Aspiring entrepreneurs face new challenges in the new economy: credit card limits are down, banks are stingy with loans, grants are harder to find and odds are that once-rich uncle is now underwater on his mortgage. Put simply, once reliable shortcuts for startup funding aren't so reliable anymore.
But in some ways, startup funding is actually more accessible now thanks to social networking and crowdfunding platforms that match amazing new ideas with people who want to be part of the next big thing.
At IndieGoGo, we connect aspiring innovators and creators -- inventors, entrepreneurs, restaurateurs, designers -- with the millions of people worldwide who want to be a part of exciting new ventures. Anyone can create a campaign to fund any dream, any passion, any idea that just needs some capital to get started.
The secret to creating a dynamic campaign that engages people is appealing to their sense of inspiration while providing confidence that the funding idea is viable. And providing perks -- a sense of membership and participation -- also goes a long way to encouraging potential funders to plug in their credit car numbers.
A successful crowdfunding campaign should include six actions:
1. Create engaging video
Explain how the funding will be used, what perks supporters will receive for their participation and why the underlying idea is viable. We've seen that campaigns which include video receive 122 percent more funding than campaigns based on text alone.
With a new product, it's great to illustrate features via video, just as the creators of the XStylus Crayon for the Nintendo 3DS did to show how their tool could enhance the gaming experience.
2. Identify exciting perks
Provide a sense of exclusivity while also showing a real appreciation for a funder's participation, whether it be a significant discount, early access to a limited edition product or a meeting with the founding team.
The Walk In Love Store offered supporters a variety of perks, including t-shirts, stickers, custom prints, blog redesigns and a Smilebooth party.
3. Set up tight deadlines
The deadline for funding small business campaigns should be no more than two months. Some fund-seekers are eager to keep the door open, but the reality is potential supporters respond best to the confidence that a tight deadline demonstrates.
Instead of using all 120 days available to campaign, Satarii utilized only 60 days to target their goal.
4. Make it a team effort
Starting off a solo campaign may seem sensible, but actually campaigns with at least four people on the team outperform solo ventures. That's partly because teams bring to campaigns wider social networks. Indeed, on IndieGoGo teams raise 70 percent more than ventures with just one person involved.
Consisting of six team members, the in.gredients campaign is well on its way to funding its endeavor for a package-free grocery store.5. Share, share, share Once a team has assembled and developed an engaging campaign, team members need to activate their connections through social media. A robust online presence gives a project energy and jumpstarts participation. Beyond traditional use of Facebook, Twitter and YouTube, specific tips include:
- Sending personal emails with a direct ask to your friends and colleagues
- Making sure personal emails -- even those not directly related to the project -- include an email signature that reminds people what you're doing, and how they can help your venture
- Staying in touch: campaigns that provide more than a dozen updates win 60 percent more funding than those providing only a few updates
- Spreading widgets on personal blogs and via emails that link back to the campaign and contain progress updates
- Responding to comments and questions on the campaign site and across social networks allows people to connect with the creators and helps them decide how or why they may want to support
While going wide provides campaigns with a broad base of potential funders, it's essential to pay special attention to the audiences that are most likely to care about what the campaign creators are trying to accomplish. That starts, fundamentally, with the people who care most about the creators: family, close friends, Facebook friends and personal contacts. People observing the campaign will be more likely to provide their support if they see that those closest to the creators have already done so.
San Francisco-based Mission Cheese received contributions from 130 sources after sharing 250 regular updates on their progress.
6. Start the PR snowball
The next step to pushing activity is PR and reaching out to bloggers who are influential in a campaign's topic area is key. Prove to them why the campaign is worthy of support and they can amplify its message to audiences previously untapped. Then do the same on Twitter with influencers.
As a campaign gains support and word-of-mouth on IndieGoGo, we use a custom algorithm to determine its "GoGoFactor," which helps discern which campaigns are promoted on the homepage, the site's blog, or in media. The factor takes into account funding, comments, shares and other campaign activity -- the democratization of startup funding in real time!
After fastidious outreach to the tech blog community, tech blog Gizmodo.com covered eMAKER, which increased the startup's funding 10x.
IndieGoGo has provided millions of dollars in funding since its launch in early 2008, with thousands of startups born on the IndieGoGo platform.