A total of 64,216 projects have launched on Kickstarter (the largest crowd funding site), sending over $241 million to startup founders. Would you like a piece of that action?
I’ll bet. But not every project gets funded. Here’s a guide to how the successful get funded and which are the best crowd funding platforms for an online business.
How does crowd funding work?
Though there are many different platforms, they all work in broadly the same way.
You post a description of your project, a choice of funding levels ($25, $50, $100, for example), along with the rewards backers receive at each level.
And it works.
As of July 2012, 44.03% of Kickstarter projects raised full funding. Given that includes the 10% or so of projects that are canceled or suspended, that means when you post a project on Kickstarter you have roughly a 50:50 chance of succeeding.
That’s not too bad.
But you can boost those chances by following the common characteristics of successful campaigns.
Don’t try to crowd fund a service
It’s very hard – by which I mean virtually impossible – to get funding for something your potential backers can’t imagine touching, seeing or hearing.
You need a product.
Even projects that are raising funds for a “service”, like helping the homeless or other disadvantaged groups, don’t ask backers to fund the cause directly. Instead, they ask for help in funding a video documentary about the project, or something similar.
Be as real as possible
Even if your product doesn’t exist yet, create good quality mock-up images to bring the idea alive. The easier it is for a potential backer to see what you’re doing and how it will benefit the world, the more likely they are to fund the idea.
If you have a prototype, even better – make a video.
Having spent a long time browsing the successfully-funded projects section of Kickstarter, I can tell you I didn’t see a single one that didn’t have a video. That’s why you need one. Text and images are not enough on their own.
Offer decent, tangible rewards
Crowd funding isn’t a loan. Your backers won’t get their money back, they’ll only get the rewards you give them.
That means you need to offer backers more than just the warm glow of being a social entrepreneur. They’re also partial to freebies, customized products and first dibs on new features.
Remember that although a user might only be putting up $25, it’s still an investment (of sorts) and that means you need to sell your idea.
Launching your funding request is only the start
Once your project page is live, you can maximize your chances of success by following the tips below.
Keep your eye on the comments
Responding quickly to comments and questions helps generate interest in the project and makes it easier to attract backers.
So make sure responding to comments is a priority after launching your appeal. Not just on the website hosting the appeal, but on any supporting website that’s in your project listing. Many people will visit those to find out more before pledging cash.
Clear the “$0 from 0 backers” heading ASAP
Just like a public auction, no one likes to be the first to put their hand up.
So before making your project page live, ask family, friends and your most enthusiastic followers to make a pledge the moment your funding page goes online.
Back your own project
If you won’t put money into your own project, why would anyone else? Making a meaningful first pledge yourself will show you’re serious and it’s another way to get the ball rolling.
Keep backers up to date
Posting regular updates on the project adds a crucial level of trust to your campaign which will encourage more people to pledge.
As well as updating on the funding website, keep the updates flowing through Twitter, Facebook and other social media channels.
Never stop saying thank you
If someone likes your project enough to stump up some cash, say thank you. It’s a small thing that means a lot. If nothing else, you’ll be keeping your mother happy.
If a backer has been particularly generous, go out of your way to thank them on Twitter or on their Facebook page.
Get started – the major crowd funding platforms
Since the launch of Kickstarter in 2008, the crowd funding market has exploded.
There are now dozens of other platforms either competing directly with Kickstarter or focusing on niche business areas like film making, music or technology.
To keep the list useful for us online business types, I’ve kept to platforms that are busy and related to business and startups.
The first big crowd funding site, a “funding platform for creative projects”. It has an all or nothing model, so projects that don’t meet the minimum cash level stipulated by the founders don’t go ahead.
This means entrepreneurs aren’t stuck having to launch without sufficient money and funders don’t pay for a project that won’t go anywhere because it’s underfunded.
Not all crowd funding sites operate like this, so check if this is important to you.
A good mix of creative, art, health and technology projects. Unlike Kickstarter, it’s open to non-U.S. citizens, but has a somewhat confusing pricing structure.
Allows entrepreneurs to raise startup capital and backers to invest for equity and, optionally, mentor startups. Investment levels go from £10 to £150,000. Projects tend to be technology based with mobile, software and marketing being heavily featured.
Somewhat similar to the business-like Seedrs, but with more entertainment, music and web-based projects.
Micro funding investing for startups, currently an invitation-only beta but looks like it could be interesting.
Worth a look but mostly small-time creative projects and not particularly business orientated.
Interesting site that allows inventors to start raising capital to prototype and launch physical products.
Start Some Good
Crowd funding for social entrepreneurs.
As you’ve probably guessed from the name, App Funder aims to find backers for app developers, whether for Android phones and tablets or iPhone / iPad.
GreenUnite Now offline, try gogetfunding.com.
Specializing in game-related projects, both digital and real-world projects like board games.
More inspiration and resources
Laurel Papworth has this inspiring story: Crowdsourced Funding: How to ask for $75K but get $1.5million – a step-by-step outline of how Casey Hopkins got $1.5 million in crowd funding to make a better dock for the iPhone.
The Wikipedia entry for Kickstarter has some interesting statistics on which categories tend to get the most funding and for how much.
Have I missed a good platform or resource? Please let me know in the comments.