Eight top tips to make sure you hit your campaign target.
Crowdfunding is one of the most popular forms of raising finance in the UK today. The top five UK crowdfunding platforms helped businesses raise £72 million in crowdfunding in the first nine months of 2017.
One of the main attractions of running a crowdfunding campaign is the speed with which you can raise tens (or hundreds) of thousands of pounds. But many businesses underestimate the investment required for the campaign planning and management, with potentially disastrous outcomes.
The Business Finance Guide spoke with Patrick Ryan, co-founder of Russian vodka brand Ishka, who ran a rewards-based crowdfunding campaign in 2017. Despite reaching its £10,000 campaign target, Ishka experienced devastating setbacks, which led to all the supporters being refunded their pledges. Now with alternative funding secured, Patrick reflects on what he learned.
Patrick spent several years living and working in Russia, where he fell in love with the fascinating world of vodka-distilling. Having worked in Ireland in the whiskey business, making vodka felt like a natural step. Alongside running his start up, Patrick now works at Crowdcube, so he’s well versed in the detail of what makes a winning crowdfunding campaign.
The team at the Business Finance Guide recently met with him, and he shared the advice that he’d wished someone had told him in the early stages of the campaign planning process. He admits: “I should’ve done more research before going live”
Top tips for a successful crowdfunding campaign
1. Plan communications in advance
First things first. Set up PR in advance of your go-live date. Write press releases and hold them under embargo until the launch date. Know which publications are going to publish your story and when, so you can use their links to build hype on your own website, social channels and with your personal network.
Plan ahead with your own communications for your social media and website – it’ll save you much needed time once you go live. You should be posting about your campaign in advance of the launch date to pique the interest of your network, and creating momentum with new content once you go live, so a robust plan is vital.
2. Warm up your crowd before going live
Create a list of everyone you know that you think might invest because they believe in you, or think you have an interesting idea. Start by speaking to close friends and family, but then think a little outside the box: old classmates, teachers and university professors, colleagues and ex-colleagues. Even that guy you used to do a karate class with three years ago…
If you can fund at least 30% of your campaign target in your first day, you have a good chance of your campaign being featured on the first page of the crowdfunding site. This is the key to making your pitch more visible to people browsing. So if you can get your own network to invest, your chances of meeting your campaign target are much higher.
Most crowdfunding sites have similar algorithms in place to determine whether your campaign will appear on the first page of their site.
3. Get a team together
Patrick advises that “having a support network means you don’t get stuck inside your own head”. Many entrepreneurs know it can be a lonely place going it alone. Speak to trusted people about your ideas, gain their input, ask them to share your plans with their own network, and get a few people behind you.
Even if you’re the only founder, you’ll have friends and family that you could enlist to actively support your campaign. If you have 300 contacts within your own network, but can enlist the support of someone else, then that number could quickly double or treble, making your 30% target for the first day of the campaign much more attainable.
4. Don’t announce anything until you’re 100% ready
If you’re working with partners within a supply chain, or in any way depend on someone else, you’re quite likely to be slowed down when things (invariably) get delayed. Don’t make promises on a crowdfunding platform if there’s even a slight chance that you might not be able to deliver – so only make announcements when you’re absolutely ready.
Embracing a small delay at the start could save you a lot of grief later!
5. Spend time to plan your video
While videos aren’t usually mandatory, they’re one of the most powerful ways to concisely pitch to potential investors. People don’t expect a blockbuster standard, but people do tend to invest in other people, so a well-planned video is an excellent opportunity to build up trust in you (and your team if you have one).
The best videos are clear, concise and professional – your pitch needn’t be more than two minutes long. Do make it interesting, though: a little humour goes a long way. If you have contacts in a creative field consider asking them to help you film or edit your video – an agency or film production company may also be able to help. It’s vital that the production quality, as well as the content, feels professional.
6. Be fully in control once you launch
You’ll need to monitor your campaign regularly once it goes live. Most crowdfunding platforms allow both supporters and potential supporters to pose questions directly to you, and they will always do so. You need to be ready to provide polite, useful and timely responses.
If you have a team to support you, even better.
7. Personalise your campaign to your audience
Tailor your campaign to your audience. It’s not only the rewards you offer, but also the way you communicate with your network, that can make you stand out.
Part way through his campaign, Patrick decided to create hundreds of short videos, each one personalised to the individuals in his network, to ask them to consider investing in his crowdfunding campaign.
The combination of using his network and taking a personalised approach meant that Patrick funded 90% of his campaign through his own extended network.
8. Read all the terms and conditions
The last, arguably the most obvious, and the most easily forgotten bit of advice from Patrick, however, is to read all the small print from your chosen crowdfunding platform.
When Patrick created the crowdfunding campaign for his start up, Ishka Vodka, he inadvertently breached a clause in the terms and conditions. Instead of offering vouchers for his product, Patrick and his team offered actual bottles of vodka. This breached the terms specified within the platform, and so Ishka was forced to refund all supporter pledges, despite the campaign successfully meeting the target investment.
Patrick subsequently raised funding of £10,000 directly through investors from his own network, and Ishka Vodka continues to grow from strength to strength. Ishka is now stocked in a number of partner bars and restaurants.
To discover whether your business could benefit from a crowdfunding campaign, or to learn more about other funding options, explore our interactive business journey tool.
Crowdfunding platforms have a regulatory responsibility to ensure that the information that businesses put up is clear and not misleading.
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