8 steps for crowdfunding
Crowdfunding is an increasingly popular way for creatives to find money and support for their projects. Chris Buckingham, a researcher and lecturer on crowdfunding, has advice on how to get started.
As an alternative method of funding culture and the arts in the UK, crowdfunding has been growing steadily in recent years.
As a global phenomenon, it's predicted to expand even further in the future. But how can it help you in get the funding and support you need for your project?
Let’s start with a quick definition: Crowdfunding is the process whereby a project raises funding from many people (the 'crowd') by asking for, and receiving, small donations from each of the people in the crowd.
3 ways to do crowdfunding
Crowdfunding has three distinct models to choose from:
- Equity: this is the model used by reality TV shows, where investors offer to help entrepreneurs launch a new company. They invest their money and in return they get a share ('equity') in the company.
- Interest: this model is different – the backers don't get a share of the company. Instead, they expect a return on their initial investment. Arguably, this model of crowdfunding is the closest to traditional banking, where a person takes out a loan and then repays it plus an extra bit as interest. An interest model works in the same way.
- Donations: this is probably the most common fundraising method within the creative industries. People offer their money in a project for some form of value. 'Value' can mean almost anything. For example, for pledging some money towards a project, they might receive a t-shirt or a signed copy of the project's artwork. Alternatively, an artist or performer the project is associated with might offer personal appearances as a guest speaker or performer.
How a donation campaign works
Most crowdfunding websites only allow you a limited time to try and meet the money target you set.
Often, if you can't reach your target, you get nothing at all from the crowd. However, if you go over the target, you get the whole lot!
"The key to a successful campaign is communication. Think of it as telling a story to a very wide audience."
The key to a successful campaign is communication. Think of it as telling a story to a very wide audience – it has to be told clearly and be understood by the reader.
Look at other campaigns, and start making notes about what you like and what could work for your campaign. Planning your campaign properly is essential, and can also be great fun as you start to see your vision become a reality.
Imagine you set a target of raising £2,000 within 90 days (3 months).
There are three possibilities in this situation:
- You don’t raise the £2,000
- You raise the £2,000
- You raise over £2,000.
In the first situation you don't get any money, but in the second and third outcomes, you get the money, or more than you aimed for.
8 steps for crowdfunding success
1) Choose your funding model
Which of the three crowdfunding models will you use? If you go for the donation model and decide to offer rewards, you will need to think about the 'tiers' you offer.
The more money people give you, the ‘better’ the reward you offer them. Think about how and when you will deliver rewards to the individuals that make up the crowd. Can you post rewards to them?
With interest or equity models, you might need some assistance from a local business advisor. Make sure they understand the legal position of crowdfunding and the expectations and responsibilities you must meet under your country’s laws.
2) Write a good pitch
Perhaps the most important element is the initial script on the campaigns page. No matter the model you choose, your writing needs to draw the attention of the reader.
Your campaign will be one of several on any crowdfunding website. Look at other campaigns and see what makes them successful.
Normally the script for the campaigns front page cannot be altered once it is posted to the site. Think carefully about what you are going to say and how you want to present yourself.
3) Make sure you use photos
Even with great marketing copy, readers can quickly lose interest and get bored. Images are a fantastic way to liven up your campaign page.
Make sure the pictures are appropriate and show something connected to the campaign.
Photos of the person behind the campaign may help the crowd to feel more ‘connected’ to you, and thus more likely to help you. Images of previous artwork or performances are also a great idea.
Be careful not to overwhelm your audience with too many images. A good balance of words and images is best.
4) Make a promotional video
Most campaigns have a video in which the people behind the project present themselves to the world.
Humour is great, but this needs to be balanced against the seriousness of the project and the benefits the project offers. Be careful not to be too flippant in your video.
"Humour is great, but be careful not to be too flippant."
Your video does not have to be a high quality production. In fact, sometimes more 'amateurish' production techniques can help the crowd feel more empathy with you and your project.
However, this really depends on the scale of the project – if you are a professional video games producer asking the crowd for £250,000, you would be advised to spend a little extra cash and get professional help with the video production.
5) Keep your crowd updated
It is essential you keep the crowd informed of your progress throughout your campaign. Most crowdfunding websites allow you to post updates for the crowd in addition to your campaign's front page.
You can also use blogging and social media to promote your campaign. No matter the size of the project, you will need to update all channels of communication at least once a week. This helps keep up the momentum.
Planning these updates is important. Craft your updates carefully, taking care that you keep them relevant. Stay within the story you have told on your campaign's main page. Make sure your updates don't contradict it.
Think about communicating to an even wider audience. For example, could you get a mention in the local press or radio? Other people's blogs and social media pages might also help you get coverage for your campaign.
Steady publicity is vital. You don't want a situation where you almost get to the target, but then simply run out of steam.
6) Plan your timeline carefully
Since most crowdfunding websites ask you to set a time limit for your campaign, you should plan this timeline out carefully. Think about when you want key events to happen, like updates or certain target milestones.
Timelines do not have to be complicated. They can be as simple as an arrow with dates, drawn on a piece of paper.
But by planning and thinking about the timeline, you will be able to measure the campaign's success during the ‘live’ phase when you are raising cash.
"Steady publicity is vital. You don't want a situation where you almost get to the target, but then simply run out of steam."
Get friends, family and fans to make offers early in the campaign. There is evidence to suggest that the more people you can get involved at the beginning of the campaign, the more likely you are to attract other people to put money into the project.
Early investments act like a signal to other people that the project is a good one and worthy of funding.
However, don't worry too much if things don't go exactly as planned. It may take time for the campaign to gather momentum. You might also find the crowd suddenly offers its cash right at the last minute.
7) Make sure you budget effectively
You need to consider the costs of doing the project itself – make sure you are raising enough. You also need to think about the costs of the campaign.
There is often a cost attached to using a crowdfunding website. They normally take a small percentage in return for you using their site. They may also use a service like PayPal to process the money you have been offered. If this is the case, you will need to factor in both the cost of the website and the cost of using PayPal, who also charge processing fees.
One other expense you need to think about is the cost of delivering the rewards to the crowd. If you're planning to travel or post goods, you should take account of this.
Generally these are small amounts, but they need to be included in the target amount you are asking for.
8) Plan for the end of your campaign
So, you have successfully raised the target amount for your project – now you have to deliver on the promises you have made.
If you went over your target, this may include promises about what you are going to do with any extra money you have raised.
"Make sure you deliver on the promises you have made."
If you have a big success, it may well be of interest to local media and the wider local creative communities. Success in crowdfunding is not always easy, and people will want to hear your story of how you managed to do it.
This is a wonderful opportunity for you to make an even bigger network of contacts. The next time you start a crowdfunding campaign, you may have an even greater number of people to help start it.
Equally, when thinking about the end of your campaign, you should ensure you have a 'Plan B'. If you fail to raise the target, what are your options? How will you continue to get support for the project?
These are the questions that most people put off until the end of the campaign. By then, if things haven't gone to plan, they are often ready to give up altogether.
Remember, there's nothing to stop you from trying again. Perhaps a different website would be better, or just waiting until the time is right for your project. These are issues that must be taken into consideration in any good plan.