Is Crowdfunding Success Art or a Science?
Looking at the number of companies that try debt and equity crowdfunding around the world we see that only about 20% hit their funding target. Why is there such a low success rate? And what are the mistakes that were made that contributed to so many not reaching their target? There are a few common mistakes that people make over and over again that prevent them from being successful with crowdfunding. Taking steps to invest in yourself and learn about crowdfunding before you start is important. As with anything worthwhile, it takes time, energy, and focus. The good news is that resources are available at your fingertips for you to learn everything you need to know. As someone who has gone through rounds of funding and started and grown businesses I’ve learned that two keys to success are 1) Creating a Network and 2) Mastering Disclosures. Disclosures are the documents investors review when making an investment decision. When seeking capital you need to provide enough disclosure to make your investors feel comfortable that they have all the facts about your business, how it will generate cash (note: we didn’t say sales) and what the market landscape looks like. Additionally, you will want to use your crowdfunders as a signaling device to let you know if there is market demand for what you want to sell or if you need to change your market strategy. Network is the other critical part. You can’t crowdfund without a crowd. Companies that have been most successful with crowdfunding have created and followed a carefully constructed Project Planning Tool. (We give away our Interactive Project Planning Tool with the Advanced Lessons in Crowdfund Investing program) These successful companies will assign a campaign manager to oversee the formation and implementation of the campaign. (Even if it’s you) This will include a social media outreach schedule of pre-planned messages and including amplification strategies. Amplification is the means by which the entrepreneur will engage their followers to reach out to their own followers. All of this is both art and science. Take the time to educate yourself about crowdfunding and plan your campaign and you too can be one of the successful 20%.