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The Crowdfunded! Kit
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!Your Free Gift !As a way of saying thanks for your purchase, Im offering a free email course thats exclusive to my readers. !You have a big crowd funding idea? Thats great! But youll have to make sure that there are people out there wholl want to buy your product. Thats why I made the course: 5 Ways To Get Users For Testing Your Crowdfunding Idea. !This 5 day email course will show 5 methods that you can use to find out from people if theres demand for your product(or not). Knowing this will save you the risk of a failed product nobody wants to buy down the road, as well as pre-cious time and effort. You can join this email course course by going here. !!!!!!!!!!!!!!
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! Table of Contents
Before You Launch On Crowdfunding First Things First
!The Launch Plan Prepping For Launch The Art of Prelaunch Marketing The Main Launch
!After The Launch Post-Launch
!Case Study: Duet Bluetooth Tag 3 Frequently Asked Questions (FAQs) The Crowdfunding Toolkit About the Author !!
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Before You Launch
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!On Crowdfunding Launching a crowdfunding cam-paign is the single most exciting thing that Ive done this year. It has given me the confidence to step out and launch my own business. Could crowdfunding do the same for you too?
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The Crowdfunded! Kit For Startups is your trusty companion guide for exe-cuting successful crowdfunding campaigns, and that guide has a real-world parallel. It is that planning, marketing and operating a crowdfunding cam-paign is akin to the preparation needed for a long-distance marathon. After all, a successful campaign also requires proper preparation just like how all marathon runners do. ! Three elements one, an easy-to follow launch strategy; two, the right set of tools to implement that strategy; and three, taking actionare the very things needed to finish your crowdfunding marathon well. Of the three, the third, taking action is the most important, because it is the purpose why youll even need the first two at all, and that will set you apart from the le-gions of wantpreneurs out there who only read and talk about crowdfund-ing, but still have not taken the leap of faith yet to pursue their dream project. ! But the good news is that after reading this guide, chances are youll come away with a Can-Do spirit! Its my hope that youll feel more confi-dent than ever to get out of the room, and get your idea Crowdfunded! on the world stage. After all time is money, and each day that youve not launched, you are potentially missing out anywhere between $1000-$10,000 in crowdfunding dollars. And I dont want you to miss out on your dreams. Which is why Ive put this step-by-step guide together to help fellow startups like you save time, launch faster, and raise big bucks. ! Page ! of !6 172
Along with an introduction to the launch strategy, this guide offers bat-tle-tested tips, best practices, and resources for putting together the pieces of a successful crowdfunding campaign. ! The guide is segmented into Before You Launch, The Launch Plan, and After The Launch sections and includes case studies based upon my experience running a successful Indiegogo campaign. It may also reference wise words of advice from other successful project owners. The guide closes with a case study of the Duet smart bluetooth tag project (a campaign I ran which raised $106,830), a list of Frequently Asked Questions (FAQs), as well as a rolodex of helpful resources in the Crowdfunding Toolkit. ! Whether you are completely new to this, are planning to launch one soon, or have previously launched a crowdfunding campaign before, this book is written for you. Empowered with a winning strategy and the right tools at your fingertips, you can now run your crowdfunding marathon in such a way that you finish well; and be able to say at the days end: ! I have been Crowdfunded! ! Ready to get started? Lets dive in!
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What This Book Is About !
What It Is This is a step-by-step roadmap for planning, marketing and operating a suc-cessful crowdfunding campaign. My goal is to equip you with only the neces-sary, no-frills knowledge to run a crowdfunding campaign. All other irrele-vant information is noise, and has been omitted. ! You will learn actionable crowdfunding strategies that can be applied for your campaign, as well as hands-on tactics to implement those strategies delivered via video lessons (thats if you bought the higher priced versions of The Crowdfunded! Kit). !What Its Not Because this book focuses almost exclusively on planning rewards-based crowdfunding campaigns, it is not meant to be a general overview of the overall crowdfunding scene. Put simply, rewards-based crowdfunding is where individuals and companies seek financial contributions in order to develop and launch a new product, with the contributors receiving some re-ward (such as a T-shirt, or the product itself) in return. That means other crowdfunding models (i.e equity-based, donation-based, lending based), the JOBS Act and other regulations will not be discussed in this book. ! Also, you have my guarantee that this is not one of those books out there that simply regurgitates info thats already on Google. Its a tried and
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tested system that works based on my prior experience running a crowd-funding campaign. !If you follow the steps outlined closely, put in effort, and not give up so quickly, youll have a high chance of success! !How Do I Start? I recommend that you begin by reading through this entire book once through to familiarise yourself, and then internalising the section on the Launch Plan Overview. !
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Launch Plan Overview !A Plan Makes All The Difference When I was a commander in the military, I often had to navigate around dense forests with nothing more than a map and a compass. Before every ex-ercise, our team of soldiers would plan the path to the objective and accom-plish our mission. But the most painful part of planning was that 80% of the time, things didnt go as planned! And I often thought to myself, why bother planning then, when the world is so unpredictable? ! The answer is because the process of planning increases our chances of success by more than 1000%. Even a plan that doesnt work, still increases your chances of success 10 times more than not having a plan at all. The simple reason is because a plan lets us study the options and the situation. And when changes need to be made, we can always respond based on our initial plan. ! A good crowd-funding launch plan makes the difference between rais-ing just enough funds to afford a week of Macdonalds, versus a significant amount of money to put your idea on the factory line. And quite naturally, most will want to follow a tried and tested plan that works. !
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Fail To Plan, Plan To Fail
! Below are the different stages your crowdfunding roadmap that will guide you through the entire journey:
!1. On Crowdfunding - Introduces crowdfunding and also sugges-tions for how to get the most out of this kit. Itll also show you the en-tire roadmap that well be covering in this kit. !2. First Things First - Five very essential things that you should do before you dive into the nuts and bolts of setting up a crowdfunding campaign. Reading through this and doing the included exercises will help save you a lot of time and energy later on. !3A. Prepping for Launch - Four key things you must prepare for setting up your campaign page. Making a good video, planning re-ward perks, setting campaign goals, and writing the pitch copy will be covered here. Also, Ill show you how an ideal revenue curve looks like, and how you can achieve it. !3B. The Art Of Prelaunch Marketing - The meatiest part of the entire kit. We'll spend lots of hands-on time looking at creating mar-keting buzz, and building up your audience. Without an audience, your launch will struggle to get off the ground. !4. The Main Launch - Well look at how to bring that first pledge in, as well as how you can maintain the relationships with your project backers. We'll also discuss how to defeat that inevitable mid-campaign sales 'slump' monster. !
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5. The Post Launch - You've finished your campaign and reached your funding goal. Now what next?
! A point to take note: Prepping for launch (3A) and preparing for your Pre-launch (3B) are two activities that should be done together at the same time. A lot of crowdfunding projects do not hit their goals because they try to do everything first, but leave marketing their campaign buzz only to the very last part. ! Or worst still, they only start spreading awareness of their campaign after it has launched. By then its too late. ! Its likely that every person reading this will be at a different stage of planning their campaigns. So whether you are at the very, very early plan-ning stage, or are almost about to launch, theres something in this kit for everyone. !
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First Things First I know youre excited to jump right in and press the Launch button. But hold right there! Lets make sure we get our fundamentals cov-ered first.
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Customer Discovery !Warning: Be prepared to change or even drop your crowd funding idea af-ter this step. !All great crowdfunding campaigns begin with customer discovery. Simply put, customer discovery is about understanding your customer do they care? What do they care about? How much do they care? After all, your cus-tomer is the king right? ! So before you launch a crowdfunding campaign, it only makes sense to start understanding your customer right from the start. This chapter will show you how to go about finding who your customer is. But first, a true sto-ry. !
!Segway: Great product, but not a solution Have you heard of the Segway? If you havent, it is a self-balancing personal transportation device with two wheels, and it can operate on any level pedestrian environment. The Segway was built to be environment friendly, ease traffic congestion, and decrease air pollution who wouldnt want it right? Demand for it would skyrocket, or so Dean Kamen, its creator thought. !It turns out that when Segway was launched, they did not sell anywhere close to their target of 10,000 machines per week.
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ITS REALLY ABOUT THE CUSTOMER AFTER ALL.
!The main reason for this failure was because Dean failed to identify a problem before creating the Segway. Did he really expect people to ride an odd looking bike without trying or training? !In a bizarre twist of events, Dean himself died in 2010 after the Segway he was riding on fell off a cliff. !In other words, Segway was a great product, but not a solution. !
!The Same Principle Applies to Crowdfunding There is no shortcut. If you want people to open up their wallets, youve got to solve a pain so profound that they are willing to part with their cash. I will not mince the truth: customer discovery is hard, tedious, and often disap-pointing. You might find at the end of this process that your crowdfunding idea might not be profitable after all. But when you do find the Holy Grail of product-market fit, the journey is absolutely rewarding. ! I have to let you in on a comforting secret here: the people on crowd-funding platforms are very much more forgiving, and are willing to give you useful feedback. Think of crowdfunding as a platform where you can validate your idea on a mass scale, and where you can also do customer discovery. ! However, I think the power of crowdfunding platforms is much better realised if you do your own customer discovery first. At the end of the day,
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you want to raise big bucks right? So why waste the opportunity that crowd-funding offers to do customer discovery? !
Here are the 5 steps to perform customer discovery before you crowdfund. !
1. Write Down the Top 3 Hypothetical Pains that You (think) Your Idea Solves You start firstly with the top 3 hypothesis of customer pains you are solving. At this stage, you must treat every hypothesis as an assump-tion. Until youve tested the assumption, theres no way you can pre-dict what your customers want. So if youre selling a smart child-monitoring device, an example hy-pothesis could be: Most parents would like to know whats going on with their children at home with the baby-sitters. !Youll then test this assumption by asking actual parents questions based on that hypothesis to know whether its a valid one. For exam-ple, you might ask them the question: How often do you call back home from work everyday to check on the babysitter and your kids? and find that the majority call 2-3 times each day. This might signify that they have a strong concern for their kids at home, and youll know the hypothesis is therefore valid.
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2. Write Them All Down And Get Very Specific About Which Group Of Customers You Will Be Targeting The next step would be to ask: Who are my target customers?. List them down, and write out the specific group of people that you are targeting at. The trick here is to not be too general, yet not too nar-rowly specific with describing these customers. !Lets say you have a innovative idea for takeaway lunch box meals. People who like to eat food is too broad a category, while people who like to eat only spaghetti bolognese with beef is too narrow. White collar workers who work in the city, and takeaway their lunches daily from fast food chains sounds much better. !3. Find Out Which Wells They Hang Out At, and Go Talk to Them There Long ago in the ancient Middle East, guys who were looking for prospective, future wives would often hang out at the common town well in the evening. Thats because the evenings were the time of the day when the unmarried girls in the village would come out to draw water for their families and livestock. And what better place to chat up a girl, then when she was drawing water? !In the same way, once youve identified your target customers, youll then need to go and find them where they hang out, and talk to them. Which online sites do they frequent to read up about restaurants? What fast food chains do they visit the most? How do they order piz-zas? !You get the idea. !
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!!4. Listen Closely for Hidden Problems A story was told of Tom, a patient who complained of pains all over his body, and went to see a doctor. Any part of his body he pressed with his finger,he would have a pain in that part. This was what hap-pened in the doctors room: !(Doc presses Toms head) Doc: Does your head hurt? Tom: No. (Doc presses Toms shoulder) Doc: Does your shoulder hurt? Tom: No. !(Doc is bewildered, presses Toms left knee) Doc: Does your knee hurt? Tom: No. Doc: Can you press your head with your own finger? Tom: Ouch! Doc: Can you press your shoulder with your own finger? Tom: Ouch! Doc: Can you press your knee with your own finger? Tom: Ouch! Doc: Its your finger thats hurting, stupid! !This is a funny story, but it might astound you that like Toms finger, many customers do not know what real problems they have. Usually, customers will only be able to articulate the problems that they can immediately see and feel. But those may just be symptoms of a deep-
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er problem that is not solved, and might require more questions to dig out. Its often in the fourth or fifth question that that the real golden problem comes out. !Keep asking enough questions, and youll strike gold. TIP: Look out and take note especially for the exact words and phrases they use to describe their problems. This will come in very handy when develop-ing product messaging. Well cover that more in detail under Craft-ing Your Product Messaging. !5. Look for Product-Market Fit Once youve gathered the problems that your target customer faces, now its time to review them for product-market fit (and hopefully youve also studiously made notes). For each of those problems, does your crowdfunding idea address their problems and pains? !If you do find that your solution addresses most of their problems, then congratulations, you probably have a winning crowdfunding campaign! !But the likelihood is that on the first customer discovery run, you might discover your solution does not solve any of their problems/pains at all. What are you to do in this case? If its within your budget and capacity, you could modify your crowdfunding idea to address those problems and pains, and then perform the customer discovery process again. Otherwise, you should drop the idea and find a more workable one. !
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Whatever the outcome, customer discovery is a very useful tool, and it can potentially save you lots of unnecessary work and money down the road. !To further illustrate the customer discovery process in action, check out the Duet Case Study section.
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Crafting Your Product Message !One of the best things you can do in order to save yourself a ton of work later on in your crowdfunding campaign, is to craft your product message early on. Your product message primarily communicates an overall picture of the value you are offering to your customers. ! If you skip this all-important exercise, chances are youll find it hard to clearly articulate later on what value youre truly offering to your backers. And this doesnt help your funding goals. ! I shall be upfront here: there is a substantial amount of brain-juice re-quired for this exercise, and you might find it a rather dry activity. But Ive found that the exercise is similar to the process of mining for gold. Its labo-rious no doubt, but the more you keep working on those questions, the more you get to the deeper driving passion of what youre doing. Youll also begin to surface very precious customer insights that will help you to connect with your target customers. ! So Customer Insights + Driving Passion = Value ! The deeper you think through the following questions, the more value youll begin to extract from them. The value extracted can then be used to craft your product message. For a start, there are three sources you can look at to extract value. They are your Product, Customers, and Competitors. So find a quiet corner, grab a pen, and lets work through the following ques-tions together. Page ! of !21 172
The Best Products That Sell Are Those That Even Grandma Understands.
!Step 1: Value Extraction Start with Product
Why are you creating this product? Ask yourself: Why are you passionate about this? What inspired you? Are you passionate enough to work for free to create this? !What needs am i trying to solve? Its great to have a good idea. But are you really solving a real need that people face? !Why are those needs worthy enough for me to solve? Are the need (s) youre solving with your product truly big ones, or are they very minor? !Have I validated if those needs are real, or just something I think might be real? Do you have at least 10 people you can name off your head right now who have the need you are solving, and are looking for a solution? !
Then Customers.. Who is my initial target customer that has these needs Im trying to solve? While shell likely be your first funder due to compassion, your grandma is definitely not your first customer. Be specific about your target customers, and use customer personas to profile them (Cov-ered in Customer Discovery). For example: 25-34 year old, Tech-lovers, working in the IT line and loves beach wear.
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!What are the recurring emotional words or sentences that my customers use to describe their needs? (Frustration, Worry, Ruins My Day, Inefficient etc.) Youll need to find the emotional connection to your customer. And this is best done by using the emotive words that they use to describe their problems. To find this out, the trick is to observe and listen more than you talk around them. Ask them open-ended questions such as: -Can you describe a time when you needed to find your lost phone, but you faced a certain roadblock? -Can you tell me the feelings you had when you tried hard to recall where you last left your phone? !Then watch as they reply and pick up the emotional words. !Where will i find my first 10 customers? Where do your first 10 customers hang out online, and also offline. Youll have to be proactive about seeking them out at the beginning, because nobody knows what your product is all about yet. !Can you tell EXACTLY what your ideal customer values? Are you able to share with me what does your target customer value? What causes do they care about? What do they read? And where do they get inspiration to solve their problems? !!!!!
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What benefits will my customers get from using my prod-uct? In 30 seconds, you must be able to list out in bullet point length, not more than 3 ways that your customers lives will improve by using your product. !In what scenarios will my product fit into their lives? Can you describe how you foresee your customer using your product in their daily lives? Under what events or scenarios? !How and when will they use my product? What is the first thing theyll have to do when they receive your product in the mail for the first time? How should they do the setup? Also consider how the setup will be different if your product is a digi-tal product, or a consulting package.
!Then look at Competitors
Is there sufficient competition in your industry? If there are few or no existing competitors in your industry, its going to be difficult to build brand awareness, because you have to do much of the heavy lifting to educate people not just about your product, but your industry! As an example, think thermonuclear fission reactors vs wristwatches. !Who are my closest competitors? Who are 3 competitors in your space that you can emulate or draw ideas from? (i.e dont reinvent the wheel at the beginning) !What are the customer needs that they are solving? !
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What are the value propositions that they are offering to customers? In other words, what are they doing specifically to make their cus-tomers lives better by the day? By helping them save money? save time? or make money, feel cool, gain status? etc etc. !What can my product offer in value thats better than my competitors? And finally, youll need to analyse and determine your product differ-entiation. i.e Are you faster? Do you have the best service in the in-dustry? or have lots of social proof? Are you simply competing on price? etc etc.
!Step 2: Weaving Your Value Together Into A Product Message I hope youve extracted enough value from those questions. The next step requires you to consolidate, and rank all your answers by greatest impact. The winning value statements go into the following: !
What is your product? Self explanatory. No need to describe in detail here. !What is the key benefit provided? The most impactful benefit to your customer. !What is the key feature? The top function that helps achieve the key value. !What are 3 Core benefits to customer? The secondary ways that your customers life is made better because of your product.
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!!1. _______________________________ 2. _______________________________ 3. _______________________________
!Attention Grabbing Marketing Hook This is a sentence that triggers an emotional response from your cus-tomer. You craft it based on recurring emotion words or sentences that your customers tell you.
!Step 3: Re-package Your Product Message As A Painkiller Your product is either one of two things. It either a painkiller, or a vitamin supplement. A painkiller remedies a pain that people suffer from, and youll have no problems selling products that address pain. !An example of a product thats a painkiller, is the ubiquitous mobile phone most of us carry these days. Whether its an iPhone, or Android, we need a phone because its the only way we can stay connected to others over long distances. !On the other hand, a vitamin supplement enhances an experience. Growing up as a boy, my mother used to make me take Vitamin-C tablets daily. Vita-mins improve our health, and helps give an additional boost of important minerals, such as potassium, to our body. However, its possible for people to still go on with life and survive without vitamin supplements, as long as they eat healthy. A product thats an exam-ple of a vitamin supplement is Google Glass. Its a cool, and very futuristic mini-computer wielded onto a pair of spectacles. But even if you dont own one, its possible for you to still get on with life without it.
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!Whats the point of talking about painkillers and vitamins? In order for your product to succeed with crowdfunding, you should try to position your product and pitch it as a painkiller, even if its ac-tually a vitamin supplement. Many successfully crowd funded prod-ucts on Kickstarter and Indiegogo are really vitamins, but the mes-saging are pitched as painkillers.
!Lets learn from the following examples:
Pebble Smartwatch Pitch: Customise your perfect watch with apps, watchfaces, and notifications. !At the first glance, Pebbles messaging might come across as a vitamin. But if you read between the lines, it is subtly pitched as a pain to a specific group of people: early technology adopters. !These are people who want to be known amongst their friends as being cool, and at the cutting edge of technology. And so it feels like a pain to them, to be amongst the first in the world to !own a Pebble smart watch, which is more of a status symbol than a real need. !But Pebble is really nothing more than a watch that can talk to your phone. One can still survive with a normal watch. !!!!
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!!Oculus Rift Pitch: Step inside your favourite game. !Oculuss pitch is targeted at video gamers, and offers them an immersive gaming experience that has never been available before. Video gamers who have always wanted to engage deeper with their games might find that an Oculus Rift solves that pain. But do you really need to have a pair of VRglasses to be immersed into your game? Computer graphics and Hi-Definition screen resolution technology these days are already good enough to get people immersed in their games. !
Summary If youve read till here, youll probably find that this chapter has worked out your mental muscles quite a bit. Developing product messaging is not an easy skill to master, so dont worry if youre still unable to grasp the entire process just yet. It comes with time and more practice. ! To make things easier for you to follow, Ive attached how I went through the same process for Duet under Duet Case Study. Read through and familiarise yourself again and again, until you are confident enough to start.
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Types Of Crowdfunding Do you really need rewards-based crowdfunding? !When I first started out, all I knew about crowdfunding was that you only put down a pledge in exchange for a nice rewards (or perks). One day as I journeyed on with my campaign, Andrew Yanai, a nice business develop-ment guy from fundable.com got in touch with me. ! Being in a sassy mood, I said yes to a Skype call as he wanted to tell me more about what Fundable does. So we Skyped, and he begun by saying: Fundable is one of the worlds first rewards and equity based crowdfunding platforms. Equity crowdfunding? What on earth is that.. ! And it was that Skype session that opened my eyes to the bigger world of crowdfunding. I soon discovered that there was actually a very big crowd-funding ecosystem online that until that day, I had never even heard of be-sides Kickstarter and Indiegogo. Fundable, GoFundMe, FundedbyMe, Ra-zoo, Pozible, Crowdtivate, MedStartr the list goes on. ! As of 2012, there were about 450 verified crowdfunding platforms, and many more thousands of tiny, unknown Kickstarter wannabe sites. Basically I discovered that there was crowdfunding for virtually any industry you could think of: Medical, Agriculture, Service Businesses and even one for App Developers! ! And the other interesting discovery was that, there are many different business models of crowdfunding, namely rewards, donation, equity, lend-
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There Are Just Too Many Platforms Out There
ing or hybrid based platforms. None of these models is better than any of the others, as they are created to serve different purposes. It just so happens that the rewards based crowdfunding model is the most well-known of the lot, given that its catered for the mass market. ! So lets start by looking at the rewards based crowdfunding model.
!Rewards Based Crowdfunding Rewards based crowdfunding, also sometimes known as perks-based crowdfunding, is a model where contributors get no financial return for their donation. Instead, they are offered thank-yous, perks, or even an early ver-sion of the product/service being funded. This is often the case, as it is if you back a Pebble watch for $150, Pebble Corp sends you a Pebble in return. ! Though in its purest form, rewards based crowdfunding is meant to give project owners the initial seed capital for developing their first proto-types or manufacturing batch, it is often used as a channel for pre-sales in-stead. Service businesses also frequently delve into rewards-based crowd-funding, but instead offer experiences such as a free year of touring around the world, or discounts on their services. ! The biggest benefit of rewards based crowdfunding, is that project owners do not need to repay backers (unless of course they fail to raise the target funds if they chose Fixed Funding) financially. So unlike equity crowdfunding, you do not incur any debts at all starting on your new ven-ture. Youre only obliged to repay in terms of perks when its ready. !
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!Some of the most well-known rewards based crowdfunding sites are:
The poster child of the crowdfunding world, Kickstarter boasts over 9,000 active campaigns at any moment, and till date claims to have raised over $1.26 billion dollars in funding. !Kickstarters has a reputation for quality products, as well as a vast and extremely supportive base of backers. !But projects from outside non-English speaking countries are not able to use the platform at this point in time as they require campaigns to have an Amazon Payments account. !So that effectively excludes many deserving projects from around the world, though there are ways to workaround that. !Terms: 5% fee on total payments, plus payment processing fees (3% for each pledge). If funding isnt successful, there are no fees. !
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The second most well-known crowdfunding platform, Indiegogo has been trying to catch up with market leader Kickstarter. Unlike Kickstarter, Indiegogo practises a very liberal approach to what projects can/cannot be listed on its platform. Also, all youll need is a Paypal Business account to receive funds, and youre good to go. So Indiegogo makes it very easy for you to get your product to market quickly. !While the platform doesnt enjoy the same big base of subscribers that Kickstarter has, it has a has a top notch customer support team assigned to every campaign for assistance. !Terms: If successful 4% fee on total payments, plus payment processing fees (3% for each pledge). If funding isnt successful, there are no fees. Platform also offers option for Flexible funding. In Flexi funding, if funding is
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successful, Indiegogo takes a 4% fee, plus payment processing fees (3% for each pledge). If funding is unsuccessful, it charges a hefty 9% fee, plus payment processing fees (3% for each pledge), while project owner gets to keep the rest. !!!Pozible (www.pozible.com)
An up and coming contender for the throne, Pozible is catered more towards the creative arts community. It also has an interesting fee model. Besides the traditional all-or-nothing funding approach, it offers backers the ability to back campaigns via monthly payments, instead of donors forking out a lump sum. !Terms: 5% standard fees, 4% for invitations from previous successful project creators, plus transaction feeds - which range from 2.4% to 2.7% plus $.30 for each pledge. Pozible also accepts Bitcoin pledges and will pay in Bitcoins via Coinjar. !
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Equity based crowdfunding
!Equity Based Crowdfunding Honestly, Ive never dabbled with equity based crowdfunding before. But from what Ive researched, it is the latest form of crowdfunding, where the crowd makes micro-investments. Equity crowdfunding was made possible by the creation of the Jumpstart Our Business Act (JOBS), a law signed into effect by President Obama. Before JOBS, project backers werent allowed to receive an ownership stake, nor profits that were viewed as financial returns on money provided to crowdfunding projects. ! Equity crowdfunding now allows business owners seeking startup cap-ital to sell company shareholding stakes via crowdfunding platforms, in ef-fect giving them potential of a financial return. Its really nothing more than an innovation on the traditional financial securities industry. ! The key thing to note is that while the JOBS Act has been passed, it will still take some time before the U.S Securities and Exchange Commission (SEC) comes up with the complete legal framework to govern equity crowd-funding. Until that time, project owners can only post their campaigns on websites that are restricted to accredited investors. Under SEC rules, the re-quirement to be an accredited investor is that you must be earning at least $200,000 a year, or have a net worth of $1 million or more. !!!!!!!! Page ! of !34 172
Startup Valley ( http://www.startupvalley.com/)
Startup Valley is an equity-based crowdfunding portal that allows technology startups to raise seed funding through crowd investing. !
!Donation Based Crowdfunding This is nothing more than giving to charity via an online platform. It is often used for raising funds for personal causes, or for a community or religious initiative. Unlike rewards or equity based crowdfunding, donation based crowdfunding does not require project owners to give a reward in return, though they can do so if they wish. !!!! Page ! of !35 172
Gofundme is the best example of a donation based crowdfunding portal. It is mainly used by people to raise funds for events ranging from life events such as graduations, birth of newborn, to difficult circumstances such as illness and accidents. The site is well-known for especially funding tuition fees, and even has a dedicated section for education. !Terms: 5% flat fee on all donations, PayPal charges of 2.9% fee and $0.30 per donation. !!
Lending Based Crowdfunding In this model, the crowd lends money to project owners in small increment, and expects repayment over time with a fixed rate of interest. This is very helpful for the project owner, because he can go directly to people to get fi- Page ! of !36 172
nancing, and thus avoid the costly and sometimes time-consuming bank ap-plication process for a loan. The target customers of most lending platforms are a different breed from that of the other crowdfunding models. Typically, the customers tend to be established brick and mortar companies that have a proven cash flow of at least a year. !
!Terms: 1% annual fee for lenders !!
Hybrid Based Crowdfunding And finally, we come to the last and emerging model of crowdfunding, the hybrid model. Hybrid crowdfunding platforms can incorporate a mix of two or more different models of crowdfunding. This is especially interesting as there are economic synergies between certain crowdfunding models. For ex-ample, an emerging trend is the rewards-equity hybrid model, where project owners can list out reward perks for backers, and if successful also get some form of equity financing from private investors.
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!Fundable (http://www.fundable.com )
Fundable is an example of a hybrid rewards-equity hybrid crowdfunding model. Project owners can choose to run either a rewards based crowdfunding campaign, or a pure equity based campaign where investors can a stake in their company. The dual option also allows projects that were successfully funded by rewards based crowdfunding, to run a second campaign on equity crowdfunding in order to secure investments. !Terms: Flat rate of $179/month to create a fundraising campaign. Consultancy and crowdfunding advisory services are add-ons. For rewards based raises only, there is a WePay fee of 3.5% + $0.30 charge per transaction. !!!!
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FundedByMe is one of the worlds earliest, one -stop funding platform that offers rewards, lending and equity based crowdfunding options. FundedByMe has a strong presence in Europe, and especially in the Scandinavian countries of Sweden. Norway, Denmark and Finland. It is well known for its focus on helping small businesses to raise funds. !Terms: For all successful campaigns, theres a 6% success fee, plus a 6% administrative fee. !
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!All fee terms of the various crowdfunding platforms covered here are the lat-est at this time of writing. But it is always wise to do your own due diligence, as crowdfunding platforms can change their fees anytime. You can find out the fees and pricing in the FAQs section of most of these sites, though lend-ing and equity platforms can be a bit more complex. !So when in doubt, always do your research first. !
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Which Crowdfunding Platform Should I Use? !Almost every person Ive come across and is about to run a crowdfunding campaign tells me the same thing: Oh, were going to be launching our campaign on Kickstarter, because thats where theres a big, supportive community of funders. And then the next thing I discover, is that their project is not suited to Kickstarters crowdfunding model. ! To illustrate with an example, I recently crossed paths with a universi-ty professor who wanted to raise money for his latest medical invention, a device that can detect dengue fever (a serious tropical disease spread by mosquitoes). He was looking at Kickstarter, but I immediately recognised that it would not be a good fit. ! That was because Kickstarters terms and conditions forbids projects that are heavily regulated in nature, and this professors invention was one of them. It had to first get certified by the U.S Food Drug Administration (FDA) before it could enter the market, and so this certification in itself al-ready violated Kickstarters terms. Instead, I referred him to MedStatr, an-other crowdfunding platform solely dedicated to healthcare tech. ! The takeaway lesson here is that its highly advantageous to know the landscape of the crowdfunding space, and where you can best fit. !
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It Doesnt Matter Which Model Is Used. Show Me The Money!
!A Few Factors to Consider There are a few factors to consider that will help you decide which crowd-funding platform you should use. !Answering this checklist of questions will be helpful to you: !
Is the type of campaign you are running a social cause, or charity? Are you seeking to validate if your idea will work? Are you trying to get pre-orders for a ready product? Are you selling a service or physical item? Is the funding youre seeking, between $1 - $500,000 or more? Do you have a great idea but need to test pricing? Are you a profitable venture looking for more growth funding? Are you a proven business in need of earning more interest on your spare
cash? ! If you have a great idea but arent sure if it will work, then equity crowdfunding is definitely out of the question, as investors will only invest in a business that has a proven business model. Or if you want to seek for fund-ing above $500,000 to buy some new machinery, rewards based crowdfund-ing is the wrong model to seek after. ! Are you raising funds for a service business instead? Then a rewards based crowdfunding model is suited for you. The key thing here is that there is no one size fits all approach, and you must resist the temptation to only think narrowly of Kickstarter as the only platform with the highest chances of success.
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! In fact, in terms of web traffic, Gofundme is the most visited crowd-funding site right now on the planet, outpacing even Kickstarter! It has actu-ally raised more than $380 million online, and has a sizeable community. So do not overlook all these seemingly smaller sites. ! The table below will help you decide easily the appropriate crowdfund-ing model that fits your purpose:
Equity Donation Lending Hybrid
Platform Sites Kickstarter/Indiegogo/Pozible
GoFundMe! Zopa! Fundable
Not sure if idea will work
Have great idea but need to test pricing
Ready product. Trying to get pre-orders
Yes Yes Yes
Product is a service or physical item
Yes Yes Yes
Campaign is social or charity related
Seeking for funding > $500,000
Yes! Yes Yes
Seeking for funding < $500,000
Profitable venture looking for growth capital
Proven business with spare cash lying around
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!A last note about choosing your preferred platform When choosing between the platform sites, you should also consider these other factors, besides the business model fit. !
Do determine if your campaign is a niche or broad based campaign There are very specific crowdfunding platforms for very specific things, such as appcatalyser.com, a crowdfunding platform solely for mobile apps. If you are going to serve your product in the mass market, then the traditional ones like Kickstarter or Indiegogo will suffice. ! Also bear in mind that although niche crowdfunding platforms might not enjoy the same amount of traffic that the big boys do, their audience tends to be highly engaged and very targeted, and thus will be more willing to pledge to your campaign. Compare this with listing your project on Kick-starter, where it might just drown out in the sea of never ending listings. !
It also helps to consider the audience quality of the platform you are going to use From my personal experience running a campaign on Indiegogo, I noticed we had to apply a lot more effort and resources into doing our own market-ing, just to drive traffic to our campaign page. And we did not have many re-
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ferrals from within the Indiegogo community itself. In fact, our Facebook Ads had more referral shares than Indiegogo! ! But when I spoke to friends who had crowd funded on Kickstarter, they told me a different story. They did minimal marketing, and word of their campaigns naturally spread due to the efforts of its highly engaged and supportive community. This explains why Kickstarter is still probably the crowdfunding platform of choice for most people. ! So while it is not everything, the quality of the platform audience does play an important role too. !
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Crowdfunding Intelligence 101: Researching Other Successful Campaigns !Lets look at what its going to take for you to get a good understanding if your crowdfunding campaign has a good chance of making it. The first thing you want to do is to gain intelligence about your industry and products.
!If you want to be a dreamer, hang around the dreamers - Old Proverb ! The same principle applies. If you want to succeed in your campaign, start by learning from the ones that are already a success. Youll want to start by looking for other products, and other campaigns that have been suc-cessful. Thats not to say that if no one has ever done a similar campaign like yours before, that means yours is doomed to failure. ! Doing this exercise will show what worked, and what also didnt work, and itll also give you ideas to implement for your own campaign or project. ! When you are evaluating these campaigns, have a notepad on standby, and ask yourself some of these questions:
! What engaged you? What didnt you like? What was the funding goal? What was the most pledged reward?
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The Smart Profit From The Experience Of Others
Which rewards had zero support? !! As you observe more, youll begin to see themes, patterns that emerge. Itll also show you what those triggers points are, and why people are buying certain things. Another important thing ill do is to check out the reward perks, and see what are backers backing. We check out which are the ones that are popular, and see what is in that perk that attracts backers.Youll get lots of inspiration and ideas that are very useful for planning your campaign. ! With this thought we wrap up the first section of The Crowdfunded! Kit. I hope this has given you a good birds eye view of the entire crowdfund-ing process. Again, I stress that its important to go through this section again if youre in doubt, because these are very strategic factors that will af-fect the rest of your campaign. Remember, the process begins with you being convinced by hard evidence that theres sufficient market demand for your product: otherwise all other activities covered here are meaningless. ! In the upcoming section, The Launch Plan, youll begin to get hands-on preparation for 5 key campaign collaterals that are needed for your cam-paign. Well also look at how you can put together a pre-launch marketing roadmap to get lots of publicity and buzz, even before your campaign has launched. !
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The Launch Plan !
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Launch Well look at how to shoot a good video, plan reward perks, setting the funding goal, and writing good campaign written pitch copy. !
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! Creating A Good Product Video !Why Make A Video? Though it is not a requirement for crowdfunding campaigns to have a video, campaigns that have a video are far more likely to raise funds. Videos are great ways to tell your products story, as well as for viewers to make a hu-man connection with you, the product creator. ! But many people shirk back in fear at the mention of doing a video. That could be because they feel they lack the professional chops or experi-ence to shoot a good one, or they just do not like being in front of the cam-era. Whatever those fears, they can be addressed. ! If you lack the professional experience, take heart because you dont need a professional video: a good enough one will suffice. Pebbles video is an example of a video that was shot almost entirely in house, and by profes-sional standards, it certainly did not hit the mark. But that video was con-cise, clear and good enough to communicate the product concept, and was instrumental to help Pebble raise over ten million dollars! ! The Shooting on Budget section at the end of this chapter will show you two ways you can still shoot a good video while on a tight budget. But first, let us look at what makes great crowdfunding videos. !!! Page ! of !50 172
A Picture Speaks A Thousand Words. Videos Speak Millions.
!The Crowdfunded! Principle to Making Great Videos: Good artists copy. Great artists steal - Steve Jobs !This was a quote made famous by Steve Jobs. Its a thin fine line between outright copying, and stealing. Copying means explicitly taking someone elses idea and calling it your own. But if you took an existing idea, and mod-ified it so that its your own, thats what Steve Jobs was referring at. ! While its a controversial statement, it holds weight. Its true even for the process of learning. We learn everything in life by imitating others. For example, if I want to get better at cooking, Ill imitate the cooking of great chefs, such as Jamie Oliver. !
Learn From Those Whove Succeeded The same thing goes for making great videos. If this is your first time making a video, dont be intimidated. The way to create a good crowdfunding cam-paign video is by imitating other great videos. Seek successful campaigns out, and spend time watching and observing what makes great video. After all, if a video has already proven itself to make good money, why risk rein-venting the wheel? !
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!Lets look at 2 powerful ways you can make your product video sell: ! !
!https://www.kickstarter.com/projects/lumi/print-on-fabric- using-sunlight-the-lumi-process !Lumi is a special ink dye for printing your own clothes and fabrics, using only sunlight or UV rays to develop the color. !The Lesson: Sell a story, not your product Lumis video sells well, because Jesse Genet (the founder) makes it very easy for viewers to understand and follow its chronological journey from concept to creation. When you make it easy for people to walk through your products journey, it immediately builds credibility. !Also, do notice that the video focuses strongly on the
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human element. !!The video displays the genuine and authentic personalities of Jesse and her team, and shes personally narrating throughout the video. Its interesting to observe that the crowd loves to see campaigns that have a genuine and human touch. !!!GoPro
!Watch GoPro Backflip Over 72ft Canyon - http://www.youtube.com/watch?v=x76VEPXYaI0 !If you havent heard about the GoPro camera, you are probably still living in the stone age! !GoPro is a high definition personal camera, thats often used in extreme action video photography. When you own a GoPro,
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you dont just own a camera; You become a person who lives on the cutting-edge! Ok let me break the rules here. GoPro wasnt crowdfunded, but its promo video is very well-done. There is a very important lesson we can learn from it. !The Lesson: Sell an experience, not your product Pause for a moment, and write down the emotions that you felt while watching this video. Did you feel emotions such as: !Adrenaline, scary, edge-of-seat, sweaty palms.. !Those were some of the feelings that described how I felt while watching GoPros video. Did you notice that GoPro did not focus at all on selling the cameras features at all? Instead it only simply showed the GoPro in action, mounted on a motorcross helmet. Even if I were not an adventure enthusiast, this video is enough to trigger a desire in me to want to buy a GoPro camera. !Whats the lesson here? Its that great videos sell experiences, not products. !The backflips, death defying stunts, are enough to bring out the side of us that longs for adventure. Its that part of us that longs to do crazy things, or YOLO (You Only Live Once!), and gain recognition from our friends. And the subtle message is that where it once wasnt possible, GoPro now enables people to share those exotic experiences! !
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When you sell experiences, people intuitively realise the need for them to buy your product.
!Script And Narration For Your Video Another very useful thing you can do is to review the videos of other success-ful crowdfunding campaigns. Then you transcribe the scripts of those videos, analyse the content, and identify the patterns. ! In general, your video should highlight the pain youre solving, fea-tures and benefits of your product, introduce your team, and also state the amount of funds you are seeking. Ive found that if you use enough visuals in your video to communicate the concept, you do not really need too many words between 200 and 300 words is good to explain what it is. Also, remember to time your narration. Ultimately, the best videos are always produced with your audience in mind. !
10 things You Must Cover In Your Video Use the answers that youve answered earlier in Crafting Your Product Message to help work through the video script. Let your answers set the base for your videos theme. Whether your video is creative or action-packed, ensure that your product message comes out clearly. !
1. Keep It Short and Sweet The maximum length you should aim for in a video is 3.00 mins. Any longer and you are probably stretching it, especially if your video content is draggy. Bear in mind that your online viewers will likely
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have a million and one other agendas on their mind, so theyll take a quick glance at your video. Also, if youre like me, a person with a shorter attention span, I tend to start losing attention just past the 1 minute mark. So the challenge is for you to figure out how to com-press and concise the main selling points of your product, into 3.00 mins of showtime.
!2. The Why It is important to bring out the Why in your video. People dont fund your project simply because they like it; they give their cash to you because they feel like they are part of something bigger than them-selves. Its the same analogy with how products are marketed; people dont buy tabletop candle stands because they make the dining table look nice. They buy them because they want a romantic atmosphere for dinner. People dont buy a pebble watch because its functionally better than other watches (there are better smart watches than Peb-ble out there.). Rather, they bought Pebble because they they want to be known amongst their friends as the cutting edge people at the forefront of the wearables trend. Addressing the why of your prod-uct is therefore very powerful.
!3. Show Your Face When a backer chooses to make an investment into your project, they are really investing into a real person. And so it follows that theyll want to make a human connection. That is why it is important to dedicate a segment of your video for showing your face. It can be in the form of you demoing the product, or a short message that you wish to share with backers at the end of the video.
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A good headline for your product can greatly boost awareness of your project. Good headlines get the attention of potential backers, and are able to communicate the key point you want to make in one glance. 5. What Is Your Product You must mention what your product is, and within one to two sen-tences. Any longer than that, and you probably dont know what youre selling. Being able to convey your product in one to two sen-tences projects confidence in what youre selling. !6. What Pain Your Product Solves Videos are very good for making relevant connections in people with the pains that they are already facing, so make sure you cover this well. For example, if you selling a Bluetooth tag that protects smart-phones, then bring out the pain of people losing their phones in your video. You can illustrate this pain by bringing up everyday scenarios of people misplacing their phones in various places, like in the toilet, park bench etc.
!7. How Will Funds Raised Be Used Backers often want to know what will their money be used for too, so its important to stay accountable and be transparent with them of your intended purpose of use for the funds raised. If you need the money for manufacturing costs, then be detailed and let them know exactly what manufacturing costs it will be used to cover.
!8. How Will Your Backers Benefit? Too many project videos only talk about features of their product, but fail to communicate the end user benefits to backers in simple terms. Its like a salesman selling a Ferrari, only to communicate to the cus-
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tomer that it has high torque, and that it uses a 2600cc horsepower engine. Do you think the customer will be convinced? Likely not. But the customer will likely be more convinced if the salesman sells the Ferrari as a symbol of prestige, power and status, that will put the customer above most people in a class of his own. In other words, sell your benefits, not the features.
!9. Any Press or Media Mentions If your project has been covered before in the media, or mentioned in any press articles, utilise it to boost your projects credibility by showing it in the video too. People are far more likely to back some-thing that is credible, and that has already have authentic proof. This phenomenon is called social proofing, so use whatever press or me-dia mentions to enhance it.
!10. Thank You And finally, dont forget to thank your backers! This is pretty self-ex-planatory.
!Shooting A Video On Budget If you do have the money to afford to, the best investment you can make is into hiring a good videographer to shoot it for you. Seriously, do it! With the competition for crowdfunding dollars already so intense, having a good video is almost a basic requirement to truly stand out. Ive listed a couple of agencies who are willing to shoot your videos in the Crowdfunding Toolkit section. !
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But what if you cannot afford money upfront for a video? That does not spell the end of your crowdfunding campaign. Heres two more ways you can still get a nice, video done without any cash upfront: !
1. Ask If Your Video Can Be Produced on a Deferred Payment Basis Its very possible. Just ask Doros Kyrialoulis, the founder of GOKey. GOKey is a slim, compact keychain accessory that has four handy items in one: backup charger, file sync cable, flash drive and Blue-tooth locator. GOKeys phenomenal Indiegogo campaign raised $1,032,168, far out-smashing its goal of $40,000. !But whats most fascinating about Doros, wasnt that he raised more than a million dollars. It was that he only spent $200 to raise $1,032,168! And that $200 was only because a member of the video team needed to purchase camera lens for the filming. Aside from that one-off cost, Doros managed to get his entire project: graphic design, prototype, video, marketing, done entirely on a deferred payment ba-sis! !Its well possible to get people to shoot your video first for you, and only pay them after the campaign. While most video agencies and freelancers still require upfront payment, there is still a chance that they might be willing to do your video on deferred payment. !But the caveat is that you must be able to pitch your product idea to them so well that you get their buy-in. And if they reject, you just have to have the tenacity to keep asking other videographers. !In Doros's case, the videographer he approached bought into his idea. And it turns out that he had found a video guy who was really
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good at making video. Chances are, videographers who are worth their salt are able to spot potentially successful products from those that arent. !Also, if you hunt around hard enough, you will also find that there ARE video agencies that accept deferred payment. Just check out www.sidekickcreatives.com. These agencies realise that many deserv-ing startups do not have the financial ability to engage video agen-cies, which tend to be expensive. So they are willing to shoot your video on deferred payment, in return for a higher percentage payout from your fundraising proceeds.
!2. DIY Your Own Video, but Ask Friends for Help This is your last resort. Because Im not a video professional myself, MediaStyles article: 4 Steps to a Great Crowdfunding Video! has some great resources on the technical how-to, lighting, and audio fac-tors that you should take into account before shooting any video. You can also google around for more tips from the video pros. !But dont attempt to shoot the video all by yourself. Ive found that reaching out to friends for help does tremendous good. Its good to read and take note of 101 things to consider when shooting a video, but its even better when you have someone by your side who can point out blind spots youve missed. Better still, if your friend is a video professional!
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Reward Perks !Your reward perks make or break your campaign. If your reward perks are not well-planned, you will lose the interest of potential backers. You might have a convincing video and a well crafted pitch, but it is the reward perks that sweeten and close the deal. ! We wish to make-believe that the community on Kickstarter or In-diegogo browses them daily to find crowdfunding projects to fund. The in-convenient truth is that most people are naturally self serving, and they are actually thinking: Whats in it for me? ! And that is why when you decide on your reward perks, youll have to think in the shoes of the backers. Also, this is the time to be creative, and of-fer your backers rewards beside the core product or service offering.
! Some examples of popular Whats in it for me perks are: !
Tangible perks: T-Shirts Product Add-ons (eg. watch straps) Limited edition collector item sets Protective Case DVDs
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Whats In It For Me?
Paper Toy !!
Intangible perks: Having your name credited on campaign website/donor walls Participating in cameo roles (Film & Video, game projects) Personalised consultation over Skype A meal with founders Tour of the office
!3 Rewards Best Practices Here are 3 best practices when planning your perks:
!1. Tangible rewards > Intangible Rewards Tangible rewards triumph intangible rewards, anytime. !Lets say you are creating the next big social networking site. Its the next Facebook for pet owners, and youre crowdfunding it. And I told you that if you backed my project for $25, I would give you beta ac-cess to the site once its launched. Would that be a convincing reward to part with your money? !Now lets take the same scenario, and instead I told you that if you backed my project for $25, I will give you an early bird T-Shirt with our logo, and your name imprinted on it. Now, doesnt that sounds like a more convincing reward? !
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Why were you more convinced with the T-Shirt reward? The differ-ence was that with the T-Shirt, you had something physical to touch, while with the beta access, you cannot touch it. !And that is why hardware and art craft crowdfunding projects have traditionally tended to succeed better than software, or publishing projects. Not all crowdfunding projects were created equal, and cer-tain projects such as software ones tend to be more on the intangible side. !That said, there are many creative ways to make intangible rewards appear more tangible. Film and video crowdfunding projects are a good example of intangible projects that have done surprisingly well. A common perk tactic that is used for film projects, is to get backers to participate directly in the film itself. For example, in the Veronica Mars project, there was a $10,000 perk where you could get a speak-ing role as a waiter for a dinner scene in the movie. !Now, how awesome would it be to tell your friends to watch that scene in the movie, and tell them that you narrated that waiters voice? !2. The $1 Donation Perk This is a perk that is often overlooked. Do not underestimate the power of the $1 donation perk! !The greatest advice I ever heard about setting perks, is that youll have to give people a way to easily share your campaign. Thats be-cause the majority of visitors to your site might not necessarily back your flagship rewards, like a $150 Pebble smartwatch. But the good
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news is that they are still interested in your crowdfunding project, and are willing to show their support. Its just that they have a much lower risk appetite, or are financially strapped at the moment. !And the $1 perk is very low-risk way for these group of people who by the way, happen to be the silent majority. And the patterns largely the same; whether youre a backer who has a higher risk tolerance, or a low-risk one, the likelihood is that youll tend to share the cam-paign with your networks after youve backed it. !3. The Early Bird Perk The early bird perk is a set of reward tiers that is rolled out at the be-ginning of your campaign, with the price of your product increasing over time. They usually start at a discounted price, and with a limited quantity. For example, offer 10 limited units of an item at $19, and then when they sell out, offer the next set of perks at $29 for the same item. Take note that for early bird perks to work their magic, the discount has to be significant enough. A good discount percent-age would be at least 20% of the shelf price. !Ive found that early bird perks worked very well to quickly drive ini-tial adoption, and brought three benefits for my previous crowdfund-ing campaign. !It attracts and makes early adopters feel special. Your first backers are likely to be early adopters. These are people who like to be at the cutting edge of things, and they love to have the latest stuff: the latest wearable tech, the latest indie movie film etc. And it gives them even more bragging rights to their networks, when they were able to get these limited quantity perks at a discounted price.
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!Its a great way to validate pricing early on. From the response of the early bird perks, you will be able to roughly tell if people perceive your product as being priced too low, too high or just about right. With this knowledge, you can then quickly make price changes in your subsequent perks. !*Note: Most crowdfunding platforms will not allow you to adjust your perks as long as somebody has already claimed it. Youll have to create a new perk if you wish to adjust the price. Its a great way to forecast what perks work/dont work. You might discover that people might generally favour a certain perk, while oth-er perks do not work as well. You can then adjust the type of perks in subsequent perks.
!How To Price Rewards Pricing rewards is more art than science. Theres no one formula to deter-mine the best pricing for your rewards, because there are just too many vari-ables to consider; perceived value, market competition etc. But here are some key things you should not miss out: !
Start By Totalling Up All Product Related Costs Pricing rewards is best done only after youve factored in all relevant product related costs, so that you can effectively project revenue. Or else you run the risk of making a loss. These costs include manufac-turing, marketing, design, shipping, labour, perks etc. !Its Quite Normal For Shipping and Fulfilment Costs to Overrun
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Manufacturing and shipping delays all cost extra money, so ensure that you price your product is priced sufficiently high enough as a buffer to cover those sudden increases. !Aim For Rewards That Dont Cost You Anything, Yet Give Backers a Great Experience For example, it doesnt cost a single cent to offer your backers the chance to visit your office and have coffee with the founders. Fur-thermore, your backers experience a deeper connection to your busi-ness. !Also, Take Note that Backers Will Likely Spend Between $20-$50 on Average for Each Pledge It is not the focus of this book to go in-depth into the psychology of reward pricing, But if you want to read more, check out this well written article by Jay Ehret on pricing stuff: Three Predictably Irra-tional Pricing Strategies That Get The Sale.
!Estimating Reward Delivery Dates Rewards fulfilment is probably the most challenging part of crowdfunding, because from the moment you launch, everyday its a race against time to get perks out your door, and into your backers hands. There are just too many unforeseen variables. !!Here are just some examples:
Manufacturer parts are incorrect or not working Shipping, or material costs increase unexpectedly
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Delivery parcels get stopped at customs inspection checkpoints Inability to fulfil rewards in time due to manufacturer delays
! Getting overfunded is a good thing, but along with it comes the addi-tional work of managing backers and fulfilling the additional rewards need-ed. Youll need to buffer in additional time for all these, and have plan B con-tingencies in place to deal with them. ! So itll do you good to triple the original length of time youve planned for rewards to be fulfilled. If youve originally forecasted that 3D printer to ship in 6 months, set the estimated delivery date 1.5 years later instead. This will help properly manage your backers expectations early on. Basically under promise, over deliver. !
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Setting Your Funding Goal How should you decide on your funding goal? !This is one of those important, make-or-break questions you must ask your-self. A funding goal that is set too high could mean you risking months of hard work and walking away without any capital, if you are using a fixed funding campaign. On the other hand, a goal set too low or wrongly could mean that you will have to foot additional campaign costs out of your own pocket, a costly move you dont want to make. ! Before you decide on a funding figure, here are three battle-tested, recommendations Ill make:
!1. Start by totalling all project and reward fulfilment costs 2. Budget for more money than you think youll need 3. Always set your funding goal lower than what you need
!1. Start By Totalling All Project and Reward Fulfilment Costs Let me be honest: I hated accounting when I studied it back in school. But as I started doing my own businesses, I realised how important it was to be able to account for costs. Otherwise, your costs will spiral quickly out of con-trol. ! Page ! of !68 172
The Funding Goal Is Everything
If you could do a quick survey of all crowdfunding campaigns out there, youll be amazed at how so many crowdfunding campaigns out there do a poor job with their accounting basics. Recently, I came across a video game crowdfunding campaign that asked for a funding figure of $30,000, and its creator substantiated its figure only with percentage breakdowns. But there were no hard figures to substantiate why they needed that sum of money. !So well start with some accounting basics. To set your funding goal, you start with the basic costs of your campaign. Basic costs of your campaign in-clude:
Fixed costs of your project. This includes the costs of manufac-turing your product, building a website, or renting a storefront
Costs of reward perks Shipping and fulfilment costs. That includes mailing envelopes,
parcel boxes, and international shipping fees for backers Marketing costs. This includes ad campaigns, Press Release dis-
tribution, and event promotion Crowdfunding platform costs. The costs can total up to 10% of
your funds raised, after including in payment processor fees. An important note is that Indiegogo charges 9% if you do not hit your funding goals, and 4% if you do. And if your bank account is based outside the U.S, there is a one time wire transfer fee of $25
Professional costs. If you plan on hiring a creative video agency, PR or crowdfunding consultant, you should factor these in too. (*Note: There are plenty of different tiered pricing options out there depending on whether youre an individual,startup or a full fledged company)
!Once youve totalled them all, a good safety measure would be to add an additional 20% buffer to your total costs. Most campaigns tend to
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overrun their costs due to manufacturing and delivery delays, and the buffer will help absorb those cost overruns. !So: Total Costs = Basic Costs + 20% Cost Overruns Buffer !Use a Spreadsheet It is recommended to use a spreadsheet to help you list all these costs down easily. Youll also be able to forecast the expected number of perks that will be redeemed, and then subtract all the costs outlined in the previous section. Go detailed and deep here, listing down as many relevant costs as possible that you expect for the campaign. !If youve bought the full package of the Crowdfunded! kit, there are ready made spreadsheets that are provided for you to use.
!2. Budget For More Money Than You Think Youll Need A well funded project is one that raises far more than its funding goal. But even with the extra funds, the money depletes very quickly as costs mount up. Some of these costs include manufacturing delays, unforeseen shipping and import customs fees, packaging costs, plus factor in the profit margins that you expect to hit. !So when it doubt, always budget for more money than you think youll need. !(Read more about budget more money than you think you need in the Duet Case Study at the end of this book)
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3. Always Set Your Funding Goal Lower Than What You Need (MIOPS campaign on the left is very likely to be funded. Mootch campaign on right also shows good funding progress.)!
!AHA! Ive got you here. Does this statement sound illogical? After all the talk about factoring in costs and buffering in addition cost overruns, shouldnt you just tell your backers how much exactly youll need? !Actually, the answer is no. Well come to that in a minute. For now, know that another big secret to a successful campaign, is to set your funding goal at 80% of your actual funding requirement. So that means if you need $100,000, ask only for $80,000.
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The Power Of Social Proof: The Funding Bar There are two reasons why setting your funding goal lower makes sense. !Firstly, backers like to see the progress bar move, and that theyve helped you to get to the finish line. If you have a smaller funding goal, progress is much more evident. But if you set a high funding goal, you run the risk of much slower progress. And backers can get turned off, as they might not be-lieve that you can actually reach the goal. !Secondly, is the power of social proof. A lower funding goal means its easier to hit the target. And when a campaign is fully funded ahead of its deadline, people find it more credible and hence less of a barrier to fund your project. This is because others have already validated your idea by putting their cash before these people. Momentum generates more momentum. !
One Last Note: How To Decide On A Campaign Duration Kickstarter and Indiegogo both allow you to choose anywhere from one to 60 days for your campaign funding duration. As a one-off, Indiegogo also al-lows you to extend your campaign up till 60 days, even if youve originally set it at a shorter campaign duration. ! In general, its recommended to have a shorter campaign timeframe, between 30 to 47 days, rather than to max it out at 60 days. ! The reason for this is because you do not want to wear your backers out with a constant barrage of emails and social media postings. Also, a
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longer time frame can unintentionally communicate to your backers that you do not have the confidence to raise the funds required. ! Within these 30 (or 47) days, you should do all you can to create a sense of urgency. Send frequent updates, and try to rally people around your passion for your product. Well look more at ways to sustain campaign mo-mentum further in the chapter, Main Launch. !**An exception ! That said, there is an exception to this rule. If your objective of the campaign is to create brand awareness, and you have the resources to guar-antee almost daily traffic flow, then it makes complete sense to fully max out the campaign duration. ! This is especially so in the case where you are running a major PR campaign, and very often, youll have limited control over when an article about your campaign gets published. As an example from the Duet cam-paign, we had a spurt of $7500 of pledges in a single day when a PR article was released late, just two days before we ended our 60 day Indiegogo cam-paign. ! Had we not chosen the 60 days campaign duration, we would have missed out that vital $7500 in pledges, and much more! !!
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Writing The Pitch Copy !There are two major things which will help sell your campaign. The first is your product video. Most people are visual learners, and process ideas quickly through a video. A well-produced campaign video is suited for this. ! The written pitch builds upon your video pitch to help sell your cam-paign. Think of it as a followup marketing collateral that expands and rein-forces your video pitch. After someone has watched the video, your pitch then continues on to share further details to convince your viewer to pledge. ! Another reason for having good pitch copy, is because youll also have to take into account busy people who arent free to spend 3 minutes watch-ing your video. Instead, they might prefer to speed scroll through your cam-paign page on their mobile devices. If youre like me (a guy with a short at-tention span), chances are Ill speed scroll through the campaign and look at your product photos and read the pitch text instead. !
Focus On The Pain Good pitch copies have one thing in common: they focus on the painful problem youre trying to solve. Spend the first few seconds getting visitors interested, and then the rest of the time overcoming objections that keep the visitor form making a purchase. As a rule of thumb, the more complicated or
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How To Sell Ice To Eskimos
expensive your product is, the more convincing and longer pitch content youll have to write to help them overcome their purchase objections. ! The pitch copy is also a good time to incorporate your product messag-ing, an exercise that was covered under Crafting Your Product Message. This is best done after youve spoken to your customers, and have defined what exactly those pains are. Pay particular attention to the vocabulary that your customers tell you. ! For the Duet example, words such as frustration, my phone con-tains my life, worry were what our customers told us. Having these objec-tions listed out practically helped us to write the pitch copy for our campaign very quickly. ! Your end goal should be to have every viewer come away after reading your pitch copy thinking: Wow! This guy is able to read my mind!. If you can the same pains that your visitors are feeling, youve nailed it! !
Elements Of Pitch Copy These basic elements are required just for about any crowdfunding pitch: !Essentials What the product is The story of how your product came about Key benefits of your product to viewers Graphics and photos Social proof (from press coverage, testimonials etc.) Features of your product
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Pricing of your perk packages Who your team is What will your funds be used for Risks and challenges FAQs !Optional elements (if any): Stretch goals Collaborations with others Further product demo videos News Blog !
Not All Crowdfunding Projects Are Made Equal. Not all crowdfunding projects are made equal. Some projects by nature just happen to be more viral than others in themselves. Take the example of Ocu-lus Rift, an immersive virtual reality headset for video games Kickstarter project that raised over $2.4million! ! Because the concept of virtual gaming is so cool, chances are high that word gets around very quickly if you told your friends that youve bought an Oculus Rift. Even without much marketing, the campaign would still go vi-ral. ! But Oculus, and a handful of other projects (such as Ouya, Pebble), represent just a very tiny fraction of projects that are viral by nature. An Oculus Rift is really nothing more than a Virtual Reality goggle that is adapted for gaming. And V.R technology is nothing new; the technology has actually been around since the 1860s!
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!So What Can You Do if Your Project Isnt Oculus Rift? Even without the element of virality, your project can still be a success. There is a set of principles you can follow to structure a successful pitch. It is based upon AIDA, an acronym borrowed from the marketing world that de-scribes a common list of events that may occur when a consumer engages with an advertisement. !AIDA stands for Attention, Interest, Desire, Action. Your pitch copy will be crafted based on AIDA.
!AIDA A- Attention Attracting the attention of your viewer is the first step. When she comes to your campaign page, youll have to find ways to capture her attention. !How do you get your viewers attention? Engaging videos, high-quali-ty graphics/photos and good headlines are the key things that will at-tract attention. Which is why youll want to put a lot of effort into making a good video, taking good pictures, having good graphics, and a great campaign headline. !A smart tactic is to intersperse your copy with pictures and graphics at different points in your pitch, so that your viewers attention con-tinues being captured. !I- Interest
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In this stage, youll raise customer interest by focusing on and demonstrating advantages and benefits. This is where you communi-cate how your viewers will benefit from pledging for your product. !D- Desire Once youve got them interested, you now have to arouse a desire strong enough in them that they want the product, and that itll satis-fy their needs. But before they make a decision to pledge, youll also have to overcome any objections that they might have. Well look at how the elements address objections.
!!A- Action Last but not least, when viewers are convinced that they need your product, youll have to give them a way to take action easily, either by making a pledge, or sharing your campaign via social media. Crowd-funding platforms already provide tools that take care of much of the Action portion for you, through the perk rewards selection, and as well as by providing social media sharing tools.
Objection Element that addresses objection
Im not sure if other people think this campaign worth pledging to
Social Proof (press coverage, testimonials), Funding Bar
Great idea, but who are these people? Who your team is
Is the product expensive? Pricing of perk packages
What will happen after I fund you? What will your funds be used for
Im not sure if the product will deliver! Risks and Challenges, Delivery Dates
Does it ship internationally/any other questions
What can I use this product with? Further product demo videos
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Let us look at a example of a crowdfunding campaign which incorpo-rates AIDA very well. !!
NudeAudio Super-M Case Study NudeAudio is a company that produces high performance Bluetooth speakers that can fit into any pocket. Their Kickstarter campaign raised $839,834, far surpassing its original $75,000 goal.
!!!At its very basic core, theres really nothing so special about an NudeAudio Super-M. Its nothing more than a scaled down wireless speaker, encased in a piece of plastic casing. But whats amazing is that despite not having the marketing
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dollars that other competitors in the wireless speakers space have, NudeAudio still managed to raise close to a million dollars! !Lets examine their written pitch copy in detail and see what we can learn. !Access the NudeAudio project link here: https://www.kick-starter.com/projects/1180551085/nudeaudio-super-m !!Pitch Element AIDA Category Comments
Video! Attention! Video captures attention with its simplicity, and story of NudeAudio is well told.
What the product is Attention Super-high performance Bluetooth speaker; waterproof & sand proof, that fits in your jeans pocket - minus all the stuff you don't need. - Short and sweet product description got my attention, enough to make me want to read on.
Thank you to backers Desire Basic courtesy.They didnt forget to thank their backers.
Social Proof Desire They featured a mix of product reviews, press mentions on top tech blogs.
Story of how the product came about
Interest Shared story of how it all started in 2013
Social Proof Desire More product testimonials and accolades
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Product features Interest Observe the way they blended NudeAudio technical features with benefits to the consumer: 4 full range, high performance neodymium drivers on both sidesmeans Super-M can pump out incredible, 360 sound and keep the party going for 8-hours straight, all from a package that fits in your jeans pocket.
Key benefits of product Interest Clear cut benefits- Its waterproof, sand proof
Social Proof Desire More social proof, this time a video endorsement from Hugh Padgham, a world renowned record producer for some big name artistes such as Sting.
Perk Pricing! Desire Whats interesting is that NudeAudio justified with 3 strong reasons why it was priced at $99.
Who the team is! Desire Both founders have some impressive street creds, and they are not ashamed to list out why they are the best people for this project.
Perk packages and pricing!
Desire! Even the perk package visuals are attractive. They communicate in very simple and straightforward terms, what different package prices, perk types, and colours are available.
Product graphics and photos
Attention! NudeAudios product shots are High-Res and very well taken
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Collaborations! Desire They were proud to feature their collaborations with famous street artistes, a environmental lifestyle brand, a well known UK DJ,a popular beach hotel, and a French recording artist. !!Collaborations with key influencers are a smart way to further promote any crowdfunding campaign.
Stretch goals Attention It probably didnt cost them much to introduce a new color idea as a stretch goal.It furthered maintained the attention of fans.
News blog Desire- They uploaded more product demo videos in common accident scenarios, such as accidentally dropping it into water. This further lends to the credibility of NudeAudio as a reliable product.
What the funds will be used for
Desire- The usage of funds was clearly explained. Their reason for using Kickstarter is that they dont have the resources to market NudeAudio through traditional advertising, and that they need money for the rest of their mass production run.
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!!!As you can see from our analysis, Nude Audio spent majority of its pitch copy on addressing viewers Desires (60%, 12/20 elements ), followed by Attention (20%, 4/20 elements) and finally Interest (15%, 3/20 elements). !The biggest lesson learnt here from the NudeAudio case
Risks and Challenges Desire NudeAudio is very different from most other projects out there in that they are using Kickstarter to scale, not start a new product. !!Thats because they have already begun producing all hardware parts, and theyve already figured out much of the manufacturing supply chain operations, giving them an advantage over others. !!So their challenges have more to do with ensuring product quality and fulfilment of product pledges, both of whic