Before you get into the crowdfunding bandwagon, make sure you’re prepared
While fintech in Asia continues to build momentum more broadly, crowdfunding in particular offers huge potential that remains largely untapped. In a Q3 2016 report, KPMG reveals that Asia got the largest chunk of venture capital in the fintech and cryptocurrency technology sectors.
Asian companies received US$1.2 billion out of the US$2.4 billion funding in the 3rd quarter of this year, with China leading the pack followed by Hong Kong, Singapore, Australia, and then India.
With that as a backdrop, the coming days are packed full of optimism for ‘crowdfunders’ looking to get funding for their projects or wanting to launch their startups.
Whatever your purpose for crowdfunding — raising capital, testing the waters, encouraging innovation inside corporate walls (a.k.a. intra/corporate/enterprise crowdfunding) — you will find that it is quite a challenge. To be successful involves more than having a great idea and certainly more than being on a great platform. You can’t just set it up and be on ‘auto-pilot’ mode and expect cash to flow in.
Craft a winning plan
“People don’t want to back a campaign that is not going to work,” says writer and entrepreneur Seth Godin on his crowdfunding experience. Before you launch a campaign on a crowdfunding platform, plan for the success of the campaign. How do you get from zero to $100K?
Break down the funding goal into appropriate perks, each with different fund sizes for contribution. Be as detailed as possible, but keep it simple. Develop your story, since customers want know how you plan to turn your dream into reality.
Richard Swart, crowdfunding expert from UC Berkeley, found that successful campaigns typically spend 200 hours of preparation and 136 hours for managing the campaign. No one is going to invest in a half-baked campaign.
Use the power of video
Video has hit content marketing like a storm. Look at all the benefits of using video (22 times more memorable than facts, better positive emotions, 10 times more engagement).
Video is crucial, since it gives visitors a better idea of your project without overwhelming them with text. Instead of reading text for 5 minutes, customers can get the information they need in less than a minute by watching a video.
In addition, the message of the video should be concrete and clear. It has to hit the spot within seconds. People are busy and they may not have the time to watch your video again. That short clip could make or break your campaign, as it influences the backer’s trust in you or your idea. Spark your audience’s interest and catch their eyes within seconds using video.
Leverage the 80/20 rule
The Pareto principle (or 80/20 rule) here will refer to how 80 per cent of the effects come from 20 per cent of the causes. This can be related to crowdfunding — 80 per cent of the funds you can raise will come from 20 per cent of backers.
In other words, it is the loyalty of the customers, which belong to the golden 20 per cent are what drives most of our businesses. This implies that before or after launching your campaign on a crowdfunding platform, you should focus on building a solid fan base to support your campaign.
This can be done through an effective pre-launch buzz. Get at least 30 per cent of the fund committed before going live with the campaign. This means doing online and offline outreach to peers, friends, or networks. Go beyond your network by tapping thought leaders, celebrities, industry supporters, and even your second or third degree networks. Build strong relationships that would translate to people backing your project, sharing your message on social media, and becoming your solid fan base or community.
Use story-driven messaging
Your backers are interested in who you are, what you are doing, and why you are doing it. People support other people and not just ideas.
The whole campaign will revolve around this brand story, which will be the driving force for social impact. You can put your story out there via online and offline means. At SparkRaise, we have a brilliant example — the crowdfunders of the ZOLO Active Mat campaign host live events or yoga sessions featuring their cool product which is a cork-based yoga mat.
In line with this, don’t spam your contact list with the same message. Try to personalise the message that you send out to your supporters. You can do this by segmenting your network into subnetworks and categorising them according to their interests, industry, and channels.
Once you have all these elements, your campaign will be headed towards success and towards reaching its funding goal. Above all else, focus on improving these key aspects — the main product or idea, the network and distribution, and the social impact.
Ken Mendiola is the resident growth hacker of SparkRaise – an online network and crowdfunding platform for creators and social innovation. Ken loves to write about analytics, marketing, branding, and FinTech. Acknowledgement to Andrea Liu (superstar intern) for some of the insights in this article.
The views expressed here are of the author’s, and e27 may not necessarily subscribe to them. e27 invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, submit your post here.
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