How To Set Up Crowdfunding Campaign? You’ve got an incredible idea, and now all you need to do is get attention and funding for it, and since you’re reading this, you’ve decided crowdfunding could be the right option for you, but we know how difficult it is to decide where to start.
That’s why we’ve created our definitive guide to tell you just that, so read on to find out how to set up your crowdfunding campaign.
But first, what exactly is crowdfunding?
How To Set Up Crowdfunding Campaign: What is Crowdfunding anyway?
We’re sure you’ve seen all the successful products, services and companies to have come out of websites like Kickstarter, Indiegogo, Seedrs, and Crowdcube over the past few years.
Crowdfunding certainly has a lot of benefits, from possible funding to gaining market validation, plus it gives you the opportunity to reach millions of potential investors and allows you to avoid the awkwardness of asking a few people for huge sums of money.
Sounds like a win-win all round right?
Well, before getting swept up in the world of crowdfunding, the first thing you’ll want to consider is which type of crowdfunding campaign you want to commit to, whether that is a Donation based campaign (campaigns that offer no financial reward), Reward based campaign (rewards in exchange for investment) or an Equity based campaign (shares in your business in exchange for investment, this method requires a pre-raise with a minimum of 20%).
By deciding which campaign benefits your business the most, you can now start the preparation and planning needed for a successful campaign!
How To Set Up Crowdfunding Campaign: The Startup Essentials
The Business Plan
Your business might be absolutely perfect for crowdfunding, but if you want a solid investment, you’ll need a solid business plan for crowdfunding.
What is a business plan?
Well, it’s a statement of your business goals, how you’ll achieve them and how you expect your business to grow. It should include all the small details that investors need to feel safe in their investment.
It should include:
- An executive summary
- A mission statement
- Market research
- SWOT analysis/competitor research
- and Financials
To help you get started, you can claim your free Business Plan Template here.
And talking of financials, this leads us to our next point:
Your Financial Forecast
A financial forecast is created to help investors to understand the future of your business, and to allow them to make judgements about its potential.
We know it’s challenging to make future predictions when your business may not have even started yet, but it’s vital to earning the confidence of your investors as a business with long-term aspirations is an attractive prospect.
It may sound difficult but think of it this way, think 3 years into the future, covering both the short, mid and long-term. For year 1 aim to break down the forecast into specific monthly detail, so: Is your business highly seasonal? Does it have certain busy periods? And outline these aspects clearly. If you’re out of pocket before your busy period kicks in, you might need extra funding.
Let’s say you’re releasing a new product and marketing campaign halfway through your forecast, and expect a boom in trade.
Can you explain why you expect this? How much would the marketing cost?
The main thing to do is show how the investment will benefit all those involved.
To help you get started, you can claim your free Financial Forecast Template here.
How To Set Up Crowdfunding Campaign: Prepping Your Campaign
So your business plan and financial forecast are firmly in place, and you’re ready to take on the next stage, which is prepping your campaign!
Let’s start with the reason you’re funding in the first place:
How To Set Up Crowdfunding Campaign: The Crowdfunding Goal
How high should your crowdfunding goal be? It’s an important question that well if it’s not right, could mean your investors could lose confidence in your ability to value your business correctly.
Set your goal too high and you might not even reach it. Sure on platforms like Indiegogo, if you’ve decided to use their flexible funding feature, you’d be fine, but the all or nothing model utilised by Kickstarter, Seedrs and Crowdcube would leave you with nothing.
So consider the following aspects:
Conduct a valuation
This isn’t just the value of all the equipment you’ve brought. You need to look at your forecasted net profit. Simply put, if your business profits £100,000 per year, then it’s value is £100,000 X a certain multiplier.
What’s this mysterious multiple? Well, the average for start-ups is between 3 and 6. It’s subject to a host of factors though, so we recommend seeking specific advice from an accountant or business expert before valuing your business.
- Deciding your funding goal
The funding goal should cover your costs, and provide a tidy profit (unless it’s for charity).
So, how much will it cost? Why are you seeking investment? How much profit should you get?
Remember you’ll have to be transparent with your investors if you want to fund, therefore, make sure all your numbers are realistic and fair.
If you’re going to allow over-funding, you must be prepared for it. Yes, surpassing your goals could lead to some glorious profit margins, but it can also come with extra responsibilities.
Firstly, your projected plans will need re-aligning with a new budget that you had no way of predicting.
Secondly, you’ll have more backers, which means more communication and obligations to fill.
This is why you might want to include stretch goals as a part of your business forecast.
How To Set Up Crowdfunding Campaign: Your Story
Loving a great story is the weakness of our species. Stories are built into our DNA.
If your campaign tells a good story, the contributors will come in crowds.
Convey the passion, the hardship, the challenges, the breakthroughs, and the personal touch that makes your project inspirational. Whether this is through blogs, vlogs, early prologues, overlong monologues, it’ll be a slog- but just focus on the dialogue.
For example, the founders of Pulp, whose goal was to make wine accessible for everyone, used their own personal history with wine to add authenticity to their campaign. They wrote detailed and interesting blogs about wine (not centred around self-promotion) and consistently supplied their fans with engaging wine-related information. See their successful campaign here: Pulp
The basics to include are:
- The problem you are solving.
- Your solution to that problem.
- Why you believe it’s important.
- How you intend to do what you’re setting out to.
- What is the investment or reward opportunity?
Consider the best way to tell your story, whether this is through videos, images or testimonials.
How To Set Up Crowdfunding Campaign: Teamwork Makes The Dreamwork
According to Indiegogo, working in a team makes the success of your crowdfunding campaign 3 times more likely. So consider this before going it alone.
With a team, you can divide and conquer, get critical feedback and opinions, and even combine the social networks of multiple people into something HUGE.
Unsure of who to have on your team, but know how useful they are to have? Our article breaks down all members who could be the difference between your campaign getting by, or being a success! Find it here.
How To Set Up Crowdfunding Campaign: Finding The Right Crowd
One of the most exciting things about crowdfunding is seeing your crowd grow from a few close friends to a few hundred acquaintances, to a few thousand complete strangers. Heck, reaching a few million isn’t out of the question!
Just remember, beyond the three tiers we’re about to introduce, you should also consider getting to know what motivates your audience into helping you, so what do they benefit, and how will you interact with these audiences?
- Your First Tier
This is your best starting place. Friends and family won’t turn you down….as long as you remember their birthdays that is!
But that aside, they’ll often like, share and favourite what you do to infinity, and it really is the thought that counts.
- Your Second Tier
Know a guy who knows a guy? Well, that guy’s your second tier!
This tier is filled with the people who are just beyond the reach of your social circle, and when you get them enthused, you can start a chain reaction that can be like igniting rocket fuel!
- Your Third Tier
This is the tier of strangers. The randoms.
Imagine 5 shares turning to 25, 25 turning to 625, 625 turning to 390,525, and so on so forth! Okay, slight exaggeration, but with enough third-tier zeal, your project will launch into stardom.
How To Set Up Crowdfunding Campaign: Marketing 101
You’ve considered the previous sections, and are ready to get your crowdfunding campaign ready to go…but WAIT!
Sure you may have the empowering story, the amazing team, a suitable goal, and a crowd of people you know you can rely on to invest in your campaign, but do you know how to market your campaign?
How To Set Up Crowdfunding Campaign: Closing Statement
Amongst the points mentioned, you should also think about how long your crowdfunding campaign should last, how to stay relevant to investors if equity crowdfunding, and how to maintain your campaigns momentum if you want your campaign to be super successful.
With these tips in mind, we know you’re on your way to creating a pretty amazing campaign!
But if you are feeling overwhelmed, we can help. Drop Studio are proud partners of Crowdcube and Indiegogo and have helped raise millions of pounds. We assist ambitious businesses in communicating their ideas, products and services with outstanding videos, design, marketing and PR.
To learn more about us and our services, visit our website: drop.studio
Or book a free phone workshop today and ask us anything, like how to create a successful crowdfunding campaign or how to accelerate your business from zero to fully funded.