7 things you should know about crowdfunding
Over the years, crowdfunding has become an effective alternative for entrepreneurs to raise funds for their business ideas. Crowdfunding allows entrepreneurs to raise capital without giving up too much equity. This avenue also provides an alternative to those who may have difficulty gaining access to traditional sources of funding. Indeed, many have had enormous success using this approach to attract significant resources such as capital, publicity and investors to their businesses or to test market validation.
I meet with 3 African entrepreneurs who speak with me about their crowdfunding campaigns all of which, were successful. The platform of choice for these entrepreneurs was Kickstarter and they each explain why they chose Kickstarter.
Mugo Muna, founder of Borawear states, “I really did not consider any other platform other than Kickstarter. The biggest attribute that swayed my thinking is the data Kickstarter shares on its blog and the regression analysis provided me with information on how best to run a campaign. While doing my research, I learned more about Kickstarter, watched interviews with the founder of the platform, saw some campaigns go viral and saw how entrepreneurs raised millions of dollars for their ideas. Not that there was anything wrong with any other platform, but Kickstarter seemed to have a lot of blockbuster campaigns reaching over a million dollars in pledges.”
Esosa Ighodaro, founder of COSIGN who successfully raised over $40,000 for her campaign also chimed in, “I conducted extensive online research on various crowdfunding platforms and surveyed friends. Knowing that Kickstarter had a larger audience than other platforms allowed my team and I to get the word out to more people. Although it was the most expensive in terms of fees, we were however willing to pay the costs to gain access to their audience.”
Roye Okupe, an entrepreneur on a mission to create more African superhero comics added, “I did quite a bit of research and compared Indiegogo and Kickstarter. At the end of the day, I found out that people raising money for comics and graphic novels had more success on Kickstarter. So I decided to go with that.”Here are seven (7) things you should know about crowdfunding:
Do your research. Figure out the platform that works best for you. There are many platforms out there, take the time to know what works for you, your audience, and your product or service.
Get your family and friends involved. Start early with getting everyone involved. Ighodaro adds, “let people know 2 months ahead of time that you will be working on a Kickstarter campaign, the heads up won’t come as a shock to them when you ask for their support. Rally a group of your family and friends; encourage them to put your campaign as their main focus for the next few weeks.”
Have them leverage their networks. Muna says, “to get people to do this, encourage them to take ownership of the campaign.” He continues, “the simplest way to do this, is to get them to give you feedback on every piece of your campaign such as your exact wording, the name of the rewards, or on your video content. As you launch your campaign, you will be able to count on your friends and family not just because they know you, but because they are now part of your success and want to help get your idea funded.”
Be prepared to tell your story. Telling an impactful story is one of the major ways to get an audience to connect with your product, service and campaign. It is important to create good content. Ensure that you have a good video and story to allow your audience to connect with you authentically. It has to be more than the product or service that you are trying to sell. People connect to the “why” more than the “what.”
Have 30 percent raised on the first day by getting commitments prior to your launch. This helps with your ranking on the platform and helps you to build momentum for your campaign, says Ighodaro. Okupe talks about his experience. “For me the most important thing was to start strong. So, the morning my campaign launched, I chased down and followed up extensively with family members and close friends to get their donations in. As a result, it became much easier for strangers to donate to the project, especially when they see that one has hit 100 percent in days (which was the case with my campaign) as opposed to $0 after 24 hours.”
Use the press to your advantage. Line up some press outlets to get the word out and try to reach as people as you can. Get journalists to write about you and the campaign. Okupe notes that for him, this was the most grueling task. He continues, “nothing boosts your campaign more than a blog like Mashable giving you that extra credibility. About 30 percent of the total raised for E.X.O. was as a result of the interview I did with Mashable. I also got another interview with Forbes in the final week, which gave another great boost. But getting an article written on huge sites like this is not easy. I spent countless hours researching different journalists who had written similar stories to what I was doing. I sent them friendly emails telling them that I had a story they would be interested in. I emailed over 100 journalists in the 30 days my campaign ran and only 15 responded, out of that 15, 7 of them wrote about the campaign. You just have to be relentless.”
Use all of your social media channels to get the word out. Linkedin, Facebook, Twitter, Youtube, Instagram, everything that you can think of. Remember, crowdfunding campaigns only work if you can get people to spread the word actively and consistently.
Be mindful of when things are not working. “I would say that you have to be mindful of when things aren’t working,” Muna states. He continues, “that is not to say that you give up when there is a minor setback, but you have to constantly check in with yourself to see if things are actually moving forward. If not, what else could be done to make things work? How can one change their thinking to solve this problem? Who can you speak to, to provide some insight? People will constantly tell you what you should or should not do with your business, you have to cultivate a sense of what your specific business needs are. Most importantly, you have to feel like things are moving forward. Nothing frustrates more than a prolonged plateau.”
Okupe sums it up nicely. “Never give up. You will fall, you may fail. It is inevitable, it is a part of life and it is a part of business. What really matters is how you react to these issues. I know it is cliche but nothing good comes easy. Make sure you believe in what you are doing because that is what gets you through the rough periods. Above all, believe in yourself. Keep learning and strive to become the absolute best at what you do, not just in Africa, but in the world.”
Have additional tips to share: tweet @Africwomenpower or email mary (at) awpnetwork.com