One year ago, President Obama signed the JOBS Act into law, legalizing equity-based crowdfunding in the United States. And while the Securities and Exchange Commission has been slow to implement rules governing equity crowdfunding, the industry has been anything but stagnant over the past year.
So, even though equity-based crowdfunding is not yet available, there are ways entrepreneurs can capitalize on existing crowdfunding channels. Below are some pointers to help you reach your funding goals.
Run the numbers
If you’re going to ask for money, you need to know exactly how much you need. While this may seem like an obvious point, it’s important to establish an in-depth breakdown of what exactly you are using the funds for, the cost of executing the project, and other expenses you may incur in order to ensure you arrive at a reasonable dollar figure.
Expenses should be categorized as fixed or variable — and be sure to leave some extra padding with variable expenses so you don’t get in trouble with cost overruns.
Identify your target market
Right now, nearly every crowdfunding campaign run by a business is going to be driven by pre-sales and perks (see: Pebble Watch), which means it’s really just e-commerce with a twist, and what we in the industry call “rewards-based crowdfunding.”
Most in the e-commerce industry know how important it is to understand who your customers are, and if you’re raising money to expand an established business, then you have a huge head start as you already know some of your potential contributors.
For start-ups with a new idea or product, being creative is key. Make a list of all the blogs and news sites your audience reads and try to establish a relationship with the writers there. See what kind of content garners the most shares and comments – this is what your audience really cares about and where you should position your brand.
Look at similar crowdfunding campaigns that were successful, which publications they are mentioned in and which influencers they had sharing their campaigns as well.
Keyword research and SEO
As many of you know, Google is not just a search engine – it’s now your campaign’s best friend. Go to Google’s Keyword Tool and enter some popular search terms related to your product or service (e.g., “blue sneakers” or “personal shopping app”). When creating a crowdfunding and social media campaigns, consider using the most popular related keywords in your title.
By doing so you can leverage the SEO strengths of the platform you use to get search traffic to your campaign. You can use this same data for other platforms like Twitter and YouTube.
Track viewer activity and adjust accordingly
All the major crowdfunding platforms either have their own native traffic analysis tools or let you connect to a third-party solution. Once the campaign is live, review and analyze traffic data to better focus your efforts during your campaign.
Depending on which sources of traffic (e.g., search engines, Twitter, blogs) most of your supporters are coming from, shift your efforts should to these and similar channels, knowing they have a higher likelihood of generating more contributions.
Make a standout promotional video
The popularity of YouTube should tell you that video is among the most powerful tools in your marketing arsenal. I can’t stress enough just how important this is — if your video doesn’t elicit an emotional response, then you need to go back to the drawing board. A few important things to include in your script:
• Make your story compelling, and identify the problem you’re going to solve and why it’s so important.
• Establish that you have the experience to execute.
• Make sure you point to the contribute button in the video.
• Ask people to share. Getting one supporter isn’t nearly as cool as getting one supporter and five of their friends to contribute.
• Keep it short and to the point; nothing more than four minutes.
• Make sure your sound and picture look good. If you can’t make a decent looking video in 2013, your viewers may assume you probably can’t execute your project, either.
Launch big, close quickly
Finally, to quickly build momentum around your campaign, you should have at least a dozen or so contributors lined up before you go live. You will be much more successful if potential supporters see that someone has already jumped on the bandwagon.
Parallel to this – keep your campaign at 30 days or less. While it may seem counterintuitive, in our experience, the vast majority of your contributions will come in at the beginning and in the last three to four days. The lull in the middle of the campaign will feel like forever and can take a toll on your team’s resolve and motivation.
Alon Goren is cheif exectuive and co-founder of InvestedIn, a technology start-up that specializes in social fundraising and crowdfunding platforms. Prior to founding InvestedIn, Alon worked as a manager for tech giants like IMDB and MySpace.