How to Make $2 Million in One Day
Last month, a video game project called Ouya hit the million-dollar mark on Kickstarter in just more than eight hours. It was the biggest single-day crowdfunding total in Kickstarter history.
The project went on to receive more than $2.5 million in pledges within 24 hours. With just a few days remaining in its campaign, it has 46,914 backers and a whopping $ $6,061,081 in pledges.
Granted, Ouya is an exceptionally successful case, but what many business owners don't know is that crowdfunding is not just for start-ups--and it's not just about the money. A crowdfunding campaign can address some of the most significant challenges that small-business owners and start-ups face. From validating a new product or idea to gathering feedback from the marketplace and finding the resources to scale, crowdfunding can be the answer to your biggest challenges.
I've turned to the top crowdfunding experts to give us their most creative insights and strategies to leverage the power of crowdfunding.
Jason Best and Sherwood Neiss of Crowdfund Capital Advisors wrote the book on crowdfunding. They authored "Startup Exemption Framework," which was used in the JOBS Act, and which advises would-be crowdfunders to socialize their idea with its intended "crowd" before trying to raise capital on a crowdfunding platform.
"Pick people's brains on what makes your product or service exceptional," the book says. "Focus on what makes you stand out to customers. When writing your pitch and making your video focus on these strengths to increase your odds of success."
In crowdfunding, two items are crucial: the quality of your network and your online image, says Joy Schoffler, principal of Leverage PR, a publicity firm for growth-stage businesses that has helped clients raise tens of millions in capital.
"Before executing a campaign, look for ways to boost your online image; work on relationship building with the media by offering to be a source; take a leadership role with associations in your industry; connect with LinkedIn groups where you can meet industry leaders and engage with them," she says. "You need to create a profile worthy of investor dollars."
Once you have your online image set to impress, building a strong social network is priority No. 1, says Best. "Typically, 30% of your funding will come from your social network before anything comes from an anonymous resource."
Hence, crowdfunding is not necessarily right for social-media newbies.
"If you are thinking, I've never really gotten into that social networking stuff, stop right now and build out your LinkedIn, Facebook, and Twitter profiles," Best says. "Make sure you are engaged with your connections (both personal and professional), as you will not be successful without them."
Ruth Hedges, CEO of CrowdfundingRoadMap, a company that walks clients through the process of preparing for equity-based crowdfunding, advises that you start early. But also, she advises that you study up on the coming changes to the crowdfunding ecosystem.
"Sadly, many companies that want to raise capital via crowdfunding come January 2013 will not be able to," Hedges says. "The crowdfunding provision of the JOBS Act mandates that companies meet certain regulatory hurdles--such as audited financial statements and incorporation before listing their company on equity crowdfunding platforms."
Hedges recommends that you take advantage of resources available to help you succeed and prepare for your campaign. The Crowdfunding Professional Association, for example, has a good deal of educational classes for entrepreneurs looking for help to stay within the limits of the law. There is also a Crowdfunding Bootcamp in October 2012 that will get entrepreneurs ready to launch their crowdfunding campaigns.
"Remember that crowdfunding is a full-time job," says Neiss. "Executing an effective campaign takes many hours in front of your computer. Things such as answering emails, creating videos (before, during, and after a raise), and social-media management can eat up an enormous part of your day."
But the more communicative you are with your crowd, the better your chances of hitting your funding target, he says. So keep at it.
"When communicating through any medium, remember that one of the reasons people contribute to crowdfunding campaigns is to feel they are a part of something larger than they are," he says. "Give them insider info, such as showing them a video of where you make your product."
Who knows if you will hit the numbers that Ouya did? But following the advice given by these experts certainly increases the odds. Let us know in the comments or on Twitter if you have other tips and tricks for successful crowdfunding.
Marla Tabaka is a small-business advisor who helps entrepreneurs around the globe grow their businesses well into the millions. She has over 25 years of experience in corporate and start-up ventures and speaks widely on combining strategic and creative thinking for optimum success and happiness.