12 Secrets for Success in Crowdfunding for Social Entrepreneurs

posted Nov 15, 2012, 4:12 PM by David Khorram   [ updated Nov 15, 2012, 4:51 PM ]

This  week I’ve polled a variety of people with experience in crowdfunding to identify the secrets for success for social entrepreneurs.  I’ve talked to people who’ve tried to raise money using crowdfunding and have raised absolutely nothing.  Others have been blown away by the generosity of their friends, neighbors and social network, raising more than they hoped or expected.

The following insights may help you to join the ranks of those who are blown away by the generosity of crowdfunders:

  1. Start before your start:  Nathaniel Houghton, Founder and CEO of the Congo Leadership Initiative, notes that, “A successful campaign should have at least 50-60% of funds committed before the campaign launches.”   Sherwood Neiss, Principal at Crowdfund Capital Advisors and a leader in the JOBS Act effort to allow for equity crowdfunding, adds that you should vet “the idea with your crowd prior to going live so they can start coming in with funds ASAP.”
  2. You’re in the movies now:  Neiss notes that the video that introduces your campaign is vitally important. “Make a video that sells you and the idea within 2 minutes,” he says. Megan Doepker, Founder of UNA Fashion, says, “Bring on the passion! Your campaign video is the vital tool to let your passion and vision shine through.”
  3. Be creative:  Javan Van Gronigen, Co-Founder ofDonately and Founder of Fifty & Fifty, suggests that a key to success is “be really creative and make something that is shared solely for its uniqueness.”
  4. It takes money to make money:  Van Gronigen adds that you need “to put money behind a good campaign so you can do the grunt work to make it successful (emails, phone calls, web work, etc.).”
  5. Leverage your social network: Neiss offers the counsel that represents the long pole in the crowdfunding tent: “Have a strong social network.”  Of those I surveyed for this article, only about 20% felt you could raise more than $2 per person in your social network.  If you only have 78 Facebook friends and you’ve never understood what Twitter is for, building a successful crowdfunding campaign will be a challenge.
  6. Support your supporters:  Van Gronigen suggests that social entrepreneurs need to “come along side their fundraisers to cheer them on.”  Houghton add that “The most important thing is to make it easy for supporters to share the campaign with their contacts. Writing out emails and social media communications for their use makes it possible to grow the campaign organically through existing supporters.”
  7. Image representing IndieGoGo as depicted in Cr...

    Image via CrunchBase

    Organize your campaign:  Joy Schoffler, Principal of Leverage PR and who previously engaged in raising capital for startups, suggests organizing your list into As, Bs, and Cs, where the As are the “low hanging fruit.”  “If I could raise 25% from my A list I knew chances were good that the B’s and C’s would close the rest,” she says.

  8. “Tell a great story:”  Alex Budak, Co-Founder ofStartSomeGood, says, “Remember to tell your potential supporters why you’re doing this in the first place.  Why are you dedicating your life to this issue?  Why are you giving up sleep and a traditional career to make a difference in this manner?  Speak to your vision and your impact, and don’t forget to connect with supporters on a personal level.  Let your passion and your personality show through.  Ultimately your ability to tell a compelling story and connect with your community will drive your success,” he concludes.
  9. “Again and again!”  Doepker suggests that, “You need to engage your family, friends, social network, media and influencers in your industry. Be sure to include a call to action and why backing your campaign matters. For example, back UNA Fashion [on Indiegogo] to make a style statement and change the world through the movement to ‘fashion the change!’”
  10. Expertise, traction and scale:  Rory Eakin, Co-Founder of CircleUp, notes that, “We find the most successful entrepreneurs are able to demonstrate three things for potential investors: expertise, traction, and potential to scale.”
  11. It takes work:  Howard Orloff, Managing Director and Mayor of IPO Village, “The effort and resources put in to creating [and] promoting the campaign cannot be overestimated. The greatest idea or business concept can easily be lost in a poorly presented campaign.”
  12. Public relations:  Simon Erblich, Founder of IPO Village, observes that, “From experience, we have found that retaining a PR firm familiar with the industry can be extremely worthwhile if you land the right firm… do your due diligence!”

A consistent theme from across the panel was that it is difficult to predict outcomes.  Few campaigns gain “viral” traction, meaning that by and large crowdfunding is really “peerfunding.”    While Houghton suggested having half of the money for the campaign raised before it begins (see number one above), most were a bit more optimistic and several refused to suggest a number.  Virtually all agreed that having a big, fast start was key to the long-term success of the campaign.

Please share your experiences in the comments below.  In the future, I’ll be writing a story about crowdfunding mistakes that social entrepreneurs should avoid and hope you’ll help me with that by filling out this survey.

Posted from: http://www.forbes.com/sites/devinthorpe/2012/11/15/12-secrets-for-success-in-crowdfunding-for-social-entrepreneurs/