Crowdfunding: How to Get Funded by the Crowd
Crowdfunding is on fire. In 2011, the industry raised $1.5 billion for 1 million* projects world-wide. Most recently, record-breaking campaigns have funded the development of customizable smart watches, a Nikola Tesla museum, and the care of a baby with an incurable skin disease.
Crowdfunding is enabling money to be raised via the Internet, where anyone can view your campaign and give. Hundreds of companies including Kickstarter and Indiegogo have created crowdfunding platforms (see more comprehensive lists below). The Pebble smartwatch campaign on Kickstater raised over $10 million. The Tesla Museum campaign on Indiegogo raised over $1.3 million.
But how does crowdfunding work?
Well, anyone can create a campaign. It’s important to choose the right platform as some are only for specific types of projects and have an application process. For example, Kickstarter focuses on creative projects like films, games, and inventions, and selects projects to post on its site. Other platforms are more general such as Indiegogo who supports a variety of projects with no application process and prides itself on “democratizing funding”.
Many of the most successful campaigns include key pieces:
1. A video – pitching and personalizing the story
2. A budget – explaining how the money is going to be spent, and
3. Incentives – compelling perks at varying price points
For example, Amanda Palmer who became known through her previous punk band the Dresden Dolls, created a campaign to fund the release of her newest album. As an incentive, she offered anyone who donated $300 the opportunity to write on her naked body with markers.This incentive might not work for everyone, but it’s creative and it was compelling for her audience.
Another key aspect to Palmer’s success was having a fan base. You’ve got to get fans to get funds. But she was fortunate to already have a following. This is similar to the Tesla Museum campaign, which exceeded its target by nearly $500K. The fact that Tesla is famous and the campaign manager – the creator of The Oatmeal – is a popular web comic artist influenced the success of the campaign.
So what does that mean for the rest of us?
Well, we’ve got mom and dad, and “friends” on Facebook. But, you can also try a more targeted approach. Contacting bloggers, associations, local organizations, etc. that are relevant to your project, could pan out. And if you can at least get them to share (or “Like”) your campaign, you may have a good chance of reaching people who want to give.
This article is primarily focused on rewards crowdfunding. For more information on other types of crowdfunding and the industry overall, see the Crowdfunding Industry Report, May 2012.
*Source for $1.5 Billion raised, 1 Million projects: Massolution, Crowdfunding Industry Report, Crowdsourcing.org.