How to Use Crowdfunding Recap
Jamie shares tips and tricks to better utilize crowdfunding
Jamie McDonald, Chief Giving Officer of Network for Good, spoke to the UMBC community on the basics of crowdfunding, how to select the right crowdfunding platform, and the steps to follow to increase the likelihood of success.
If you missed this informative and exciting Workshop be sure to listen to the unedited audio of the Workshop available below.
Jamie first got the entrepreneurial bug when she started working for a banking firm early in her career. After learning many things at the firm, she decided to leave and launch her first company. From there, she launched and sold multiple companies and has learned how important and diverse crowdfunding can be.
Crowdfunding has a long history, spanning back to tribal communities when individuals would donate money to obtain new products. Crowdfunding is now linked to technology and social media, which has amplified the opportunities available to entrepreneurs. This link with technology has encouraged a "succeed/fail fast" mentality with crowdfunding. Despite the time gap, the idea of crowdfunding remains the same.
Jamie talked about how having “passionate ambassadors” to test and your idea is critical before starting a crowdfunding campaign. This "inner circle" should be friends and family who are willing to criticize your idea to make it better.
She then went on to talk about the factors an entrepreneur should consider when starting a crowdfunding campaign:
- Timing & Deductibility- Before launching a campaign you need to think about timing and whether your idea is ready to be created. Do you have manufactures lined up? If you make this product will you be profitable? Do you have a marketing strategy? For example, if you launch a crowdfunding campaign for a product without having manufactures in line, how will you make those products in a timely manner?
- Audience- Most of the people who will support your crowdfunding campaign will be people you have already networked with. Some crowdfunding sites allow you to reach an audience outside of that network, but you can’t always count on this. Therefore, it is important to use the cheapest crowdfunding avenue possible because most often, you are going to be delivering the audience. If you don’t think you have a strong audience, take a step back and see if you can rework your network to get more established. Once you have a stronger audience, go back to the idea of launching a crowdfunding campaign.
- Marketing Strategy- Share the creative journey with your ambassadors and supporters. You need to have a marketing plan in place before launching a campaign to ensure that you can properly market your idea during and after the campaign.
- Funding and Cost- There are three different crowdfunding options you can choose from when selecting a campaign. Be sure to select the one that will benefit you the most. When it comes to cost take into consideration time and marketing.
- All or Nothing- If your campaign doesn’t make it's goal, all supporters get their money back. This option can motivate supporters to share your campaign with friends. However, this method is high risk and expensive. (Ex- Kickstarter)
- Tipping Point- Your campaign needs to reach x% and you get to keep what you make. If it doesn’t reach x% you lose the what you make. This option can motivate supporters to share your campaign with friends. This is the least expensive method but still has high risk. (Ex- Indiegogo)
- Get What You Raise- Whatever you make on your campaign, you keep. This method is more expensive but has less risk. It doesn’t have the competitive feel that All or Nothing and Tipping have.
- Rewards- Rewards in campaigns are important because they encourage someone to donate. For example, if you are selling a product related to coffee, you might offer an award of two bag of coffee for every $25 donated. This way, the donor will get something, regardless of the success of the campaign.
- Value- What’s the value of using a crowdfunding campaign that brings an audience vs what’s the value of just getting the money? Whatever amount you want to raise by doing a campaign, you should assume it will cost 20% of that money raised.
Posted: November 10, 2015, 9:29 AM
