Whether you’re doing a non-equity crowdfunding raise on Indiegogo or Kickstarter, or are planning an equity-based raise once the SEC finally puts the rules in place, there are a few mistakes that I see frequently. Just a casual run through Indiegogo or Kickstarter will show you a great disparity. Some projects seem to accumulate great support from the beginning, while others languish. And it’s not always because of the idea’s merit. There are plenty of good ideas that never get a single supporter–and plenty of mediocre requests that get thousands of dollars.
So what separates the successful crowdfunding projects from the failures? Here are a few critical mistakes that cause a crowdfunded project to go nowhere quickly:
“I’ll list it and see what happens.” If that’s your approach, then nothing will happen. There are, after all, not that many people who spend every day poring over Kickstarter looking for people to give money to. These crowdfunding venues are just meant to be platforms. Their purpose is to give you a piece of online real estate and a back end for tracking contributions/investments, their purpose is not to go out and get you money. It’s your job to make that happen. Do some marketing to drive traffic to your listing page. Put out press releases. Contact your local newspaper, and work your social media connections.
The “great idea” mistake. You have a wonderful idea for a product or a business, and you’ve described it in glowing terms in your description, but at this point, that’s all you have. Very few people–even friends and family–will kick in anything based on a 500-word description of a business that exists only in your head. Projects that enjoy greater success will at least have a prototype, beta site, or something tangible before launching the crowdfunding initiative.
The “tote bag” path. You’re not public TV, and contributors aren’t going to make a major contribution in exchange for a token gift. Forget about the buttons, “heartfelt thanks”, plaques and honorable mentions on your website. If you’re planning to create a product, your reward for non-equity crowdfunding should be the product itself. Think of it more as a pre-sell of your product, rather than soliciting donations. Starting a craft microbrewery? Nobody’s interested in receiving a calendar or a keychain. FREE BEER is the ticket in that case.
Social media isn’t everything. Yes, it is important, and social media needs to be part of your marketing plan. But it is a big mistake to assume that since you have a lot of
Facebook friends, you’ll be able to reach your goal exclusively through that group. First, take a look at who those Facebook friends are. Do they consist of two hundred acquaintances from high school who work at marginal jobs and who spend their time posting cute kitten pictures and sending you Farmville invitations? Don’t expect much support there. Work it, let everybody in your network know what you’re doing, but go beyond. You’re not in high school any more.
The anonymity failure. Finally, this is surprisingly common among would-be entrepreneurs, especially online ones. If you’re starting a business or an online venture, there may be a temptation to not want to list your name and contact information. That’s a big mistake! If you want to go into business, you can’t be anonymous. You need to tell people who you are, provide contact information, and make yourself available.
Crowdfunding has great potential, and there have been some noteworthy successes. We can expect even more success stories for those who approach it logically, with sound marketing practices, and are willing to put time and effort into making it work.