As there are a few entrepreneurs in the group i share this file
How to Raise Money with Reward Crowdfunding
In start ups initial stages the seed and angel money are almost always used up fast and all the companies start preparing for the next round of financing . Normally the founders need first to prove the demand through some orders before they are ready for series A mainly through VCs .
But the last 3 years there is a much better method (VCs are valuable for the follow up phase and all depends on experience and level of financing needs) that not only gives capital to finance the first serious product development but also valuable customer ( mainly early adopters) validation. This is a direct customer validation without the need for market research that many times is inaccurate and ineffective.
It is called Reward Crowdfunding through companies like Kickstarter or Indiegogo. It is about preselling and validating a product or service. With this process in fact you are getting payed in advance by promising to deliver a product or service to potential customers within a number of months . It is not only about financing your R&D and start of the go to market process but it is even more important about validation of the product/system/service concept in a very direct and cost effective way . There are so many examples of successful projects e.g through Kickstarter raising tens of thousands USD up to 21 million USD Protected content TIME watch) by pre-selling products . In case the project receives low/medium response you can try again by using the process described in this article to become successful.
In order to execute a successful reward crowd funding campaign you need a professional team ( big part can be crowd sourced ), great planning and to consider all below mentioned key success factors. In fact the project is really a serious marketing campaign:
-1. To reach out to the crowd and create a community is the responsibility of the start up.The crowd funding platform does not create the community, the start up does.
-2. To evaluate the right amount of money to be raised is crucial. It should be calculated taking into account among others the following :
- How much we need to create the product /system/service
- Cover the expenses of the marketing campaign ( see more later )
- Take into account other expenses like Credit Card, .....
- It should be reasonable to reach the target easily and create excitement in the community !
-3. Create a strong group of affiliates before the start of the campaign that will support the funding campaign actively in the begin
-4. The choice of the various rewards Protected content ( supporting the cause ) , to a basic product , step up product , a few different colour versions ( to be tested in the campaign ) ,.... ) deserves not only attention but devotion
-5. All rewards need to be tested with people before the campaign starts.
-6. It is really a marketing ! campaign and need to be executed from a team of competent professionals with the following key content :
- A serious community related campaign Purpose statement
- A great Video which is very cost effective nowadays
- A Media outreach plan as part of the campaign is vital. The min content of this plan is:
Bloggers informed , give an exclusive ( timing only ) to a big one(e g Gizmodo)
Digital marketing presence in social networks
Full marketing alignment about all actions
-7. To be successful needs to reach 30 % of the target amount the first day and above 50% the first 2 days . Moreover Protected content is a good time for completion.
-8. Depending on the industry/product/service you may execute a campaign in 1 go or through a few sub - campaigns like first introducing a simple product and then a second more elaborate one.
Thank you very much and I appreciate comments or questions .
Mike Mastroyiannis is a Business & Executive Coach and Consultant for among others Exponentially Disruptive Innovations. He has served as CEO of business units in Multinationals, founded or lead start ups and serves in advisory boards. He can be reached through
LinkedIn or email at Protected content