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Since crowdfunding is continuing to rapidly grow worldwide, it is important to be aware of some top crowdfunding tips. Crowdfunding will help you transform the way you seek out finances and engage with online communities. With the convenient online platforms of crowdfunding, you and your business are able to access loads of prospective backers who are willing to contribute. Read on to discover five essential crowdfunding tips that you must follow in order to make your business campaign a success and help you achieve your funding goals.
1. Shorter Campaigns Are More Successful
Often times, it is tempting for start-up companies to create long, drawn-out projects to enhance the opportunity to drive up donations and build a momentum for success. However, short projects consistently raise more capital because the deadline encourages lenders to pledge quickly. Unlike popular belief, success rates actually drop the longer the project goes on. In fact, those that last 90 days or more notice a 30 percent drop in success rates. Therefore, make sure that the project length is around 20 to 30 days, so that you can realize the average success rate of 60 percent.
2. Entertain with a Compelling Story
Crowdfunding campaigns are more than just proposed products that people may want to purchase; they are also meant to appeal to people’s interests and passions in life. Stories are the best way to take potential investors on a journey, teach them, inspire them, and draw them in to make a pledge. Not surprisingly, campaigns that are focused on sharing a compelling story are also the ones that inspire the most people to contribute to their funds. Usually, investors do not make decisions based only on numbers and finances. They tend to react to stories about your business’ origins, future endeavors, and progress, because they will be interested in becoming involved in the next chapter of your story.
3. Incorporate Engaging Crowdfunder Videos
Although the average success for campaigns is around 50 percent, those without a good video plummet to a rate of only 35 percent. Using a short video is one of the top methods of communicating and pitching your business’ ideas across the crowd platform. Crowdfunder videos also enable you to put a face to who is the mastermind behind the project in an easy to share format. Since potential funders will not watch videos that are longer than three minutes, it is suggested that you keep it short and engaging. Draw in investors with an engaging video that clearly communicates a concise message for the ultimate driver of pledges.
4. Offer Seven or More Reward Tiers
If you try to start a project without offering a little reward in return for their investment, you will quickly discover that few will take the time to pledge. Most backers expect to receive something in return, so it is necessary to provide incentives for their support. Research studies have found that seven is the magic number for gaining a success in your crowdfunding campaign. In fact, campaigns that offer seven or more reward tiers consistently achieve a 50 percent rate of success. On the other hand, those with fewer reward tiers see their success rates dramatically drop down to below 30 percent. There are many options to create eye-catching and exciting rewards, so pick ones that fit your campaign and create at least seven tiers for the most success.
5. Select a Platform that Best Suits Your Campaign
There are now hundreds of different platforms for crowdfunding that each offer entrepreneurs something special. From Kickstarter and Spacehive to Fundageek and FundingCircle, there are a variety of platforms that are tailored to fit business’ financing and industry needs. Before launching a campaign, ensure that you carefully think about which platform will be the best fit for your project. Once you make the big decision, make sure that you keep these five essential crowdfunding tips in mind for the greatest chance at breaking your financial goals.