Recently I got an email from a friend of mine asking me to make a $25 donation toward her 4-year-old daughter’s book publishing project, by making a pledge on the popular crowdfunding website Kickstarter.
Young Stoney Nakoda and the effort (lead by her family) to fund her project with help from people’s contributions of small donations is already getting her close to reaching a goal of $5,000 by 23rd of May. To date, the family has raised $1,634. Stoney, and her story book about how she overcame her fear of shadows, is one of many exciting stories coming out of the crowdfunding movement.
Perhaps most famous is Barack Obama’s 2008 crowdfunding efforts for his campaign for presidency, by calling for small donations from millions of people. The singer and songwriter Amanda Palmer, known for her mastery of DIY promotional efforts, has raised $433,843 toward her $100,000 goal that she needs to put out her new album. And journalists Jim Giles and Bobby Johnson have already surpassed a $50,000 milestone, in just 36 hours, toward crowdfunding their MATTER project. They’ve raised $140,201 to date, and will soon be offering weekly in-depth articles about science and technology, for a $.99 download from the website, through the Kindle store and for Apple and Android.
But on the dark side of the story, Kickstarter has also had a scandal hit when a fake video game project secured $4,739 toward a $80,000 goal, before being caught out. And some charities are being warned not to approach crowdfunding as a quick fix solution.
Beyond Kickstarter, websites offering crowdfunding help include Kiva, Indigogo, Profounder and Startsomegood, and there is no limit to what type of creative project can be funded. Crowdfunding has become a popular method of raising awareness and resources for creative projects, social change, and start-up businesses.
How can you win success by crowdfunding? I asked Stoney’s mother Havona Madama, a lawyer based in New York City, what she has learned to date about crowdfunding, in helping her daughter’s book get published. She has offered up her insight to what may work for you to crowdfund your next book, album, app, community project or anything that your imagination can produce.
1. Find the crowd sourcing website that best fits your goals. You are more likely to find sources other than your friends and family to back your project if you are on a site that attracts people interested in your project. Some sites, like Kickstarter, will not provide you with the raised funds unless you meet your funding goal, but Indigogo lets you keep what you raise even if you don’t make your goal, for a slightly higher processing fee. That’s right, these sites make their money by keeping a portion of what you raise usually 5-10% depending on the site and the credit card processing fees.
2. Check out their rules early so you make sure you don’t waste time building a profile on a site that won’t accept your project. Four-year-olds can not form contracts so Stoney had to sign up at Kickstarter through a publishing company created by her family. According to Inc.com , 60% of the 2000 applications submitted each month are accepted by Kickstarter.
3. Determine how much you need to raise to create the product. It is important that you have done your research and know what it will cost to create the product. If your fundraising is successful on Kickstarter, you now have orders to fulfill, so you better have raised enough to create the product. Stoney is hoping to raise $5,000 to cover the costs of self publishing, including hiring a professional to typeset the book, translators to translate into French, Spanish and Mandarin, publish the first 500 books and market the books.
4. Determine in advance what it will cost you to produce the perks you will use to entice backers. Kickstarter and Indigogo each provide you with a profile page for your project on which you list different levels of support and perks the backer will receive when the project is funded. You want to make sure you can afford to make the perks with the amount attached. Don’t forget you have to mail the product to the person too, so include the cost of postage. Stoney asks backers to add $10 for mailing books to international destinations.
5. Make the perks attractive. Kickstarter strongly recommends that perks closely mirror the cost of the end product. So, if you are raising funds for a book, $25 for a copy of the book is considered a good perk. According to Kickstarter, $25 is the most common amount people contribute so that perk should be enticing. This is particularly important when you need people other than your friends and family to contribute to reach your goal. Recently, TikTok+LunaTik pre-sold over 2000 multi-touch watches using Kickstarter, raising more than $900,000 and exceeding their funding goal by 6000%.
6. Choose a short time limit. The longer you have to raise the money the longer people have to think about supporting you. People respond to urgency and fear of loss and they also are easily distracted. You want to catch their attention, make them interested in supporting you financially (buying your product) and spreading your message. This is done with a well designed social media campaign, designed in advance. According to Kickstarter, campaigns less than 30 days are the most successful.
7. Know how to use Social Media. How did TikTok exceed their funding goals? They set a lower goal $15,000, ask people to pre-purchase the watch for $25 and more than 25,000 people liked them on Facebook alone. That’s right, the key to all of the crowdfunding is sourcing a crowd. So, you better know how to keep people interested and spreading your message for you. You will want to decide in advance what stories you are going to tell about your success in funding, the product, even yourself, that will keep people interested in your story and sharing it with others. Generally, people don’t like to be oversold, so you might want to tone down the sales and increase the interesting. Stoney has started listing other interesting kids on her Facebook page to encourage support of her creative projects.
8. It is harder than you might realize to get strangers to love your idea, and less of your friends may contribute than you imagine. So it is important to follow the steps above to be successful. Make sure the prices you have set are realistic, know your target market and how to reach them. Remember this is a test market for your business, you have to take all the same steps you would take with your business. So, do some research before you get started, and then make a marketing plan. You should decide in advance each post for Facebook and Twitter and launch them strategically each day.