Business Consultant, United States
Crowdfunding Tips and Advice
Unless you are developing a simple app with a maximum development cost in the $10,000 range, or have a relatively simple project to fund, or an exceptional business that requires a fraction of the average start up cost, do not expect to fund your start up entirely from perk based crowd funding.
Crowd Funding provides micro-funds from the crowd that in rare cases add up to hundreds of thousands and even millions. The average supporter chips in $50 and most people put in about $25. Unless you are on a lending platform or a charity, in exchange for these small dollar amounts you'll provide a perk. Perks range from coffee cups and tee shirts to presold product with back stage passes.
There may also be production, handling and shipping costs. Not all crowd funding platforms are equal. Most require that you set a stated goal. If you don't reach the goal the campaign is called off as a failure. To avoid failure there are several things you should know:
- First, you'll need to have a strong base of supporters before you release a campaign.
- Second, you'll need a compelling appeal. It doesn't have to be a block buster. Everyone knows you don't have the money for that, but your supporter prospects will want to see your face and preferably know your team. Smile. You'll want them to like you.
- Third, you'll need to pay for advertising. Crowd funding platforms provide some amount of traffic, but campaigns that fail to provide a minimum of 30% of it, and ideally 80% of it or more are the ones that succeed.
- Fourth, keep your campaign short and create urgency. Keeping it short means being ready for it before you launch it.
- Fifth, remember that your goal is not really to raise money so much as it is to get to know your market. Learn from your supporters what they like and don't like. Learn from your advertising analytics what sticks. Find out what aspects of your product your customers like.
- Sixth, pick the right platform. To do this, check out the resource page on our web site for the South Florida area. We describe each platform by category and only list them if they are active. If a platform doesn't have a lot of successful current campaigns listed on it, then don't waste your time with it.
- Seventh, and most importantly, consult with a mentor or a guide. There are great resources available to help provide a quick education in the art and science of crowd funding. No two ideas are exactly alike or need to be executed exactly the same way. Consult with experienced, certified crowd funding mentors who are business professionals. The South Florida Crowd Funding program serves in four important ways:
- Education, mentoring and guidance
- Communication, PR, social networking and advertising on behalf of approved campaigns
- Funding - we take a portion of the grant money, sponsor money and member dues we receive and contribute directly to approved campaigns.
- Cooperation - we are working to brand the South Florida region as the ideal place to start a business. As such, we direct our communication to all start up initiatives in the region, supporting coworking spaces, incubators, accelerators, sharing calendars and getting the word out about each other's events.