Crowdfunding. Easy money? Think again.
Potato salad [$55,492]. Oculus Rift [$2,437,429]. Veronica Mars Movie Project [$5,702,153]. Crowdfunding has become an incredibly popular way to raise money, kickstart projects, gain initial stakeholders and develop good will. However, if you think everyone will love your project, race to pledge and propel the project to stardom, you may need to reassess.
In May 2014, I started planning my crowdfunding campaign to raise money for a children’s picture book series. The series focused on travel and a portion of the funds raised would be donated back to the community. What followed in the next couple of months proved eye-opening. Never had I felt so ignorant, idealistic and out of my depth.
Like many others before me, I learnt first hand what it feels like to be rejected, time after time. I learnt that entrepreneurship can be a lonely road and you need to be comfortable spending a lot of time with yourself. I also learnt how incredibly generous some people are with their time and experience, and will help you without expecting anything in return.
Whilst this article is a more reflective piece for my own benefit than anyone else’s, I thought I’d just share some of the harder lessons of crowdfunding with those who are interested.
- Network to give rather than take.
Too often, people go to a networking event hoping to gain something. They scan the room for people who they think will be of use to them and target those individuals. They also take a scattergun approach to handing out business cards. I find it much more rewarding and effective when I engage in interesting conversations and offer help to others where I can. More often than not, you get back what you put out and you’re more likely to have made a more meaningful contact. Here’s the twist, usually someone you speak to will know someone who can assist you. There is truth to six degrees of separation so remember, network to give rather than take.
- Ideas that sound good in your mind don’t necessarily convert to good ones in real life.
You’ve got this brilliant plan, it’s going to create traction and propel your project to success overnight, right?I had one of those too – I attended a charity ball, the campaign got a mention in the speeches, hundreds of flyers went into goodie bags but I got zero traction. Nothing. The lesson here isn’t to be discouraged from trying out ideas but to make sure that you take a varied approach and lower your expectations. Sometimes engagement or assistance can come from where you least expect it.
- Understand the importance of being adaptable.
Adaptability comes in many forms. From dealing with rejections from bloggers, journalists and sponsors to figuring out how to maximum your return on investment with limited capital or dealing with people who let you down. It’s inevitable that things will go wrong because that’s part of life. It’s how you respond to those situations that makes a difference. My film producer promised but failed to deliver my campaign video before the launch, so I learnt how to create my own in less than 24 hours using Biteable. Any situation can be overcome if you’re adaptable, resourceful and determined.
- Be smart about who you work with.
I was very fortunate to have an amazing co-campaigner, Nic Bayley, and two key mentors, Humphrey Laubscher and Jim May, who stuck with me through thick and thin. Many others also generously helped me where they could and for that I am utterly, eternally grateful. Some people, however, are time wasters and you need to be selective early on and cut your losses. It’s hard because you feel mean and you try to make excuses for them but time is of the essence.This also applies to freelancers to whom you outsource work. Ask questions, test their abilities and make sure you give clear instructions. That way, you’re not wasting time fixing their mess afterwards.
- Be your own evangelist. If you don’t believe in your product, sell it like hot fudge sundae and stand up to naysayers, who will? Sometimes you have to be assertive even if it means stepping on some toes. Put yourself out there and if the first option fails, propose an alternative. Try to find ways to make it work for both parties so it is a win-win.
As Robin Williams once said, “You are only given a little spark of madness. You mustn’t lose it”. Over the last 60 days, Nic and I built a base of over 600 fans on Facebook with at least 10% of them actively engaging with our content every day. We also reached an audience of over 45,000 on Twitter. We approached bloggers and were featured in numerous blogs and appeared in an international magazine. We signed up four community sponsors to help our campaign in various ways and we committed to book donations to major Australian children’s hospitals. On top of that, we ran a successful illustration contest that attracted entries from 11 different countries in the world and we now have a rockstar illustrator, Elinor Hägg, from Sweden!
Whilst the project hasn’t yet reached its funding target, As I’m writing this reflective piece, our project has just tipped over its funding target. The experience I have gained, the new mentors and friends I have made have been nothing short of incredible. Funny thing is, if I hadn’t been ignorant and idealistic, I might have never run this crowdfunding campaign. Perhaps that’s what Steve Jobs meant when he said “stay hungry, stay foolish”?
Think less, and just do it!
Figures that might interest those who like numbers:
- Roughly, we spent 20 hours pre-launch researching and preparing content calendar, 30 hours working on the campaign page and creating video, and an average of 6 hours a day (7 days a week) post-launch working on the campaign. Total 410 hours to raise $10,000.
- Out of 400+ bloggers we got roughly 20 bloggers to share our campaign on social media (5%).
- 1 out of every 4 potential community sponsors we approached came on board this project (and usually 2 out of 5 seriously considered our offer). Note, we were very selective on who we targeted due to time restraints.
- Mass advertising / promotion of page on Facebook = 0 conversion. Targeted advertising is much more effective.
- We spent $80 on VA on o-Desk to compile a list of 250 blogs with descriptions.
- We spent around $300 on marketing through facebook and PR.
- We spent $500 on the prize money for our Illustration Challenge.
- We paid roughly $750 (7.5%) of amount raised in fees.
- We donated $1,000 to the charity we are supporting.
- We have yet to pay for distribution of books but the cost is estimated at around $700.
About the author: Lawyer by day, children’s book author by night. Longzhen (Longy) has travelled independently across 7 continents, over 30 countries and 90 cities mostly on a shoe-string budget. She is running a crowdfunding campaign to fund a children’s travel book series and 10% of the money raised will be donated to the Indigenous Literacy Foundation, a charity dedicated to raising literacy levels amongst indigenous children living in remote areas of Australia. You can check out her project here: http://www.pozible.com/project/183060