September 26th, 2018
Kick-start your business idea with tips from a crowdfunding veteran
New ideas need to find financing and a market of buyers. Both hang out on crowdfunding sites such as Kickstarter. It’s a chance to test your concept, find potential buyers and raise capital from those customers, in advance.
But few of us know how to do it. We might feel as confident undertaking a trek in the Amazon jungle as plunging into the wilds of Kickstarter.
That’s why Jamey Stegmaier is a good fellow to listen to. He has crowdfunded seven projects – including three board games and a game accessory of his own – raising more than $1-million (U.S.). That’s chump change when we consider big company initial public offerings (IPOs), but for the smaller companies he is involved in, the fundraising was golden. He has learned what works and what doesn’t, which he shares in his new book, A Crowdfunder’s Strategy Guide: Build a Better Business by Building Community.
“I love the idea that anybody can create anything if others support it. It’s a good way to gauge demand,” he said in an interview.
The basics are simple: You start a project page, sharing your idea with the Kickstarter world. Ideally, that page will have a catchy explanation of the project, with sufficient detail to attract support. You name an amount that people must pledge to be a part of the effort and what their reward will be for their funding. For a board game, a pledge amount might be $40 and the reward a copy of the game delivered to their home.
If the project doesn’t raise the full funding you are seeking, the pledges fall by the wayside and no money (or rewards) are exchanged. The site takes a processing fee.
But it’s not magic. You can’t throw just anything on the crowdfunding platform – there are others besides Kickstarter, notably GoFundMe – and expect it to succeed. You need to build a community that will welcome the idea. That probably starts, as with most new businesses and products, by talking to friends and relatives and encouraging their support. But beyond that, you want to seek out people who might be interested in the new offering, which in his case included folks who hang out on gaming sites.
Well before the launch, he advises seeding those locations with information about what’s ahead, building buzz, so when it launches there will be a big initial buy-in.
“Momentum is really important. If you are 15 days into the campaign and only have 10 per cent of your target, you probably won’t succeed,” he pointed out.
The longest campaign Kickstarter allows is 60 days. But he recommends on your first effort, when you will encounter teething problems, to take 28 days to 35 days. After that, aim for 21 days to 28 days.
To prepare your strategy, he recommends getting involved in supporting other Kickstarter campaigns – pledges can be as low as $1 – to see how the system operates.
“See what excites you and what dismays you –what things lead you to distrust a project. You can then emulate the better practices and apply them to your own project,” Mr. Stegmaier said.
They biggest mistake creators make is not having a visually appealing page. So invest in your own – it’s a crucial element in your marketing campaign – by hiring a top-flight artist and graphic designer.
If you just throw the page together, people will also assume you are just throwing together the product you want them to fund.
Another big mistake is to underestimate the costs involved in manufacturing the product. So before you launch, think carefully about what is required to get to market and check out the actual costs involved. He has seen too many projects fail at this point, despite raising the desired amount.
Kickstarter insists that if you don’t deliver, you must return the money, so it’s not a situation you want to find yourself in. He said a few class-action suits have arisen, deciding in favour of the funders, and with punitive damages on top some creators have found themselves required to pay back triple what they raised.
Kickstarter seems like a preorder system. But with most preordering, such as a book, the product exists and purchasers are just waiting for the publication date. Here, the product doesn’t exist. At one level, Mr. Stegmaier believes that’s delightful. He tries to get his games only 95-per-cent mapped out before launching a Kickstarter campaign, because by interacting with the supporters, he will be able to learn what else the game could benefit from and what might be ditched.
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1100+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit ncfacanada.org.