Gone are the days when securing funding meant a trip to your local bank branch or tapping up relatives for their spare cash. Entrepreneurs are now looking to crowdfunding either as an alternative or in addition to more traditional venture capital routes. That’s where crowdfunding platforms like Kickstarter come in, having given start-ups and small enterprise a new finance option, with access to the collective financial might of internet users worldwide.
With the right idea, marketing tools and top-notch sales patter, it’s possible to attract an army of devotees. These will plough money into your business in return for gifts or, occasionally, just because they want you to succeed.
Kickstarter is a great way to fund anything from a niche project to an entire business. But you must be prepared to put in hard yards.
- What is Kickstarter?
- How does Kickstarter work?
- How to start a Kickstarter campaign
- How to get your Kickstarter campaign noticed
- When is the best time to launch a Kickstarter campaign?
- Setting a minimum funding target
- How long should a Kickstarter campaign be?
- Choosing your Kickstarter backer rewards
- How to promote your Kickstarter campaign successfully
What is Kickstarter?
Kickstarter is a US-based service which led the way in the embryonic crowdfunding market. Today, it is one of the biggest crowdfunding websites in the business. Nearly 20 million people have pledged via the platform; more than 188,000 projects have won funding, with 481 of these raising more than $1 million.
Although some projects give privileged access to products or services and/or gifts in return for the money, none gave up equity in their business. They have all retained 100% ownership even as the money flooded in.
But if you’re thinking ‘where do I sign?’, it’s important to note that more projects fail to hit their fundraising target than are successful and, as a result, take home no money at all. To date, more than 300,000 came up short and an unfortunate 55,690 failed to draw in a single pledge.
Clearly, there are winners and losers, so how do you secure a position in the former group and avoid the latter? Read on for our guide to running a successful Kickstarter campaign.
How does Kickstarter work?
Kickstarter is a crowdfunding platform for projects and businesses in the creative spheres. Campaigns on the website range from fashion and design to publishing, music and food – so it’s a pretty broad church.
It is a non-equity platform, meaning you don’t have to give away a chunk of your business in return for money. Instead, project owners generally try to entice funding by way of discounts and rewards. Users will also donate to causes they cherish simply for the love of the idea.
Since its inception, more than $5 billion has been ploughed into projects as diverse as a portable drinks cooler (which is also Kickstarter’s biggest fundraise to date at $13 million – more on that later) and a self-released album by De La Soul, which gave the band complete creative freedom over their songs.
How to start a Kickstarter campaign
Before listing on the website, you must pitch your idea to Kickstarter, and you can only proceed if the idea is approved. People hoping to fund leisure pursuits or expensive luxuries via the crowd need not apply.
Once you have formulated your idea and the gatekeepers at Kickstarter have waved you in, there are a few important elements to consider if you are going to be successful in raising money for your business.
How to get your Kickstarter campaign noticed
Fundamentally, if your business idea fails to attract interest then it is destined to fall at the first hurdle. It goes without saying, but your project must be worth backing. More campaigns fail to hit their goals than succeed, so recognise that only the most worthy, exciting, and popular projects are funded.
Remember too the old marketing adage that people buy stories, not necessarily products. Some people who give money through Kickstarter do so because they want to be part of a journey, not because they want to be compensated materially, so make sure your idea reflects this feeling.
When is the best time to launch a Kickstarter campaign?
The launch date of your campaign is perhaps more important than you think. Many creators time theirs to coincide with the build up to Christmas, or similar time of giving, so they can create enough product in time for backers to hand out as presents.
Others schedule a fundraising to coincide with the time of year that their product is most likely to be in demand. If you’re manufacturing a new line of knitwear, it’s probably a bad idea to kick off in July when everyone is sweltering in their t-shirts and flip flops.
A good illustration of this is Coolest Cooler, the afore mentioned drinks cooler, which failed first time around only to become the highest grossing Kickstarter campaign in its second attempt, with a very cool $13,285,226. Founder Ryan Grepper blamed this discrepancy on his decision to make his first attempt in December, when few people are looking to cool things down.
Setting a minimum funding target
Setting your minimum funding goal is a balancing act: on one hand you need enough money to see the project through to completion, on the other you don’t want scare people away with an unrealistic target that hints at a get rich quick scam.
Set your funding target at the minimum you need; this way you will make it easier to attract enough pledges, while leaving room to extend proceedings and attract more than 100% of your goal before the campaign ends.
Many campaigns attract double, triple or more of the amount they initially requested. Campaigns that quickly beat their funding target generate momentum and benefit from the sheen of success, which in turn attracts more pledges.
How long should a Kickstarter campaign be?
Conventional wisdom suggests that longer campaigns have more time to draw in money and are therefore likelier to succeed. But the busiest periods in any campaign are usually at the very beginning and the very end, so there is less logic to stretching to the maximum 60 days unless you have a specific reason for doing so.
It might make more sense to begin and end your campaign at peak traffic periods, giving it the maximum number of eyeballs during the times when more people are pledging. As with everything, it pays to do some research into user trends before you jump in.
Choosing your Kickstarter backer rewards
Rewards are the cornerstone of the Kickstarter model. Projects almost always come with juicy enticements for pledgers and most campaigns give incrementally bigger or better rewards for higher donations.
The standard model is to offer either the product itself, with early access or a discount or both; and/or a merchandise bundle that increases with the amount of money given.
Given this, it is perhaps a good idea to get creative and give something no one else can. Alternatively, there are many successful campaigns that keep it simple, with progressively bigger bundles of their product (five for the price of four, say) and early bird specials giving additional discounts.
How to promote your Kickstarter campaign successfully
The content you share on your Kickstarter page will make or break your campaign. It comes in two main forms: the written description and the video.
The description must capture people’s imagination and entice them to open their wallets. This is no time for modesty, but a good balance of excitement and authenticity will grab attention. Kickstarter has thousands of seasoned users who can spot a hollow boast in no time, but equally they want to feel energised by their pledges.
Include as many images and lively descriptions as you can; focus on purpose over fine details and explain the context: if it’s going to change the world for the better then explain how and be prepared for some quizzical feedback.
Successful Kickstarter projects almost always feature a slick video that gets to the point and does a good job of setting the scene. You don’t need a Hollywood budget for this, but good production values will set your product in a positive light.
Get straight the point, be clear and concise and focus on what your product does well. Include information about what you want to achieve, any evidence of previous successes and details of the team who’s making it all happen.
Kickstarter is a great starting point to raise money for your business before you reach the stage where your business is more developed, and you would like to approach more serious venture capital investors. But be prepared to work hard; backers don’t part with their money easily. And you should expect to justify your project’s brilliance while also tempting pledges with (genuinely desirable) rewards. Combine these elements and you could well be on your way to a successful business fundraising campaign.