● Running a web development / data analysis agency for the last six years ○ Punk Rock Dev ○ https://punkrockdev.com/ ● We often work with startups on building minimum viable products (MVPs) ● These startups sometimes use crowdfunding to raise funds ● Two recent examples where I was involved: ○ CloudFleet on IndieGoGo (website) ○ CraftStrom on Kickstarter (IndieGoGo rollover, website) About me
● Funding a project by raising small amounts of money from many people ● In short: ○ You present your idea (or better) prototype – using video, images, text, demos… ○ You ask people to pledge financial support to back your project ○ In return they get something – “perks”, often the actual product once it’s finished ● Goals ○ Fixed – unless the campaign reaches a necessary amount, everything is returned ○ Flexible you keep the amount and are responsible for delivering, no matter the amount ● Most popular platforms: ○ Kickstarter ○ IndieGoGo ● Other models exist ○ crowd investment (Conda) ○ local variants (Croinvest, Startnext) What is crowdfunding?
Technical challenges ● Feature creep ○ What is the minimal set of features for the product to be useful to the user? ○ Is what we're working on really that vital? ○ Is something else that's not finished actually more important? ○ If this feature was never finished, would it make our product useless? ● Just because it seems fast to implement something (yay, Python!) doesn't necessarily mean it's a good idea to do it right away ● Hardware products especially complex ○ Long feedback cycles ○ Delays with shipping, customs etc. ○ Communication barriers with the suppliers (WeChat, anyone?) ○ Bugs much more difficult to fix if products have been shipped
Case study – building a hardware webmail service ● Very complex ○ High demands on security and data protection ○ Lots of 3rd party integrations needed ■ Proxying to traverse the NAT ■ Using trusted mail servers to avoid being filtered as spam ■ Registering a domain automatically ● In retrospect, we probably could have selected an easier app ○ e.g. a team chat server ○ Launch more quickly ○ You can always extend the product later on
Business challenges ● Will people really want your product? ○ What is the persona you are targeting? ○ Who are they? Do a persona workshop! ○ How will they trust your product? ○ How will they find out about your product? ● The Business Model Canvas – useful tool ● Competition ○ Have there been similar products? ○ Where they crowdfunded? ○ How successful were they? ○ How did they reach their audience? ○ How is your product different? ● Do your research!
Case study – testing demand and building our crowd ● Professional marketing team and well made product materials (website, photos, videos) ● Focused ad campaigns to measure how many people in different markets we can take through our marketing funnel ● A measure of interest and a newsletter list of potential backers ● Pretty successful already at this stage, so we were confident going into the campaign
Timeline ● The campaign really starts about 3 months before the actual campaign ○ Ramp up on social media ○ Growing your community ○ Newsletter signups for interested people ○ Ads ○ Bring your own crowd! ● The whole process of preparing all the materials, video production etc. with the campaign can easily take one whole year ● Think through your campaign start time ○ e.g. before Christmas people are shopping more, but your ads will be more expensive (competition) ○ After New Years people have spent most of their cash, but are online more ● Leave enough time to get verified and approved by the platform ○ Kickstarter – exposure there potentially more valuable, but approval is more difficult ● Possible rollover campaign – after Kickstarter we continued on IndieGoGo, but you can also redirect people to prepurchase in your own store
Production ● Get professional help! – it really makes a difference ● Video production and marketing are probably the most important areas ● There are crowdfunding agencies who help you for a fee ○ We used one for a part of our campaign ○ Hard to measure how much they're really impacting the success ○ Analytics on Kickstarter very limited (e.g. no referral tracking), IndieGoGo is a bit better
Defining perks ● Try to set levels for all financial categories ○ Lots of people maybe want to give smaller tips, without really committing ● Keep in mind the availability if you want to allow different price tiers ○ Early bird etc. ○ Set smaller quantities of discounted perks to create a sense of urgency
Setting your goals ● Don't set your goal too high! ● Calculate what you really need to be successful, but aim to set your official goal lower and overshoot it ● The sooner you reach your minimal goal, the better ○ People like backing successful projects ○ Not so much if you're stuck on 10% for too long and it looks like you won't make it ● If you reach your official goal, but not your internal goal you can always refund everyone ● Famous example: ○ Pebble watch officially aimed for $100,000 ○ They needed ~$3M (if I recall correctly) and were willing to refund if they got less ○ They raised over $10M in the end (so they overshot their official goal by 100x, but their internal goal by only about 3x)
The actual campaign ● Have agreements with your friends / family on who will fund on the first day ● You want to raise about 1/3 of your official goal already on the first day from people you know will back you! ● That way you pick up pace, gain exposure on the platform and it looks likely you'll make it, so you attract more backers ● Have a plan of frequent updates, posts etc. during the campaign ● You want to do a bit of storytelling to keep people interested ● Time to deploy that ad and newsletter strategy you’ve been preparing ○ Test different ads, target audiences and compare against the achieved pledges ○ Keep in mind that people can still cancel their pledge before the campaign is over
● The “only” thing remaining is to actually run you business 🙂 ● That’s the part of the story we’re in now with CraftStrom ● Time to set up proper customer support channels ● Transparency is important ○ Communicate any delays or hiccups ○ For the most part, people are understanding Delivering your product
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