Thinking about launching a crowdfunding campaign? Professor Erik Noyes hosted a “Crowdfuding 101” session for the Butler Venture Accelerator to explain the basics of this fundraising strategy. While there are four types of crowdfunding (rewards, donations, equity, and lending), this discussion was focused on rewards-based crowdfunding, in which backers receive a “gift” depending on the amount donated. Popular crowdfunding websites of this type include Kickstarter and Indiegogo.
Professor Noyes is a strong proponent of visually communicating your product’s value and benefits. He recommends creating a compelling “looks-like” prototype for your campaign video if the product isn’t complete so that backers have a good idea of what they are funding. It also helps to share updates with supporters to keep them familiar with your project’s momentum. Doing so becomes especially vital if you fall behind schedule when fulfilling rewards.
It may seem straightforward, but be sure to double- and triple-check your costs. All too often, companies excitedly finalize campaigns using faulty calculations. Inaccuracies lead to frustrated customers and lost trust. If you find yourself in this situation, it is vital that you maintain transparency with your backers.
A final tip is to encourage supporters to build on your idea. Avoid presenting your project as final and absolute, because you may choose to incorporate changes suggested by backers. These can range from product color to additional features. Listening to feedback can create ties with your market at scale, as the backers will feel more involved in the venture.
We hope that Professor Noyes’ advice helps you run a successful crowdfunding campaign!