Whether you're promoting a good cause, launching a cool new product or a quirky app, someone is bound suggest that you use crowdfunding to bring in the cash. Kickstarter, Indiegogo, Crowdfunder, Seedrs and Crowdcube are just a few of the websites that can make this happen. The Pebble Smartwatch, Brewdog and numerous top-ranking games are among some of the most successful campaigns. People can invest cash for rewards, products or equity.
There are articles galore which talk about the planning and execution behind successful crowdfunding but not many that explain why - the rationale behind the psyche of the backer. Soup to Nuts has run campaigns and provided PR support and consultancy to other crowdfunders so we thought we'd share our learnings.
4 - The Foundational P's
Every crowdfunding project needs as many of these basics as possible. Without these, you will barely even get to first base with a potential backer.
- People - a great team that backers can connect with and believe in
- Product - an idea which backers can get excited or passionate about
- Participation - backers want to be a part of something they think will be rewarding
- Planning - plenty of time to get your ducks in a row and your online campaign ready to go
Depending on which platform you've chosen, there is a plethora of advice on the steps to put these key elements in place. If the stakes are high, you might even employ a consultant or PR company to help structure your project.
3 - The Family, Friends and Network
Framily, aka friends and family, are where every campaign needs to start. After framily, you need to approach existing contacts and personal networks. These are the people who know and love you and will follow you to the ends of the Earth. So you need to personally go visit them, call them, write them, text them, and persuade them to get behind you. If you can't convince your nearest and dearest to back you, other potential investors will question whether you have the drive to get things off the ground.
2- The Leaders & Followers
in the words of a well known Kanye West song, there's leaders and there's followers... but nothing separates the two like a crowdfunder. This is because when it comes to embracing innovation or new products, the majority of people are followers - they are either the late majority or laggards - fact!
Leaders - Innovators
Like the first legit bitcoin investors, the most innovative backers might spot a project with single-digit funding, see the future potential and go for it. Like the person who starts the dancing off at a wedding, they dive in because they believe in its potential. One of the best examples we've seen of this are the early backers behind a new Social Enterprise in Birmingham - the self-proclaimed Rightmove for homeless and sofa surfers. It's a cause which everyone sees the need for and the project has City Council endorsement. But it takes leadership and courage from the first few that get behind it.
Leaders - Early Adopters
Once a crowdfunder is in double digits - in terms of both percentage of overall target funded and number of backers - the early adopters, sensing that someone might be onto a good thing, tend to pile in. If you had a bulging blockchain balance before 2017, then you are probably an early adopter. Most people will wait until a crowdfunder is at least 20% to 30%, which is widely regarded as the follower tipping point. We're keenly watching the fortunes of a recently launched crowdfunding project for Zapaygo - which will use a specific tactic of private invites only, before going public. This is done in order to give savvy investors the time to assess and get in early before the project builds momentum and the masses weigh in. The other reason is that the platform doesn't want to spook the typical follower-backer with a single-digit crowdfunder.
1 The Activists
And then there are those that dance to their own beat. It's difficult to find a more innovative company in modern times than Apple. This 1997 'Think Different' commercial epitomises those that go completely the opposite way to the herd. If you can truly connect your project with your tribe and your tribe includes crazy ones, misfits or rebels, not only will they back you, they will become your loudest supporters and will bring others with them.