Crowdfunding is a challenging endeavor even in the best of times. Recent data indicates that from January 2014 to the present day, only 22.9 percent of crowdfunding projects met their funding goals. Combine this with the harsh economic and social realities of the COVID-19 pandemic, and it becomes clear how strong the headwinds are for businesses trying to raise funds at this moment.
However, that doesn’t mean that crowdfunding is impossible. Browse through the list of projects on any of the major crowdfunding sites, and you’ll see numerous campaigns that have achieved success in recent months despite the unfavorable conditions.
If you’re attempting to run a crowdfunding campaign in the midst of this pandemic, there are a number of things you can do to help increase your chances of meeting your funding goal. Some of these tips are specific to the times we’re living in, while others apply universally.
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Now more than ever, we rely on the businesses in our communities to get by. If your business is a local fixture but is struggling due to the pandemic, highlight that struggle in your crowdfunding campaign. Solicit testimonials from customers in your local community whose lives would be impacted by your business’s possible closure. Above all, keep the focus on your locality. If ever there were a time that called for communities to pull together and support the businesses that make the community thrive, it’s now.
Keep your backers informed
The coronavirus pandemic has taken our meticulously conceived plans and turned them on their head. If your business has suffered virus-related setbacks, be upfront about the challenges you’re facing. Let people know if your timeline for completion on a particular aspect of your project has to be pushed back or if the rewards you’re offering may be late in arriving.
Your potential backers may have suffered similar setbacks during the pandemic, so they’re more likely to be forgiving if you’re honest and upfront with them than if you remain quiet about any delays that might arise. Furthermore, if you publicly communicate with backers on social media, the public will be able to see you tackling your difficulties as transparently as possible.
Consider equity crowdfunding
Not all projects lend themselves well to equity crowdfunding (investors like to see the potential for explosive growth in the future), but for those prepared to tackle the complexities of equity crowdfunding, this could be just the time to give it a go.
Does this seem like an odd suggestion to make in the middle of a pandemic-induced economic crisis? It did to me, too, until I learned that Wefunder, the largest equity crowdfunding portal, has seen a significant increase in investor volume this year, culminating in a new daily investment record of $2 million in May. While the “why” remains a mystery, it shows investors are interested in equity crowdfunding ventures even during this tumultuous time.
Post videos documenting your progress
Videos impact potential backers the way no other form of communication does.
According to Indiegogo, campaigns with a pitch video raise four times more than campaigns without a pitch video.
Considering the fact that your pitch video will serve as the face of your campaign, don’t be afraid to invest some money into the production of your video. Think of it as an investment in the future success of your business. While touting your project’s potential, don’t forget to mention any rewards you’re offering your potential backers.
Videos are great for keeping everyone updated on your progress, as well. You may want to post videos regularly to keep your followers appraised on your progress throughout the campaign.
Choose the right platform for your project
No two crowdfunding platforms are exactly alike. You’ll need to research and choose the platform that allows you to run the kind of crowdfunding campaign you want.
For example, Kickstarter is great for crowdfunding tech projects, board games and the like. Unlike many other platforms, it prescreens campaigns before allowing them to fundraise, so you’ll want to have a backup choice ready. Additionally, all Kickstarter campaigns are all-or-nothing in terms of funding. That is, if you don’t meet your funding goal while your campaign is open (and Kickstarter doesn’t let you keep your campaign open for longer than 60 days), you get none of the funds you’ve raised – it all gets refunded to the backers.
Indiegogo, on the other hand, allows you to run a keep-what-you-raise campaign in which you collect what you’ve raised when your campaign ends even if you didn’t reach your funding goal.
Suppose your project calls for raising money on an ongoing basis. In that case, you’ll want to choose a platform in which backers essentially purchase memberships to gain access to exclusive content. If you’re in the business of creating a podcast, or some other avenue that involves releasing content continuously, a site such as Patreon will be a much better fit for you than Kickstarter or Indiegogo.
Research past crowdfunding campaigns similar to yours
Most crowdfunding websites leave all their old campaigns live. Often, you’ll be able to see how much the campaign in question raised and what the campaign’s original funding goal was. This can be a handy resource for an aspiring crowdfunder.
By researching old crowdfunding projects that are similar to what you intend to do, you can try to pick up on what works and what doesn’t. This will allow you to better tailor your campaign for success. It’s like having access to all the loan applications a bank has ever received and knowing whether each application was approved or not.
Secure commitments from backers before launch
Before taking your project live, try to get financial commitments from people in your network. Talk to family, friends, professional colleagues, and others to try to get commitments to back your project once it launches. Ask this of your social media followers as well, perhaps with some sort of special reward for early backers attached.
Garnering early support is key to lending credibility to your campaign. Potential backers (those with no connection to you) generally don’t want to be among the very first to back a campaign.
Kickstarter’s detailed stats page aptly demonstrates this: while just under 38 percent of all Kickstarter projects are ultimately successful, 78 percent of the projects that raised more than 20 percent of their funding goals ended up succeeding. Lining up support before launch is valuable above and beyond the value of these early financial commitments themselves.
The bottom line
While there are ways to tailor your crowdfunding campaign to the particular circumstances of the COVID-19 era, many of the keys to crowdfunding success remain constant, pandemic or no pandemic. Regardless of the unique difficulties we’re all facing at the moment, there’s no need to give up on your crowdfunding dreams. Many of the great business successes of our age were born of hardship, so keep following your passion until it bears fruit!