Best Practice Crowdfunding
How to crowdfund without crossing any moral or ethical boundaries.
The internet has made it easier than ever to have an idea, get it funded, and deliver the product, service, or concept to your target demographic without having any prior experience or marketing and sales knowledge. Where once small-scale inventors or entrepreneurs needed financial backing from a single, well-moneyed source like an investor or family member, they can now appeal to the masses and get access to the funds they need effortlessly.
However, sometimes the ease of raising money on crowdfunding platforms belies its complexity. Just because a person can post a web page and start collecting funds doesn’t necessarily mean they have enough know-how, experience or follow through to meet their funding goal and follow through on what they’re promising. There have been many internet horror stories of crowdfunding projects that promised big returns, galvanized the excitement of backers, and then failed to deliver on the product they had imagined.
Crowdfunding offers a great opportunity in the internet era, provided you treat it with diligence, commitment, and a sense of responsibility to your backers. Here are some tips for best practice to make sure you do just that.
Tell Your Story Well
It’s not enough to simply provide a few short sentences on what you promise to deliver. The best campaigns have a compelling storyline and origin story that explains why you have decided you must fund this initiative. Doing this with video rather than text is likely to convey your message in an even stronger and more impactful way. The best stories often provide a solution to a problem—in other words “everyone struggles with X; we invented Y to fix it.”
Be Transparent
Setting up a pattern of transparency very early on is key to gaining the trust of your backers. Long-term projects are bound to have bumps in the road—after all, very few good ideas are risk free—but the key is being honest with your backers when those issues arrive. Don’t be late on delivering rewards or meeting targets without providing an honest and valid explanation of why. Trust is essential, and once it’s lost it can be hard to regain.
Consider Other Sources of Funding (including your own)
Not everyone has money of their own to invest in a personal project, but if you do, it might be worth considering investing some of that (or a personal investor’s) first before you ask the crowd to do the same. Taking some financial risk of your own helps reassure your backers that you have a meaningful stake in what you’re doing and that you’re not going to treat their funds lightly.
Be Realistic, Not Overzealous
Everyone would like to have the financial cushion of having twice the budget they actually need to complete a project, but that doesn’t mean you should ask for that much. Be reasonable and figure out how much money you actually need (not want) to get your project realized. Being modest in the beginning is a much safer strategy than overpromising and under-delivering.
Promote, but Don’t Bother
We’ve all had that friend or acquaintance who launches a crowdfunding project and proceeds to clog up our social media feeds for days if not weeks with numerous posts and pleas for support. Of course, it’s necessary to promote your campaign far and wide so by all means do so, but be selective and respectful with how you do it. Sharing with your immediate network is important, but make sure you don’t fatigue them with numerous requests. You should also pay attention to make sure that you’re reaching potential backers outside of your immediate network. You can do this using tools like Google AdSense, promoted posts on social media, and other outreach techniques.