Crowdsourcing and crowdfunding are quickly emerging as new tools for entrepreneurs to seek funds and resources that they need in order to advance their project or business. What started out as a social experiment several years ago has now been recognized as a viable mean for people to tap into their inner-entrepreneur. The basic idea is to encourage teams, communities and network to come together to support and contribute to a project – apps, consumer products, software, etc. instead of going to professional parties like banks, venture capitalists or business angels. Crowdfunding is best for startups that have good ideas but don’t know how to collect the desired funds. To take advantage of the flourishing online fundraising economy, it is important that your idea must find resonance with the consumers…something which they like. Your sales pitch has to be great so that you can convince people there’s reason your project should soon become a reality.
Over the recent period, it has been observed that the amount of funds raised through crowdsourcing has continually increased. For instance, the UK-based software company Trampoline Systems raised 1 million pounds spread over four rounds through crowd funding in 2009. Surprisingly, there are even examples when a project started out by demanding less but eventually ended up with much more. The Pebble smartwatch, a wristwatch that connects wirelessly to a smartphone to show updates like text messages, raised over $10 million on Kickstarter, a crowd-funding platform. It was the most financed project in Kickstarter’s history and attracted 85,000 buyers for the e-paper smartwatch.
Here’s an action guide to follow to make sure that your app/project succeed beyond your imagination:
#1: First thing first. Estimate how much funds you need to develop your app or project. Be optimistic with the costs and allow 10 per cent extra contingency in the budget as this could be a possibility.
#2: Setting a clear intention is the major element of any successful creative endeavor. Clarity of intent and awareness will surely create a creative force around your project. Remember, people will only join those projects for which they are passionate about and to guys they trust.
#3: Leverage your network to spread the word out. Take a proactive approach while communicating about your project and engaging people. Being proactive means that you deliver more in less time and have more control with less tolerance for mistakes. Tell almost everyone you know — family, friends, co-workers, acquaintances – and even ask them to do the same with their communities. The goal is to reach out enough people without spending a lot of money on publicity and advertising.
#4: The biggest and the most important task then is to create an online page to explain your project and collect your donations. You can use any of the following sites to create a page:
However, you could also set up a page on your own website using PayPal. Now design a page to provide a clear and concise overview of your project, along with the desired funds required. Ideally, your page should also contain short two- to five-minute videos that highlight key features and introduce team members and some samples of your work (e.g. app images). Make sure your supporters can easily pledge the money (both Kickstarter and IndieGoGo are designed to do this). In product summary, discuss no more than three to four major features.
#5: Remember, it is not easy to entice people to make pledges towards a project; people will always expect something in return for their money. This is when reward-based crowdfunding comes into picture. Here the entrepreneur or business owner gives specific rewards to those who fund them. It is good to take some time to figure out what rewards would you want to give to your supporters.
#6: Although it seems laborious, you have to give consistent updates on your crowdfunding blog explaining about the advancement of the project. You can post photos and short videos of your project in action, which will also give a proof of what you are doing.
#7: Chances are that your target audience may not be familiar with crowdfunding. In order to widen your audience group, you need to devise a strategy that will include leveraging social media, e-mails, and various other advertising and communications tools. Have a list of blogs and media you would like to reach and prepare press release when you approach them during your campaign. Further, you can also use Internet to solicit feedback from customers which will also boost your enthusiasm for upcoming products. However, make it a point to not communicate too often, or it will eat up all of your time.
#8: It is a good idea to give a detailed explanation to people of how exactly you’ll be using their money and thus keeping all costs transparent. It will help in building trust in your project.
Conclusion: The beauty of crowdfunding is that it helps you to connect with your target audience right from Day One. In other words, it is the holy grail of marketing where customers are emotionally invested in the outcome and want to see you succeed.