Part 2 – Work Hard to Make Crowdfunding Look Easy

/ Business Law Claudius du Plooy Entrepreneurs Financing

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A crowdfunding campaign is not for everyone, but it might be for you. Before immediately launching, we should step back to see all the necessary elements of a successful campaign. Start with a matured concept that will eliminate the market uncertainty associated with surprise changes midway through the development process. Once you have the concept, you will have to assemble a team that will help you plan and execute the campaign. Finally, you will have to develop a broad community of supporters whom you can count on to either promote your product or contribute time and/or money to the campaign. If you don’t have any of these, it doesn’t mean you can’t do a crowdfunding campaign, it just means you have a lot of hard work ahead of you.

 

Defining a Crowdfunding Campaign

If you carefully define the parameters of your campaign it will have a much higher chance of successfully reaching its funding target. To define the campaign, you have to:

  1. Develop a mature concept by taking an idea and testing it against the expectations of your target market.
  2. Pick the appropriate crowdfunding platform. Donation platforms are appropriate for philanthropic concepts whereas reward/incentive and equity platforms are appropriate for entrepreneurial concepts.
  3. Set a funding target. Your target should be the minimum amount of capital you need to move the concept forward. One of the most successful crowdfunding campaigns, Pebble Watch, needed $200,000 to move the concept forward, the funding target was set at $100,000, and they raised $10,266,845.
  4. Set a campaign length. Keep in mind that historically, shorter campaigns have performed better.
  5. If you choose to use a rewards/incentives platform, you will have to choose a limited number of rewards. Keep in mind that successful campaigns have a broad range of reward offerings from $25 to as high as $10,000.

 

Planning a Crowdfunding Campaign

You need to develop a detailed plan while keeping in mind that a campaign is hectic and the last day is almost as important as the first. To ensure a well-planned campaign you have to:

  1. Gather a team to help plan and execute the campaign. The size of your team will be determined by your funding target. A campaign looking to raise $25,000 will need significantly less staff than a campaign seeking to raise $1 million.
  2. Develop a precise action plan for everyday of the campaign. Outline the materials and resources at your disposal and how they’re to be used.
  3. Create a narrative that speaks to your target audience. Focus more on why your product matters and less on how it works.
  4. Produce a professional looking video to conveying your narrative.

 

Executing a Crowdfunding Campaign

Now you have to combine the steps described above to execute the campaign. The way in which you execute will be the difference between meeting your funding target and going home empty handed. A significant portion of funding is usually earned during the first 2-5 days of the campaign. So, you will need a super-credible launch. To ensure your launch is super-credible, you will need to:

  1. Create a professional looking campaign and video(s);
  2. Encourage broad exposure on both traditional and social media;
  3. Create hype around the concept and the campaign; and
  4. Secure pledges from subscribers before the launch to show momentum from day one.

 

Once you’ve launched, you have to stay continuously engage with your community of subscribers to ensure the campaign continues to generate funds from the first to the last day. While staying engaged you will also have to react to the performance of the campaign, continuously making adjustments to ensure it remains visible. Above all, the success of your campaign will be determined by how well you plan and how committed you are to your concept.

 

About these authors: Claudius du Plooy has over ten years of experience in matters of business law, securities law, commercial real estate development, entertainment law and international trade law. Jovan Kljajic is a student at Du Plooy Law with an interest in entertainment, business, and intellectual property law.