest their hard-earned money in your business? What will you bring them that other companies competing with you for funds won’t? Look at successful campaigns from companies raising in your space. What resonates with you when you put your angel investor hat on? Don’t forget that even if the campaign is about your company, it really is about showing to the investors what interests them. Another important aspect is the length of the campaign, it needs to be short enough to bring a sense of urgency, but long enough that you have time to advertise it.
🚀 Put aside a marketing budget. Marketing is the biggest weapon you have when crowdfunding. I know it is a catch22 where you are raising, maybe for marketing, but needs to allocate a marketing budget first. Once again, if you were fundraising via institutional investors, you would have to spend on travels, potentially entertainment, and allocate time for the meetings. Here the marketing allocation will not only help you raise capital it will also reach potential clients. So there is a double whammy you will benefit from with your marketing dollars.
💸 Develop a marketing strategy. Don’t play it by ear, have a plan ready before launch! Marketing is a super important piece of a crowdfunding campaign. You would not let your intern pitch at fundraising meetings, then make sure you put the same care in your campaign. Know what collaterals to prepare, when you will use them, on what channels, towards which audience. If you don’t have marketing resources in-house, consider working with freelancers or an agency. You can barter your own products and services for marketing services via platforms such as BarterPay or ABE. Your marketing strategy should be all encompassing: link at the bottom of your emails, banner on your website, social media posts…you need to go full in. It is important to have pre-launch activities where you will build the energy and then, 💥BANG💥, you launch the campaign! The first day and week are super important. So build a very heavy front-loaded campaign. If you have contacts in the press, now is the time to reach out for a few favors!
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🚀Commit to your campaign. That seems obvious but I often see founders who are lukewarm on marketing their fundraising campaign. I absolutely understand why, it is emotionally difficult to do so, we are all afraid of rejection and failure. However you cannot ask investors to allocate capital to your business if yourself are not 110% committed to your success. So drop these resistances & fears, and go for it! Investors want to hear about the founding team and the management team, but also the employees. Enroll everyone for social media posts, videos, emails. This fundraising campaign will allow your company to grow and create wealth, the entire company should be excited and behind it. Make it fun, communicate the numbers everyday, launch competition internally…whatever it takes !!! And this is a great team building exercise 🙂
🚀 Put together great collaterals. Videos are definitely the name of the game. Put together a nice video that will hit the key points you want to convey to your potential investors. Again it is about them, not about you. Testimonials of investors and clients are always extremely valued. If you happen to have “brand-name” investors and clients, do what it takes to get a comment (and ideally a picture). If you can get them on video, this is bonus!! Call me old-fashioned but, when allocating capital to a company, I like to see details of the financials. The second I see documents going on and on about the TAM versus showing their own financials, it is a red flag for me and I just tune out.
💸 Activate your followers. You and your company have more followers than you think - your previous investors, your clients, your employees, your friends, your family - let’s rope them all in! They might not be able or willing to (re)invest but they can be social proofs and amplify your activities. It can be as small as liking your posts to providing testimonials and ideally investing! Don’t wait for the campaign to be live to reach out. You will have to build anticipation with them too, so the day you launch, they are ready to jump in and help. As an example, after I invested in CAARY Capital and eQuo through FrontFundr, I recorded a short video explaining why I invested. These videos can be added to your campaign. They can also be Q&As with past investors and clients. Sky is the limit in terms of creativity here. Don’t hesitate to be different, scrappy and have fun! If you consider yourself a minority founder, make sure to tap into your community and use the hashtags in your posts.
💸 Have investments already circled up. Yes, I know, you are fundraising exactly for that, attracting investments. However, there is nothing worst than a crowdfunding campaign starting at a full 0. WeFunder makes is mandatory to already have some funds committed in order to be listed on the platform, that tells you how much this is important for the success of a campaign. So even before you launch your campaign you will have to raise capital through your network and extended network…which is a great way to test your materials and message! There is a rule of thumb in crowdfunding that by day 7 you should have already 30% of your raise committed. I actually very often see higher numbers.
🚀 Give perks. Yes, don’t underestimate the power of a mug and t-shirt when crowdfunding! I will not pretend that I have never been swayed by perks in the past🙂 Look at what perks have been offered by similar crowdfunding campaigns - discount on your products and services, discount on valuation for first investors, etc … I would recommend to be creative and really offer fun perks such as, 1 day at your office, a lunch, a business party. Perks really can close the deal and incentivize investors to invest and/or increase their allocation, so take the time to think these through and honor them!!
Looking for gift ideas for Father’s Day or your bestie’s birthday? Look no further 😊
💸 Thank investors, ask them to advertise and to increase their investments. With most platforms, investors will receive an automated thank you templated note which, let’s be honest, no one cares about. A personalized email thanking your investors will go a long way. I would push it further. I invested in AssetDirect through FrontFundr (the campaign is still active) and not only did I receive a thank you note from Adam, the CEO, he also asked if I could increase my allocation. I could not at the time (capital constraints, I would have gladly increased my investment in the company!) but I really considered it. So I can attest to the power of reaching out to your investors for increased funding (don’t wait too long though, really it should be a few days later). By the same token, consider asking them to advertise their investment via social media. They are now part of your cap table and should be willing to see your campaign being a great success. To maximize the probability of them doing so, prepare an easy to post “I am an investor in…” marketing material.
Launching a crowdfunding campaign is very exciting, it is also quite a bit of work. However the return on investment you will receive is real and pretty much guaranteed if you are doing it properly, which is not the case with “traditional” fundraising. A couple of weeks ago, I attended a great event organized by Nicola Wealth, where the founder of Knix, Joanna Griffiths, mentioned receiving 200 No during her last fundraising campaign with VCs. Imagine how much the ROI would have been if her fundraising budget had been allocated to a crowdfunding campaign! Especially with direct to consumer products, they would have raised money while increasing the awareness of the brand and gaining new clients.
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Looking forward to reading your comments!
It is challenging to be a successful startup entrepreneur, investor or advisor. Knowing best practices and pitfalls, maximize the probabilities of success! Good luck 🙂
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