Sep 08

Crowd Funding – Yum Yum!

final logo new small-01The recent spate of cooking shows on TV has us all gastronomically aware with our senses heightened to all things culinary. Everyone now strives to be a master chef, with even the time-poor among us seeking to eat better and more nutritiously. Overlay this with the amount of chefs, both proven and aspiring, that are out there seeking to make their stand in the world of food, and the environment is set for them to really utilise crowd funding to get a strong foothold on the funding they require, as well as to supply them with their first customers.

Aspiring chefs usually have a number of projects on the chalk board for which they require funding. Whether it be to build their dream website, or to promote their services or event hold their breakout event, crowd funding offers chefs the funding mechanism they require to help them get underway. Most other traditional forms of funding would not support such endeavours without secure collateral, so crow funding remains the best, fastest, and most flexible option, not only providing the required capital, but helping to build the loyal and supportive customer base who will be advocates for the chef, as well as providing repeat business to sustain the venture’s sustained health and growth.

The project description allows the chef to detail their experience and let their audience know the styles of cooking in which they excel, or the qualifications they have attained in this field. It also allows them to promote their point of difference – whether it be their service or the style of cooking they provide. Finally, it allows the chef to explain their aspirations and outline exactly what they are raising their funding for.

And the rewards remain the best part. Those who are familiar with crowd funding know that rewards are often the inducements to get the crowd on board and to pledge their support. The old adage “the way to a man’s (or woman’s) heart is through their stomach” plays perfectly into the premise of crowd funding a chef’s aspirations. They can offer packaged meals (whether they be one off or an entire eating plan), or perhaps to cater for a dinner party for a nominated number of people. Pledges for lesser amounts or entry level pledges may include a small box of baked treats or sweet goods which may be sent through the post.

One of the common problems with speaking with chefs about such a campaign is that their rewards are often originally geographically bound, meaning that they offer rewards that can only be delivered to their local market. The key to increasing the potential market for the chef’s crowd funding campaign is to offer rewards that can be sent further afield. Perhaps the chef could offer writing a custom menu for those who pledge support, or they may have other more famous chef friends that might sign cook books for them – such rewards in limited supply can fetch a handsome amount from potential project supporters. Campaigns can also be thrown open to a global market, by offering personal cooking classes on Skype, especially when offered with some form of unique twist based on cuisine or cooking style.

So chefs – get cooking. The time has never been more perfect for you to start playing with the ingredients of a perfect campaign that will rise like a soufflé and provide you with the funding you need to achieve your projects and dreams.

Aug 28

Crowd Funding – Bridging the (Medical Benefits) Gap

final logo new small-01There has been a lot of noise in the press lately about the government tightening its purse-strings and the effect on public health care as the current fiscal policy contracts. The gap between the amounts that doctors and hospitals charge and the amount that the government will cover is big and getting bigger, with moves being made to further decrease the government’s contribution to health care. But there is an answer, as crowd funding proves to successfully finance medical payments for those really in need.

The first ever successful campaign on iPledg was Help Barry. Barry had cancer and sought to head over to Germany for treatment. His initial goal was to fund the cost of travel, but given the wonderful support he received from family and friends by way of not just pledges but by them spreading the word through social media and email, Barry’s campaign was over funded and saw him well on the way to cover a genostics test to further help with his diagnosis and treatment.

The Rays of sunshine for Ainslie campaign helped Ainslie, who had been diagnosed with a complex brain tumour, travel from Perth to Sydney to meet with renowned brain surgeon Charlie Teo to assess and hopefully operate. With the duration of the visit turning out to be longer than expected, and the cost of accommodation, travel and the expense of the operation being more than expected, friends of Ainslie banded together to crowd fund the costs.  With the funding raised by this campaign falling reasonably short of their initial target, iPledg’s Tipping Point functionality really assisted. The Tipping Point sees the ability for a lower default amount to flow through to the project owner if they hit a much lower (pre-set) target. This unique functionality has helped campaigns on iPledg achieve a higher degree of success, which is particularly important to such health-related campaigns.

Choice for MaiaBrisbane mum, Rebecca, raised money on behalf of her 18 year old daughter, Maia, who  was diagnosed at age 16 with a high grade angiosarcoma of the left breast. She had already had a mastectomy and underwent radiotherapy to the area when, about twelve months later, Maia was diagnosed with secondary angiosarcoma on the lungs. She has multiple sites of cancer on both lungs. She underwent further radiotherapy, and chemotherapy, and is currently receiving a daily oral dose of a new and relatively untested drug which is intended to stop any more cancers from growing, but not impact on the ones which are already there.  Funding was raised for this life prolonging treatment, as opposed to curative measures. This was their only option under the current model of conventional cancer care in Australia. The aim was to raise $6,000 to enable Maia to take advantage of the GENOSTICS diagnostic testing as part of her treatment for terminal cancer. Fortunately, through engagement of a supportive community, family and friends, they achieved more than double their funding target, significantly contributing to her health care

Andrea is a sole parent to a beautiful 10 year old girl. Just when life was looking good, she was diagnosed with stage 3 colorectal cancer. The treatment for this condition includes 7 weeks of chemotherapy and radiotherapy, and then surgery, more before post-op chemotherapy and further operations. The whole process was estimated to require two years, during which Andrea would need to pay for her treatment up front, as Medicare would only partially reimburse expenses once Andrea had paid. Close friends of Andrea ran the campaign- Andrea’s healing journey – which raised $9,000 and helped Andrea bridge these costs.

Funding the gap between government reimbursement and the actual cost of treatment and care is not the only benefit of crowd funding when it comes to this sector. Rehabilitation and recovery, both for the patient and their family can be covered by crowd funding, and this is often as important as the true medical costs themselves. In his book, Will to Live, quadruple amputee Matthew Ames tells of his cancelled plans for the family trip to Disneyland due to what started as a sore throat resulting in the loss of all four of his limbs. He had contracted streptococcal resulting in toxic shock and was never expected to survive. Crowd funding could well offer a vehicle to get patients such as Matthew, his wife and four small children to bond and heal together by allowing them to live out such dreams. All it takes is the will to want to do it, and the committed team of supporters to make it happen.

 

 

Jul 30

Crowd Funding – The Most Accessible Funding Option for Start-ups

final logo new small-01The term “Venture Capital” is a misnomer. The reality of it is that the providers of such capital rarely “venture” but prefer the prospective investment to have momentum and a track record. Perhaps it should be renamed “Development Capital”. Similarly, banks and services like trade finance and factoring all require high hurdles to be jumped before funding can be facilitated. If you have big resources and big successes under your belt, you can raise big dollars, but what for start-ups? Crowd funding is continuing to prove itself the funding option of choice for the start-up community.

Atop the funding ladder is the Stock exchange where IPOs can provide large sums of funding for rapidly expanding ventures. But with considerable cost and high levels of probity, listing on the stock exchange is a world away for many early stage start-ups. As you move down the funding ladder, you find at the lower tiers such options as Angel investments which are relatively guarded when it comes to risk, and who will take a sizeable slice of equity in recognition of their speculative support. Governments have been subject to tighter purse strings so grant programs are becoming less available, and requiring a greater number of conditions to be met.

So there has been an increasing gap at the bottom of the funding ladder. There needs to be a mechanism for those who require small amounts of money, up to (say) $30,000 for very early stage seed capital, especially in the early days when a business is high risk and very speculative, and does not require the entrepreneur risk their own collateral, or need them to jump through high hoops. It is Crowd Funding that is proving to be the perfect solution to this gap at the bottom of the funding ladder.

For those who have no cash to put towards raising more capital, crowd funding is the perfect option. In most cases, posting a campaign on a crowd funding site like iPledg will cost you nothing. Furthermore, not only does it cost you nothing to start a funding campaign, if you don’t meet your funding target, it has cost you nothing to at least give it your best shot (which still gives you experience, exposure and feedback). And even if you do meet or exceed your funding target, the funding costs of a successful campaign can be covered by your funding target, meaning that capital raising through crowd funding will not cause you to ever reach into your own pocket.

Given there are no prospectuses to prepare, no lengthy forms to fill in, and no protracted application process to complete, crowd funding represents a quick format of capital raising to get underway. Once the campaign description is written, a short video is made, the gallery of pictures is uploaded and a funding target and timeframe established, most campaigns can be underway in a matter of minutes – far quicker that any traditional form of capital raising.

Apart from simply providing you with the money that you need to get your venture underway, crowd funding can also provide benefits that traditional capital raising could never offer. Many project creators recognise that a crowd funding campaign is an excellent way of making presales, offering the very product that is being funded as the rewards to those who pledge their support. In effect, the initial production being funded can be sold to fund the start-up. Successful campaigns also act as a form of market validation.

But even more importantly, the social proof offered by successful campaigns can often be more valuable to the project creator than the funds being raised. By the mere fact of a large number of project supporters pledging their support to the campaign, a strong message is sent to potential financiers, suppliers, distributors, partners, etc that this is a sought after product or service. Strong social proof will attract interest from a number of parties that may help commercialise and monetise the product on a more broad scale.

And when you take the whole concept of crowd funding to its full extent, it is all about engaging with the crowd, building your tribe, your community and followers who will not only become customers but advocates for you and your project. No other form of funding provides a capital raising facility at the grass roots of business, as well as a form of engagement that links start-ups closer to their potential markets.

Jul 13

Crowd Funding – Pledge or Investment, Understanding your Target Market

final logo new small-01Business 101 dictates that for any form of financial success, one must firstly identify their target market, and then understand the motivators to get the market to part with their money for the product or service generated by the business. The same can be said for those who run a crowd funding campaign, whether it ulitizes the pledge model or if it is for investment. Understanding the motivators is paramount to structuring a successful campaign and driving it to achieving the funding target.

Firstly, the pledge model. In many countries broad scale investment crowd funding is yet to be made permissible, so pledge model crowd funding is how many business now see they can get the seed funding they require to get moving. The pledge model means project creators cannot offer financial returns, investment, or equity as inducements for funders to pledge, so they need to get creative with their rewards, many opting for pre-sales at very attractive prices. The key motivators for the pledge model of crowd funding are quite clear and simple, and successfully tapping into these is the key to reaching and exceeding the funding target sought:-

  1. They know you and like you – The importance of “the first tier” or the family, friends and those closest to the project creator cannot be understated. These are the people that must first be engaged to give the campaign the initial momentum it requires. Usually, it is those that know you and like you that will simply support out of a desire to help the project creator get a “leg up” with their campaign.
  2. They are after one of the cool rewards – In the words of 80’s star, Gordon Gecko – “Greed is good”. Tapping into consumer greed and offering really cool, sought after rewards at great prices (or in return for a pledge that represents great value) is a proven way of getting the market engaged. This becomes a more “logical” rather than “emotional” strategy for getting funders on board.
  3. They are passionate about your cause or the outcome – Not all funders want a tangible return for their pledge. Many are good citizens who recognise excellent work being done to help animals, the homeless, the sick, etc and simply wish to help, and to see the stated outcome (some form of assistance or improvement to the situation) delivered to the person or group who is suffering, disadvantaged or who will ultimately gain by the successful outcome of the campaign and project.
  4. Social Kudos – People love to see their name in lights, in print, or (as has now been facilitated in the digital age) online. Public online recognition is enough of a motivator to get some people to pledge, especially if they see the person or cause to who they make their pledge as being one who will say good things about the funder, and say it “loudly” on social media.

Given the above summarizes the motivators for supporters of the pledge model of crowd funding, those that with to invest in equity crowd funding have a totally different set of expectations and requirements for them to part with their money.

  1. Team  – Investors want to see a strong team, covering all areas of strategic and operational management and involving experienced and credible individuals. Any gaps should be filled with a strong Board of Directors or possibly even supported by a committed Advisory Board.
  2. “Must have” solution – Backers need to be shown market relevance of the product, service, or business being funded. They want to see that the project for which funds are being sought will deliver a solution to big market problems.
  3. Customer validation and market traction – The likelihood of raising capital sought is largely effected by the progress that has been made by the entrepreneur. As the idea progresses from concept to proof of concept through to making sales, generating revenue and then profit, the “investability” increases as the market validates the need for the product and the ability for the company to make money out of the venture.
  4. Financial model and capital plan – A clear demonstration of how (and when) the venture will make money, and how much money is required to get there is paramount to showing potential investors that the way ahead has been carefully considered. Usually, such a plan will incorporate some form of business plan or road map to success.
  5. An ability to scale – Investors do not typically invest in businesses that are bound, geographically or in any other way that may hold back scalability. They like to see revenue targets projected for 3 – 5 years, and how the business will scale to have a broader (and more profitable) footprint.
  6. Clear exit – Those who invest are not going into the relationship to be there forever. They want to see how they can get their money back out, achieving a significant multiple of the funds they originally put in. Those raising capital need to outline their plans for a trade sale, MBO or PE exit for prospective investors.

Understanding the motivators for pledging or investing positions the person raising funds or capital to be able to write a good story that will resonate with their potential market, and it is this story, told well, to a large audience and with the right motivators or inducements that will lead to crowd funding success.

Jun 30

Crowd Funding – Funding Your Passion for Writing

final logo new small-01Recently we were invited to present at the Gold Coast Writers’ Festival, telling attendees about the great fit between crowd funding and aspirations of the writing fraternity. The response was overwhelming, and we have since been invited to speak at a number of upcoming writers’ events. The information most sought after was centred on what sort of projects could be funded by aspiring authors, and what sort of rewards can be offered. With months of research behind us, we are now able to clearly outline both of these, and summarise them below to assist writers all around the world.

At first glance, writers commonly identify the cost of publishing as being a project they could fund through crowd funding, but as you dig deeper, there are so many more initiatives that can be addressed. It is not just when the book is written that crowd funding becomes a possibility, but formulative stages of getting the book complete, correct and presentable to market can all be crowd funded. Even getting the author more educated or developing their skills – attending workshops and conferences, or even conducting research – these can all amount to considerable costs, all of which can be crowd funded. Once the drafts have been written, external expertise can be funded to appraise the work, edit the book, assist with the layout and even supply artwork for the cover or in the work itself.

Upon completion of the book, it is time to release it to the word to be judged as a literary masterpiece. The costs of self publishing or even releasing your work as an e-book can be borne by crowd funding. And as soon as the work is out there, launch events and all other marketing activities can be crowd funded so that the awareness of the published work can continue to grow.

You may have in mind the project you want to crowd fund, but how do you entice people to pledge their support? We researched books from all over the world that were crowd funded, and these are the rewards that were the best supported in the successful funding campaigns:-

$1 – You get the warm and fuzzy feeling of knowing that you’ve helped make the book happen and keep me and my family alive. You’ll become part of our community on LinkedIn and Facebook and get regular updates as the book progresses towards completion.

$2 – Get a shout out and thank you on my personal web site. Everyone who contributes $2 or more to the campaign will be the subject of a personal thank you from me via my own personal website

$10 – You can buy the electronic version of the book, as a pdf, epub and kindle (all three together).

$10 – You get a credit in the book.

$25 – Join us for beers and ideas! You’ll be invited to an exclusive invitation only event to talk with the author and a few select friends.

$25 – A signed copy of The Book. International Orders please add $10.

$25 – You will receive the paperback. This includes shipping.

$30 – A free limited edition print copy as it is released!

$40 – A signed copy of The Book plus a sketch of one of the characters drawn in the book.

$50 – You can get the hardback.

$50 – Every person who pledges $50 or more will be acknowledged in every single copy of the book when it is released.

$100 – You can get the hardback, and a question answered on my blog. 

$100 – Become a major supporter. Get your name in the book, get a personally signed free print and ebook copy and a personal thank you card from me that you can either treasure forever or use as a bookmark.

$200 – You can get the Group Discount: 10 copies of the book for your group to work from. You can add as many extra copies as you like for the same price: so eg. 15 copies would be $300

$250 – An original drawing of one of the characters from the book. Your choice, plus a signed copy of The Book.

$500 – You can choose 6 hardbacks or 12 paperbacks, get a 30 minute skype call, and request video explanations of any parts of the book.

$500 – Let’s have a beer or a coffee for an hour or two and about the subject of the book and about creativity. It’s my chance to say thanks and your chance to pick my brain and brainstorm, challenge or completely dismiss the ideas behind The Book.

$500 – The original cover art for the book. A signed copy of The Book, plus a sketch of one of the characters drawn in the book, plus your choice of 1 print

$1,000 – So, you really love books? For the princely sum of $1,000 you will get a hardback copy for everyday use, and a hand-bound hand stitched totally traditionally properly made copy that will outlast your great-grandchildren.

These are just some of the ideas that have been successfully used as rewards for writing-related crowd funding campaigns. But just as writing is a creative art, so too is the creation of a crowd funding campaign, so the two are well served to be combined for literary success!

Jun 04

Crowd Funding – The Australian Government’s Failure to Deliver is Starving Small Business and StartUps

final logo new small-01There is only one thing worse than inaction, and that is setting a promise, creating expectation and hope, and then failing to deliver. Add to that the act of removing alternative courses of action for the audience to whom you have made the promise, and it is an example of how to totally disenfranchise the group to whom you made your promise. That is exactly what the Australian government has done to the small business and startup sector with regards to equity crowd funding, and whilst it is hurting the sector, the true pain is yet to come.

In late 2013, the Corporations and Markets Advisory Committee (CAMAC) released a discussion paper on equity crowd funding in Australia, and sought written submissions about the matters they raised. They then promised to hold round table discussions with respondents in the first quarter of 2014 before settling the report. Well the sun is now setting on the second quarter, and as the third quarter dawns, we have little indication as to when this will be progressed and addressed (if ever).

Whilst our outlook is usually optimistic, this glum outlook is based on last month’s federal government budget, which included the axing of CAMAC. At the time of the budget being delivered, we were told that the government review of equity crowdfunding would soon be completed as the final piece of work before the Corporations and Markets Advisory Committee ceased to exist. At the same time, CAMAC executive director John Kluver said the review into crowdsourced equity funding was nearing completion. CAMAC was to report to government late in May and the report will be publicly available from early June, yet none of the respondents have been consulted or advised, so the process has been truncated, with critical engagement with the key stakeholders being seemingly removed from the process. And as at early June, none of the stakeholders have been advised that the latest deadline, that of CAMAC reporting to the government by the end of May, had actually been met or whether it was another disappointment of the failed process.

Repeatedly, the federal government has expressed they are open to enabling online equity-based crowdfunding in Australia to help encourage local tech entrepreneurs to stay rather than be lured to Silicon Valley. As a nation, we need to maintain our IP, and keep investment on shore. This is increasingly under threat as the rest of the world wakes up to equity crowd funding, while Australia continues to lose while they snooze. The talk last year of positive moves to equity crowd funding promised to retain wealth on our shores, and encourage entrepreneurship and job creation – all positive signs for Australians and the Australian economy.

There were also a number of related documents and discussions under contemporaneous consideration by the federal government, including:-

  • A submission from senior manager of regulatory and public policy at the ASX, Diane Lewis, which expressed concern about a “market failure” in Australia, where the venture capital market was not developed enough to fill the start-up financing gap, and where bank financing and public listings were not a feasible option.

 

  • Malcolm Turnbull, Communications Minister, was asked about the Coalition’s pledge to change rules governing employee share schemes, which make it unfeasible for Australian start-ups to emulate Silicon Valley players by offering stock options in lieu of high salaries to early-stage employees. His reply was clear – “We need to do more to encourage innovative companies in Australia . . . an obvious area is rectifying the anomalous treatment of employee shares and options in Oz”.

 

  • Last year, chief executives from Australia’s ­technology sector called on the government to speed up its ­deliberations on the matter, which have stalled since the Coalition won office last September.

It was the stalling that was creating anxiousness after the government promised so much. Their undertaking to address the matter, and CAMAC’s discussion paper on equity crowd funding in Australia, along with their promise to engage with the sector sent the message that they were serious about small business and start-ups. But since that time, we have only been delivered two things – inaction, and then the axing of CAMAC. Add to this the axing of other federal government assistance programs for small business and start-ups (such as Commercialisation Australia) and we find ourselves in a vacuum of disappointment, with even more motivation for innovators to head off shore to satisfy their needs.

At a time when there is such a thirst for small business and start-ups to receive a mechanism to raise funds, coupled with a government desire to divest themselves of funding programs and risk, there has never been a better time for the Australian federal government to address the issue of equity crowd funding, and for them to permit equity crowd funding to become permissible under law in Australia.

May 25

Crowd Funding – hints and tips to pre-launch marketing

final logo new small-01Crowd funding is all about preparation. Regardless of the efforts during a campaign, unless you have the necessary preparation in place, the hardest of work during a campaign can all mount to little. Like the army who amasses, trains, and focuses, crowd funding is more about what you do before your campaign begins rather than what you do during the funding timeframe. Whether it be the pledge model, or for equity crowd funding, if you build the crowd and engage them early, your chances of crowd funding success are greatly increased.

If you have ever watched street performers, the really good ones, they have mastered the art of building a crowd. They create a noise, then they engage the first followers to make more noise. Collectively they do all they can to attract others, and once they have critical mass, the show begins. Nothing starts until critical mass is achieved, because the performer knows there is no show without an audience.

The same can be said for crowd funding. Before any crowd funding can begin, the project creator needs to have a crowd to whom they can send their message, a crowd to engage, and the followers who will become part of the movement to spread the word. It is essential, in the modern age, to build a social media following. Twitter, Facebook, Linkedin, Pinterest, Google Plus are amongst the leading social media platforms, and anyone contemplating a campaign needs to ensure a solid following on these. As a rule of thumb, 10% of your total networks will pledge to a robust campaign. Starting with good numbers on each of these platforms will give you the greatest chance of success.

Blogging is also a great way to engage and build a bank of followers. Starting a blog related to the theme of the project you wish to fund can build your tribe around you. Some people, however, find writing and creating a blog too hard or out of their comfort zone. In this case, joining blogs, making comments, interacting with other participants on the blog, and getting to know the creator of that blog can all be helpful to building a following and engaging other likeminded people who may help you fund your project.

Some of the more “old-school” or traditional methods of building a crowd and engaging, and bringing people on board should not be discarded. An email database, pulling together everyone with whom you have ever interacted, is a good way of “talking” directly to an audience. Given you have interacted with them before, there should already exist a degree of familiarity and trust, so it is a good base to build on, letting them know of your planned campaign, and asking them to get on board.

And if you want to go even more old-fashioned, try actually talking (yes, chatting in a verbal way) with people and letting them know what your planned campaign is all about. Get them to share your excitement early. Work mates, college friends, sporting buddies, and even neighbours – tell them all about what you are planning and get them to come along for the journey.

There are various other tools that can help you engage an audience broader than you ever imagined. “Crowd speaking platforms” such as www.thunderclap.it can amplify social reach and help get your proposed project out to thousands and even millions of people. Setting up a Thunder Clap can create a wave of attention and help your followers engage their followers, and have everything ready to go before your campaign begins, giving you a massive audience ready to join you at the starting line for your campaign. Along with Thunderclap, there are a number of other platforms that can help you reach out to a broader audience. Sites such as http://www.pitchfuse.com/, www.CF4ALL.com, http://www.crowdfundingpr.org/, and http://launchrock.co/ are all good tools for building a following prior to launch.

Part of building an audience is to have a planning session. If you are working solo, it is a quiet moment to work out who you could reach out to. If you are fortunate enough to have brought on friends or a team to assist you, this is a great think-tank session. Work with your volunteers and build them into your super-fans. Sit down and work out all of the people you can reach. It may be the people you know, are in your various circles, or people you have some form of interaction with. Your potential audience could then broaden out to suppliers, possible partners, potential customers, and likeminded groups. It is not about just who you know, but who could be interested in what you are doing, and this could come from many different areas. Make a (long) list of all of these people, and work out how best to talk with them (email, social media, phone call, etc). Then you can go about engaging them before your campaign begins.

Given that building your audience involves not just your first tier of fans, but the “friends of friends” and beyond, see if you can connect with anyone who is well known or a celebrity. We are not referring to Hollywood A-listers (although that wouldn’t hurt), but local celebrities, or those who are well known in industry circles related to the nature of your project.  Ask them to say nice things about your project. As with all announcements, don’t just make it about the money, but focus on the desired outcomes and the benefits these outcomes will bring.

And in the final days prior to your project going live, invite your followers to preview the project in VIP mode, giving them a special taste of what your project will offer.  Giving them a sneak peek and perhaps a special incentive for early adopters and first followers (making sure you tell them exactly when it is going live) will allow your project to fly from the moment it hits the pages of our chosen crowd funding platform.

Author, Bryan Vadas, is co-founder of iPledg as well as director of Time Masters (Australia) who are accredited capital raising sponsors with ASSOB. Contact him now if you are interested in either, or if you wish to deal with a single point of contact to take you from pledge-model through to investment crowd funding. This is the only place that can transition you through the whole process.

May 07

Crowd Funding – Pre-Launch Marketing is the Key to Success

final logo new small-01They say that experience is the best teacher. Having recently discussed with a number of project creators the reasons they thought their projects did not succeed, they almost unanimously said it was due to a lack of pre-launch marketing. This point of view supported by the fact that when, at first, crowd funding campaigns don’t succeed, pre-launch marketing seems to be the factor that brings them home when they do try again. Just like Hussein Bolt, it is a matter of practicing and positioning, being prepared, and working the crowd before the gun goes off and the race begins.

The formula for crowd funding is as exact as a recipe for a cake – get the ingredients wrong and you risk ending up with something unpalatable. But follow the steps that have successfully been adhered to in the past, and the expected results will come. The fundamental key is momentum, so getting movement happening before launching is paramount to success. People will only follow if there are “first followers”, and these will come from the immediate circle of the project creator. He has the ability to engage them before launch, giving the campaign “life” as soon as it hits the crowd funding platform.

Previous studies prove the fact that campaigns need early momentum to succeed. Campaigns that started with 0% funding at launch showed a 15% chance of success. However, with just a little work, those project creators that went about seeking support prior to launch, and achieved just 1% funding shortly after commencement of their campaign lifted their likelihood of success to 27% – almost doubling their chances of meeting their target. Extrapolate this out, and you will find that with just 5% of funding pre-committed, the chances of success were now 50%. Something magic then happens at achieving 35% of the funding target, at which point campaigns starting with this percentage of their target pre-committed or pre-funded met or exceeded their funding target in nearly every instance.

The concept is similar to when we were younger and stood on the edges of the local swimming pool. Everyone jostled and elbowed each other to jump in the water, but no one wanted to be the first to jump in. However, once the first couple of brave souls dived in, others quickly followed, and soon it was no longer “cool” to be left standing on the water’s edge. If we could start this scenario again by having a couple of those kids primed to run from the dressing sheds and jump straight into the water, then we would eliminate the loss of precious time standing on the edges waiting for the “early adopters” of the idea to dive on in.

The pre-commitments, the first followers, and the validators signal to the rest of the crowd that it is alright to follow. It takes away the nervousness, and gives comfort to the second tier (the first tier being the friends, family and close associates of the project creator – those who were relatively easy to engage and get on board as supporters for when the campaign initially launched). The second tier or “friends of friends” then becomes a natural extension of the initial momentum. The second tier is also larger than the first tier, given that each of the first tier has as many contacts as the first tier itself – the spread then becomes exponential. By the time the campaign is exposed to the third tier (the greater internet audience), the audience is huge, the story is completely validated by the support it has received, with the inertia carrying the funding campaign at pace to the target and quite often well beyond it.

The concept of priming the crowd “in the sheds” (to use the above example) is the key to successful crowd funding. Have the leaders lead the way, and the first followers closely on their heels. Create momentum, and others will see the movement, hear the noise, and take note, many of them jumping in to join the crowd. Do not allow your crowd funding campaign to experience a standing start, as you will use up too much of your precious campaign time trying to create inertia, creating the risk of running out of time. Put the effort in before your campaign goes live, show early signs of life and success, then let the crowds see the movement – they will be sure to jump on board.

Next week – we discuss successful and proven hints and tips to pre-launch marketing

Author, Bryan Vadas, is co-founder of iPledg as well as director of Time Masters (Australia) who are accredited capital raising sponsors with ASSOB. Contact him now if you are interested in either, or if you wish to deal with a single point of contact to take you from pledge-model through to investment crowd funding. This is the only place that can transition you through the whole process.

Apr 23

Crowd Funding – Safe, Efficient, and Effective Fund Raising for Schools

final logo new small-01Schools are constantly in need of funding to provide the best facilities and experiences for their students. Whether it is sporting equipment, shade for lunchtime seating, props and scenery for the school play, sending students to participate or compete in an event, or any of the many projects schools constantly have in process, there is a never ending need for funds to supplement the governments decreasing bursaries. So is it any wonder that crowd funding is now being seen as the most effective answer to schools obtaining the funding they need, and at the same time engaging the school community.

The current fund raising options are becoming tired and enthusiasm is waning as the efforts required for traditional fund raising far outweigh the funds raised. Selling fund raising chocolates ties up precious family time, and is also seen to be dangerous (allowing small kids to door knock and approach strangers on their own). Not to mention that it is usually the family of the child that ends up purchasing the chocolates themselves, and ending up with sweet treats way beyond the craving of any sweet tooth.

Fetes and other fund raising events require a mountainous effort by a few dedicated souls, so such forms of fund raising usually turn out to be quite inefficient. Seldom do any of the initiators of such events return for a second attempt, which is an indication of the difficulty associated with running them. Schools also need to contend with the fact that the great efforts to stage such an event can be undermined quite quickly by poor weather which can turn the best of intentions into a total wash out.

Crowd Funding now offers schools a quick, simple, and efficient way in which to raise funding for their projects, and astute schools will be quick to adopt regular or rolling programs to continually fund the projects that keep presenting themselves. Loading of a project onto a crowd funding site like iPledg takes just 10 to 15 minutes, and then the school can be raising funds. Communication to “the crowd” and continually driving the message takes no additional time to the standard day-to-day activities of the school, as informing the crowd is as simple as mentioning the campaign in newsletters, at assemblies, and in the regular forms of constant communication that schools undertake.

And there is such a crowd already in place at most schools. There is a broad audience with whom schools engage every day – parents, students, former students or alumni, local residents, sporting and special interest groups, and Parents and Friends Associations. Each of these simply needs to be made aware and constantly reminded of the campaign through the regular course of communication. Asking them to have a look at the project, to pledge their support, and to continue to spread the word to their networks allows for hundreds, if not thousands, of people to get involved and support the campaign – far more than any traditional forms of fund raising used by schools in the past.

At first glance, some schools may struggle to see what rewards they can offer to those who pledge support, but quickly one realises just how many rewards schools can so easily offer. Preferred seating at performances or sporting events, treats from the school canteen, or recognition through naming rights or mention on an honour board are just a few creative ways of rewarding those who pledge their support. Further engagement with the community can be achieved if some of the parents offer rewards from their businesses to those who support the school’s campaign, thus giving greater inducements to pledge.

Currently iPledg are looking for 3 schools to undertake a pilot program to show just how wonderful and successful crowd funding can be for schools. iPledg is not only offering to waive 100% of their success fees, but are also offering tailored and personal mentoring for the schools who opt in for the program, so they will guided and assisted through every step of the program, from designing the campaign, to promoting it, and to how to best wrap up a successful campaign to ensure maximum support the next time a campaign is run. If your school is interested, email now and start crowd funding your school today.

Apr 09

Crowd Funding – The Perfect Video for Commercial Projects.

final logo new small-01Whether the project in question is seeking funds from a pledge-model crowd funding platform or through the investment route, a pitch video doubles the likelihood of achieving the funding target. Not only does it let viewers see your authenticity, personality and passion, it allows the project creator or issuer to convey the message and to get buy in from potential backers. With the average drop off time being 40 seconds, it is critical to engage the viewer by then, and make the 2 – 4 minute video as effective as possible. These are the elements for a successful pitch video.

Many successful campaign videos employ the simple IDEA principle – Interest, Desire, Enthusiasm, Action. This is the formula used by infomercials and whist they are criticised for being an interruption to pleasant television viewing, one cannot dispute that they are highly effective in engaging viewers and turning them into customers. They create interest by highlighting the problem faced by consumers, and then solve the problem with the solution they have created, building desire and enthusiasm in just 30 seconds. They then close with the call to action – “call now”, and the urgency to act now or miss out – a simple strategy evoking complex psychological triggers. Therefore, it is essential that a good campaign video starts with the problem which exists and then provides the solution that the project creator has devised.

The Elevator Pitch

The elevator pitch then makes for the body of the pitch video. A simple formula for this is to explain who the product is for, and the market alternative or gap in the market with which they are currently dissatisfied. The next step is to explain in just a few words what the product is (for which the support or investment is being sought), and the problem solving capability of the product. To underscore and further emphasise the problem solving capability, comparison should be drawn to the current product alternative that does not deliver the same result. The final step is to summarise what it is that the project will provide by stating the key whole product with features. This should all be captured in a sentence or two which forms the elevator pitch.

For example – For time poor people who are dissatisfied with the way in which widgets simply break under the slightest pressure at the worst possible time, our Super Widget product will not break as soon as you exert force on it. Unlike Cheapo Widgets, Super Widgets are indestructible and will provide you with a lifetime of worry-free use.

Keep in mind, when writing your elevator pitch and explaining the benefits, consumers only ever seek one or more of the six psychological buyer benefits – Safety, Performance, Appearance, Comfort, Economy, and Durability. Understand your market and realise which of these six benefits your product delivers, and you will have more success in connecting with your market.

Your Team

A pitch video is a great visual medium for introducing your team. Tell the viewer all about the qualifications and achievements of each member of your team, emphasising those that relate to your project. People invest in teams even more than in an idea, product or concept, so ensuring that you build the viewer’s confidence in the team’s capacity to execute is key to securing investment or support. If you have an advisory board or external team members, introduce them to supplement the skills of your team, and again build the story around how your (extended) team has the ability and experience to deliver the product as well as the return for which the viewer could potentially invest.

Milestones

In addition to the achievements of the team, people like to see that the company is advancing, and progressing from the initial idea. Any milestones achieved by the company should be articulated, stepping through from concept to prototype to production, commercialisation, revenue and profit, obviously stating those that are appropriate, and being very accurate and truthful as to where the company or product is up to. And contracts that have been won, or nominations or awards received are also noteworthy, as is any publicity or mentions in the media.

The Need for Funding

A high percentage of pitch videos do a wonderful job of explaining the company, the product or the service that is on offer, but fail to address the issue for which the video is actually being made, and that is what the funding will be required for. Be sure to give viewers an overview as to what the capital will achieve, and why the company is raising the funds. Explaining what will be achieved by the support of the viewer will help engage them, and make them want to be part of the journey.

The Investment Opportunity

Most project supporters and investors listen to just one radio station – WII-FM. This stands for “What’s In It For Me”. Be sure to spell out the investment opportunity or return they could enjoy, or at least let them know where they can find your offer document to learn more. Understand that investors are motivated by the return on offer, how it fits with their risk profile, and how they can get their money back out. Explain it to them, or at least tell them where they can find out more, and you have a good chance to secure their support if the opportunity aligns with what they are looking for.

Endorsements

Pitching for support or investment is all about familiarity and trust. The same can be said for when major companies seek consumer support or loyalty, and that is why they use high profile individuals to add character and credibility to their brand, service or product. In a pitch video, issuers and project creators can do the same if they can obtain an endorsement from a high profile person that will support and enhance your brand. To have them appearing in the video and saying just a few words backing the company or product will immediately advance your position in the mind of the potential investor or supporter.

Call to action

The purpose of the video is not simply to make everyone feel good or to just let them know more about your company or project, but to seek investment or support from the viewer. Once you stepped through the stages above to generate interest, desire, and enthusiasm, the viewer then needs to be shepherded into the final stage which is action. What is it that you wish them to do? How do they do that? You need to clearly spell out how they can find out more or how they can pledge their support. It is all about helping them get to the destination where you wish them to arrive, and that is to provide you the funds you need to proceed.

And Remember….

There is a lot of information in the steps above, and the challenge is to put all of it into a short, concise and precise video. It does not have to be a Steven Spielberg production – it is all about quality not quantity. The pitch video should not be too long, remembering that you must engage them within the first 40 seconds or they will drop off. People are viewing it on the internet, so any longer than 3 – 4 minutes and you will have little chance of them viewing it to the end. Sesame Street’s success was based on changing the scene every 8 seconds to keep the viewer engaged, and this has shaped many of our viewing habits. Comprehensive, yet not too detailed, and without becoming disjointed – that is the key to a great pitch video.

Author, Bryan Vadas, is co-founder of iPledg as well as director of Time Masters (Australia) who are accredited capital raising sponsors with ASSOB. Contact him now if you are interested in either, or if you wish to deal with a single point of contact to take you from pledge-model through to investment crowd funding. This is the only place that can transition you through the whole process.

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