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Do's and Don't of Crowdfunding



Crowdfunding is a method of raising money from a large number of people at the same time. Many individuals pool their small individual investments into larger groups in order to provide the capital required to get a company or project off the ground.


1. Wise use of crowdsourcing.

Crowdfunding is unlikely to be a substitute for other fundraising efforts (even if you're running an equity campaign, you'll want to include Angels or Venture Capitalists in your fundraising efforts). While this is a clever way to diversify your revenue streams, gain exposure to new customers, and build a community, it is not without risks. In our campaigns, we have aimed to obtain

a) product feedback

b) product validation

Both can then use to demonstrate to retailers and distributors.

2. Have a clear message to convey

Before launching your campaign, test your marketing messages with existing and prospective customers to determine which ones are most effective. Use A/B conversion testing from digital ads, face-to-face sessions, or feedback forms to ensure that you're using the correct language and avoiding buzzwords when developing your campaign message and messaging strategy.

This is extremely important for the campaign video that you will be creating. Concentrate more on the story you're telling in it and less on the quality of the production in general. Some videos can appear overly polished and professional. When this happens, it is common for you to lose interest in your story.

3. Take a look at what is working.

Crowdfunding platforms, as well as the types of backers and investors who use them, as well as consumer habits, are constantly evolving. Investigate what people are responding positively to and use this information to your advantage.

Examine projects that interest you, get involved with them, and establish your credibility as a project owner. Successful campaigns on your crowdfunding platform can serve as a valuable source of cross-marketing support for your business.


Consider crowdfunding a cash pit.

Nobody goes to a platform, launches a project, and waits for cash. Expected conversion rate for pre-marketing visitors that land on page, watch video, or sign up. 

How many must convert to meet your goal?

A successful campaign requires at least 65% funding within 48 hours. So if you've done the arithmetic and still don't comprehend it, stop and reconsider. Consider the first 2-3 days. Those first 48 hours matter. The early funding will provide you the momentum and validation you need to attain your goal swiftly.

However, Don't focus on the first several days. Your campaign will have lulls, but the best ones keep the dialogue continuing without repeating themselves. What stories can you tell with funding? How can you keep early backers engaged (referrals)? Or, if the campaign is lagging, how will you re-energize it?

Set astronomically high and unrealistic financial or delivery targets.

Crowdfunding is really visible. Calculate your chances of meeting your financial goal and make sure you have what it takes. If you're raising funds on crowdfunding platforms, make sure you have a clear strategy for delivery and account for product delays so that you don't disappoint your backers later on in the process.

Aside from that, refrain from trying to be overly clever and over-complicating your incentive structure. Potential backers may become perplexed as a result of this. Keep things as basic as possible!      

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