Why the majority of Crowdfunding

campaigns fails

Elena Mikhaylovawww.CrowdfundProductions.com

Davinci InstituteSeptember, 2014

Current Success Rate on Kickstarter is below 44%.

For the majority of other platforms it is even lower.

Most campaigns fail Even before they go live on a

crowdfunding platform

The main reason – lack of preparation

How long does it take to get ready?

It Depends: On your funding goal On the size of your social network On your expertise On your resources (time, team, money)

Six weeks to six months

Why Crowdfund Marketing Beta-Testing, Crowdsourcing Pre-Sales, Customer Engagement Market Validation for the Next Funding

Round

4 Types of Crowdfunding Donations – money is provided for worthy causes, non-profits or

people in need. There is no expectation for return.

Rewards – money is given in exchange for “perks”. The most popular one is the copy of the product to be created as a result of the CF campaign.

Equity - funds are invested in exchange for the company’s shares or participation in the future profits.

Debt (P2P and P2B) – funds are provided in return for interest payments.

Is your project a good match for rewards crowdfunding?

B2C Reasonably affordable for general public Easy to understand value for large groups of

people Can create strong emotions/connection/”cool”

image Can build a community around the project

PlanningWhat: how lucrative is your product/project?

When: season, how much time do you need

to get ready, how long is the live campaign?

Who: your target group/groups –

demographics, geography, lifestyle

How: marketing channels, influencers

these websites provide free or inexpensive solutions for independent fundraisers:

SelfStarter – free open source software to build your own crowdfunding website. The latest famous project, Tile, raised $2.6M in July from almost 50,000 backers,CrowdHoster – an application hosted by CrowdTilt; currently. The most famous success story – Soylent.me campaign which has raised over $1M,CrowdfundingSite.net – license plans start from $129 or $328 per year,IgnitionDeck – WordPress framework, starting from $79 for unlimited websites,Mimoona – Plug&Fund app, three monthly payment plans,ITPrism.com – crowdfunding open source software for Joomla; free and PRO versionsCelery – platform to accept and manage pre-orders on Wordpress, Tumbrl, Shopify and other websites; 2% per transaction plus PayPal fees.http://www.crowdfundproductions.com/kickstarter-alternatives/

Top Mistakes Not doing your homework: research other projects,

their perks, video, media, comments, etc. Not building your crowd in advance: nothing can

be more miserable than a creator launching the project and waiting for the crowd to rush with the money. Fake fans/followers/pledges

Not preparing your media outreach, spamming your network

Not having three plans Not making a budget and sticking to it. Decide

if your goal is mostly fundraising or marketing. Not getting feedback for your perks in

advance

Planning - Perks Importance of small perks Most popular Depends on your target group - amount Depends on your target group – lifestyle Geography – shipping costs, taxes

Planning - Budget An Avg. Successful Project on Kickstarter –

below $10,000 Necessary Minimum/Stages How much can you REALISTICALLY raise? - 30%

Rule How much do you need to raise (on top of your

project costs): platform fee (4%-9%), payment processor fee (3.9% -5%), cost of production, packaging and shipment for your perks, marketing costs, canceled pledges, returns, taxes

Kickstarter• Founded in 2009 in New York City• Available for US, UK, Canada, Australia, New

Zealand and Netherlands residents, • Creative projects in 15 categories• All-or-Nothing Funding• Almost 7M Backers• 80 projects – raised over $1,000,000• Most successful project – Coolest Cooler–

over $13M

Kickstarter (cont.)• Approval process • Projects only• Prohibited uses (including causes or personal

needs)• Fees: 5% Kickstarter plus Amazon payments

(US) or Credit Card fees -3-5%. Zero, if the project failed.

• Must have rewards• Donations between $1 and $10,000 (in the

US)• If a project succeeded, the money usually is

available in 2-3 weeks after the end of the campaign

Live Campaign: Common Mistakes

Video – too long, not to the point, doesn’t tell a story

Description – too long, not enough visuals, doesn’t create trust (timeline, budget)

Talking about yourself instead of the benefits for potential backers and partners

No plan for stretch goals Lack of updates, communications with the backers No plan for keeping a momentum Spamming

What do you need to say?• This is our product• This is how you are going to benefit from it• Call to action• This is our story (how/why we came up with the idea)• This is how it works• This is how we are going to use the funds• This is the timeline• This is our team

http://www.crowdcrux.com/red-flags-to-avoid-crowdfunding-scams-and-con-artists/

Live Campaign: Common Mistakes (cont.)

Not monitoring and adjusting your action planOutsourcing, dropping off your communications with the backers after the end of your campaignNot understanding campaign dynamics. Strong start by your own connections - the Kickstarter community -media coverage - strangers. The more backers you bring – the stronger will be support from the crowdfunding platform itself.

Money raised: strangers vs your own connections

More than 80% of all Kickstarter campaigns raise below $10,000

The smaller the amount you are raising, the more you depend on your own network

Up to $5,000 – 80-90% from your connections$30,000-$50,000 – 20-40% from your

connections$100,000+ - 10-15% from your own

connections

Post CampaignCampaign and Data Analysis

Communications with backers and mediaPerks fulfillmentYour Campaign

Hasn’t Succeeded Until You Deliver The Perks

To Every Backer

Contact meWebsite: www.CrowdfundProductions.com

Email: info@crowdfundproductions.com

LinkedIn: www.linkedin.com/in/elenamikhaylova1/

Skype: Alive_Digital

Twitter: @Alive_Digital