Crowdfunding is undoubtedly this year’s hottest topic and trend and with good reason.
The ability to publicly raise funds for your idea, product, or company, by gaining access to millions and millions of potential investors, gives anyone with an Internet connection access to a little or a lot of capital.
Now, anyone with a good idea and the ability to write a compelling description of that idea, can turn to services like Fundable, Kickstarter or Indiegogo to raise needed funds by offering incentives such as product, early access and even private receptions.
The recent passage of the Jumpstart Our Business Startups Act (JOBS) only accelerated the mainstream acceptance of crowdfunding and eased some of the restrictions placed on small businesses in need of capital. The JOBS Act opens the door to even more opportunities by allowing companies to offer stock and equity to individual investors much like they might by partnering with a venture capital firm.
Okay, enough with the backstory.
While the media covers the overnight successes and over the top fundraising sensations, such as Pebble, created through crowdfunding, the fact remains crowdfunding is simply a mechanism that marries a potential community with an accounting function.
The promise of “create a project” and “watch the funds come in” is in stark contrast to the reality of create a project, market like crazy and maybe the funds come in.
In a way, crowdfunding is simply preselling your idea or product and that takes a marketing mindset pure and simple. In fact, it may actually take an even more strategic approach because you may not have a track record, any proof you can actually pull your idea off or raving fans and success stories to rely on for referrals and testimonials – all essential marketing assets.
The other element that makes crowdfunding such a marketing play is the campaign nature of how most services operate. Generally your funding campaign is an all or nothing proposition on the clock.
In other words, if you want to raise $10,000 you’ll have a set amount of time to raise the money and if you come up even a little bit short, you don’t get anything.
One of the most intriguing marketing related aspects of crowdfunding is the public nature of the campaign. For some companies, ideas and products this is their public coming out and the buzz created in a properly executed crowdfunding campaign can carry a business swiftly into a phase of growth or momentum.
So, in many ways the actual money raised is only a part of the opportunity that exists in this approach.
Since this trend has so much to offer small businesses and entrepreneurs of all kinds and since I’m making a case for the element of marketing in this space, I thought it would interesting to create a series of posts going deep into the elements of a successful crowdfunding campaign and build a case study using a real and existing campaign.
The series will consist of five posts, including this one, and end in conjunction with a completed campaign in about 30 days. (You can get the entire series by subscribing to this RSS feed)
The series will unfold as follows:
Crowdfunding: A playbook and case study
- Installment 1: Incentivizing the pitch
- Installment 2: Sharing the story
- Installment 3: Building the buzz
- Installment 4: Managing the tribe
Meet the case study subject
The start-up raising funds is called ZebraCard. The campaign is listed on Fundable.com and at the time of this writing has about a month left to meet its all or nothing goal of $5,000. (Full disclosure: I thought this was a cool project so I backed it and that’s what led me to write this series.)
Quick pitch: ZebraCard.me creates a QR code or barcode for your business card that points to a URL where each user’s interaction with your business card data is tracked.
Value proposition: Data in all directions. Business professionals will get more data on the performance of the business cards in circulation than ever before possible. Card scanning applications can increase the accuracy and breadth of data that their application provides.
I’ll be sharing thoughts from ZebraCard founder Nick Carter and Fundable Founder Wil Schroter throughout this series and offer advice as well as observations on the progress of the campaign.
One of the first lessons that ZebraCard had to learn when launching their campaign is that crowdfunding, while all the buzz in online circles, is still a relatively new and unknown concept to most.
According to Carter, “We discovered, surprising to us, that people were totally unfamiliar with crowdfunding. We had to make a quick adaptation in messaging to first educate our audience.”
The next important pre-launch consideration for any marketing initiative really, but particularly when you are trying to introduce a new concept, is clarity and simplicity of message.
You must be able to explain what your thing does, why they should back it and what, precisely, you want people to do in a way that leaves no doubt and has them thinking – Oh, I get that.
Again, returning to Carter’s lesson: “It’s easy to assume the audience understands what you’re asking of them, but just as any effective marketing, we had to be clear about a call-to-action in order to get results. We had to say, go to fundable.com/zebracard and pledge $75 to get your free business cards.”
Stay tuned as I follow Carter and ZebraCard down the path of getting crowdfunded. Next week we’ll tackle crafting the pitch and creating the pitch perfect incentives.
So, now it’s your turn to chime in – Do you have thoughts, stories, ideas about crowdfunding? Share them please.