CROWDFUNDING 101 Part 1:
Crowdfunding is an online way of raising capital (and a crowd) to realise exceptional ideas.
How crowdfunding is different to ‘traditional’ fundraising:
Whilst many elements of ‘traditional’ fundraising still apply, crowdfunding is a bit different…
Trade not Aid: A basic principle of crowdfunding is that backers get a reward in return for their contribution as they are not giving something for nothing.
Small not large sums: Crowdfunding asks people to give a little to make a big difference.
Online not offline: Crowdfunding happens online. People give online and the Internet is an incredible place to spread information easily and quickly. Of course, there are still elements of a crowdfunding campaign that happen offline (such as talking to key supporters and exposure at events) but, you need to make sure you’re clued up with Web 2.0 to give your crowdfunding campaign the best chance of success.
More than just money: Ideally, the crowd of backers that give to your project will give more than just money. They should feel part of a unique crowd of like-minded people that will champion your project by inspiring others to support and/or help your project out through volunteering their time or skills.
CROWDFUNDING 101 Part 2: Your Project And Your Crowdfunding Offer.
Defining your crowdfunding project
To recap… crowdfunding is about raising money for a specific project or idea, rather than just raising general funds. This way, your backers know exactly what their money will achieve. Once you’ve decided what the project is that you need to raise funds for, break your project down into key measurable milestones.
Setting your monetary targets
How much will it cost to achieve the project you want to crowdfund for?
As we’ve mentioned, crowdfunding can be tough so, if you’ve never done this sort of thing before, or don’t have a big pool of supporters already, then don’t try and raise a stratospheric sum!
To raise R1 000 you would need 10 people to give the average R100 contribution.
To raise R5 000 you would need 50 people.
Think about how many people you feel you can realistically inspire to give to your project given your current network of supporters, and use this to determine a sensible fundraising target.
Your time limit
As above, think carefully about the project you’re fundraising for (When do you actually need to have the money by? What sort of deadlines are you up against? When would it be ideal to have the money?) but again, be realistic.
We suggest 30-45 days but there is no ‘ideal’ project length – just that all projects have to make the most of their initial launch period, sustain a campaign, and make sure there is a final big push!
A very long time limit may mean your fundraising campaign will lack the urgency or focus it would require to succeed.
In other words:
Your team becomes complacent about the fundraising campaign (We’ve got 3 months to raise the money – we don’t have to worry about it now…);
Your backers feel disconnected from your project (Why should I give now to something that isn’t going to happen for 12 months…?) .
Besides, let’s face it, lots of things can change course in a longer time frame which may derail your campaign.
Campaigns tend to do best in the first and last quarters of their timeframe. At the start when enthusiasm is fresh, word spreads and key supporters make their pledges. Then at the end when the pressure is on to reach the target and people who had been meaning to pledge do so before it’s too late.
Your rewards
This is the driving point of your campaign's success. Will the crowd back you because they like what you have to offer them in return?
Number 1 Rule: Give fair value. If people feel that they’re over-paying for a reward, it’s unlikely they’re going to back you. Would you back yourself? Entry level rewards between R50 – R500 have proved most popular and it’s also great to ‘crowdsource’ your rewards and see what friends and family would buy and at what price first.
Rewards can involve:
Retail
Recognition
Experience / Unique Access …
What you can’t offer:
Thundafund cannot be used to raise money for donation-only causes.
Creators cannot offer equity or financial incentives (ownership, share of profits, A cash or investment return, repayment/loans, cash-value equivalents, etc) unless otherwise agreed with Thundafund. This will be reviewed on a case by case basis.
Rewards that need to be delivered during your campaign or are delivered over an extended duration such as a year.
Creators cannot promise to donate a portion of funds raised or future revenue to a cause.
Thundafund cannot be used to fund software projects not run by the developers themselves.
Thundafund cannot be used to buy or develop real estate.
No tobacco, drugs, and drug paraphernalia; or nutritional supplements.
No offensive material (such as hate speech or propaganda); pornographic material; or projects endorsing or opposing political parties.
No medical, health, and personal care products; or infomercial-type products.
No firearms, weapons, knives, weapon accessories, and replicas of weapons.
A minimum 3 rewards are recommended. After that, you don’t have to offer every level– just what makes sense for your project.
Thundafund Database Information: During your campaign, when a backer purchases a reward, you receive an automatic email with their Name and Email address from Thundafund. Once your project has successfully hit Milestone 1 and closed, you will receive a full backer database, which includes their delivery addresses.
Have a look at some of the projects currently on the Thundafund for some inspiration! Look at both past and present projects, successful and ‘misunderstood’. Their updates, rewards and milestones… and BACK one to fully engage with the process of crowdfunding!
CROWDFUNDING 101 Part 3: Your Crowdfunding Campaign.
Build a team and decide who’s in charge
The clue is in the name – crowdfunding is not something you can do on your own. Just as you’re looking for contributions from a big crowd of people so, that you’ll need the help of a small crowd of people committed to the cause. This could be your colleagues, anyone you know in a good position to get the word out and your closest supporters.
Thundafund Tip: It’s definitely worth nominating somebody to be responsible or assist you with managing and running your crowdfunding campaign. You also need to make sure that this person, and as many other people in your team as possible, have some experience of fundraising, or at least aren’t afraid to ask for money, as well as marketing!
Assess your network of potential backers
This step is absolutely crucial. It is a dangerous misconception to think that by being featured online that many backers will automatically want to fund your project. It is actually people that you already know or those that you ask, who will be the ones to make your project happen!
First of all, think about the people that you already know and those that are supportive of your project or organisation.
They will fall into 3 groups:
Your First Degree Network – The Committed:
These are the people closest to you, the project and the organisation. They could be friends, family, close supporters, or trustees. These should be the people that you can absolutely 100% count on to make a pledge and passionately spread the word of your campaign, they are absolutely crucial to your success.
Thundafund Tip: When engaging with your First Degree Network, ask them to reach out to at least 10+ other people and spread the word about your project and how to support you through your crowdfunding campaign.
Your Second Degree Network – The Inspired:
These are other people that know you, the project or the organisation. They may be people on your mailing list, your organisation’s Facebook fans or Twitter followers. They could be people who have supported your organisation before, or people in the community that your organisation serves. They may also be the friends and networks of your first degree network.
These people are the people that you have to inspire to give to your project. They’re people that you should invite to visit your project page as part of your crowdfunding campaign, by sending out newsletters, messages or tweets about what you’re up to. However, these people won’t necessarily be committed to give as soon as they land on your Thundafund page. Your project page, your inspiring story, your money-can’t-buy benefits and your campaign as a whole need to earn their trust and convince them that it’s a good idea to part with their cash!
Your Third Degree Network – The Shoppers:
This is everyone else – the friends of your second degree networks, the people who may see your organisation advertised or see a tweet online or, others browsing on Thundafund.com.
These are the people that perhaps don’t even know you at all but, might give if they see someone else has given or, if they’re particularly inspired by your project description or, if you have a really attractive benefit on offer. See them as shoppers that you can entice with endorsements from friends, a great product or a really good window display! They’re important to consider but, it will be the first and second degree networks that are much much more likely to be the people that will fund your project.
Plan your campaign.
It isn’t enough just to have your project featured on Thundafund – you need to have a plan for how to raise that money!
Your plan needs to include a strategy for the whole duration of your crowdfunding campaign – from the first all important pledges to a final push in the last few days.
Get the word out:
Perhaps consider a communications plan which details how and when you’ll get the information out there.
This should include what you’re raising money for, how people can help and the unique benefits they can receive. You can use e-mails, blogs, social media updates, offline events and personal phone call to foster community and excitement around your campaign.
You need to remember that everything is an opportunity to tell people about the campaign – from a banner at the bottom of your e-mail signature to a big ‘support our crowdfunding campaign on Thundafund’ button on your homepage. Think about creative ways of inspiring people to give or selling those benefits!
Thank your backers:
A fundraising golden rule – but you might be surprised to find out just how often organisations forget to thank their backers! Make sure you get in touch as soon as you can after people give, and maybe tell them more about what you’re up to and how they could help spread the word further – your backers themselves are a vital part of your campaign plan!
Keep people in the loop:
It’s also really important to keep your networks and backers updated with your progress. Crowdfunding is all about the power of the crowd – not just the funds – and your crowd need to feel like they’re part of the journey. If you need help you can ask your crowd, and if your campaign needs a boost, you could ask each of your backers to each try and inspire 35 more people to give.
Making the Ask:
Something else that might seem obvious but is worth repeating: you have to actually ‘make an ask’. It’s not enough to tell people that “we’re on com”. You need to actually ask them to give money too, and ideally spread the word!The great thing about crowdfunding, is that you’re not just asking for cash – you’re offering something unique in return too, which means that making the ask, which can be daunting, becomes a lot easier. Sell your rewards! You’re also not asking for very much money from each person. Make sure that the reward you’re offering for a popular contribution level is really attractive, and a positive sell, and that ask will become easier and easier.
Secure your first pledges from your closest network & go live!
It is vital that you have already asked the closest members of your first degree network to give as soon as your project page goes live. No one wants to see ‘R0 raised of R5 000’ as soon as they log on to your project page – it doesn’t inspire confidence…
Remember that if you aren’t behind your project, then you can’t expect anyone else to be either. RocketHub have found some slightly frightening facts:
Over 65% of unsuccessful projects never receive a single contribution. It doesn’t take a rocket scientist to figure out that means that even the project creator didn’t pledge even a small amount of their own money. Why would anyone want to give to a project that even the creator doesn’t believe in?!
Thundafund Tip: Line up a few guaranteed backers (friends, family, colleagues) before you launch the campaign. So that when you launch, and your ‘pre-backers’ have supported, onlookers to your campaign will be inspired by the obvious confidence of others to back you.
Time to raise the crowd and raise the capital!