I’ve shared what I learned about crowdfunding with dozens of people since we raised $100,000 in pre-sales through the Ambronite campaign. It’s been a privilige to help entrepreneur with their new ideas. Finally, I decided to compile all I have learned and share it in a blog post, for a one-stop-shop experience.
Setting the Expectations: Preparation Takes Time
Creating a successful crowdfunding campaign is much more time-consuming than one would think. Many assume you just launch a campaign and money starts flowing. But the fact is that you need at least 6 months to prepare. After we decided to crowdfund for Ambronite, it took us 9 months before going live with our campaign on Indiegogo.
Ambronite Campaign: Key figures
Ambronite raised $102,824 USD in total during its 60-day campaign between May 4th and July 3rd, 2014. The original goal of the campaign, $50,000 USD, was fulfilled at 205.65%. We had 829 individual contributors, and the campaign site on Indiegogo received 35,401 visits and 11,070 referrals. We were lucky to become the most funded food project in the history of the Indiegogo platform.
As you can see, most of our pledges came in during the first few days and during the last few days of the campaign. This was well expected and typical to most crowdfunding campaigns. It’s actually fairly easy to extrapolate the success of any crowdfunding campaign within the first 3 days of it going live. Most of the media articles came out during the first week, and a few articles helped us in the middle of the campaign, too.
Pledges Were Split Into Three Categories
- 1/3 of pledges came from people who had expressed their interest to buy Ambronite when it became available, prior to the campaign. We had a non-binding pre-order form on our website before launching on Indiegogo. There were 449 pre-orders totaling around $60,000 pre-revenue. We didn’t ask for payments at this point, but gathered a list of contacts to reach out to once on Indiegogo. Roughly half of these people completed their purchase when we launched.
- 1/3 of pledges came from media. TIME, Arstechnica, Entrepreneur, U.S. News and tens of others. We proactively reached out to journalists, together with externarnal help, during the campaign.
- 1/3 came from here and there, e.g. through social media buzz and Indiegogo discovery.
Indiegogo’s rule of thumb is to have thefirst 1/3 of the pledges committed to purchase before you launch. The next 1/3 will come from friends of friends, your extended network. And the final 1/3 will come from the platform featuring your campaign.
A Common Misconception of Success-factors
An amazing video. Great looking crowdfunding page. Well-thought pricing. That’s the recipe for success, right? Unfortunately, that’s a recipe for miserable failure.
To be fair, having these is a great start, but alone, these won’t bring you much in sales. Most campaigns fail here. They have great video, profile page and externally everything looks perfect. Then they are surprised when the campaign gets nearly zero sales.
Traffic is All That Counts
The common misconception is that the crowdfunding platform will bring traffic to your campaign.
The truth is, initially, the crowdfunding platform (e.g. Indiegogo or Kickstarter) hardly brings any relevant traffic to your page. You need to be able to generate traffic on your own first. For example, the Indiegogo’s GoGofactor will only feature you if you’ve been able to generate sales and traffic by other means. In a way, the platform multiplies traffic you’ve been able to generate yourself.
If you do really well, you might get featured to Indiegogo’s or Kickstarter’s newsletter. That can potentially be huge.
So How Do You Get Traffic?
I divide this chapter into four sections. 1) Social media presence, 2) Building your e-mail list, 3) Working with media to get coverage and 4) Paid advertising. The first two are pretty no-brainers, while working with media and paid advertising are usually areas that many first-time crowdfunders lack understanding and experience.
- Social Media Presence
You should have Facebook and Twitter accounts and start building the brand early on. It’s a good idea to register Instagram, Pinterest, Linkedin, etc. even though they might not be relevant at this stage. We started activating our social media channels one year before the campaign.
When you have your brand & visuals are ready, you can soft-launch your brand through your website and social media. A simple landing page is enough. Tell a story and start gathering email list. If you are not too savvy with tech, there are lots of tools out there such as Launchrock.
2. Newsletter — E-mail List
When you have your social media presence in place, it’s good idea to start generating an e-mail list as soon as possible.
When you don’t have any product ready, your main call-to-action should be converting your website visitors to newsletter subscribers. You can attract people to join by promising them to be the first ones to know when you launch. We also provided a small discount during the first 48 hours of the campaign for our newsletter subscribers.
Be creative — You can also provide some other value-added insights about your product of the industry in general, e.g. through an auto-responder. Keep the email list warm with at least one email per month.
3. Working with the Media and Getting Coverage
Reaching out to media is extremely underestimated and is often not completely understood. There are thousands of journalists out there looking to cover great new inventions. If you don’t contact them, they have no idea about your initiative.
You need to put yourself in their shoes. Journalists are looking for scoops: interesting milestones that nobody else has covered yet. If you’re preparing a crowdfunding campaign you already have two stories to tell: 1) your new product and 2) simply the fact that you’re crowdfunding. Crowdfunding as a method is still attractive to readers all on its own
Being featured in international media doesn’t just happen by creating a website and waiting for a journalist to find it. You need to proactively pitch to journalists. Cold-emailing is perfectly fine when you do it in a proper way. The best part about crowdfunding is that you can contact journalists a few weeks before the launch and share a private link to your crowdfunding campaign. That’s a scoop — early access to a story that has not yet been covered. It also gives the journalist time to write about you. Due to the nature of our product, we also sent physical samples of Ambronite to most of the journalists. Actually, most journalists would have not written about us without the samples, so be prepared to send something in case you have a food product.
Keep in mind that outreach can be surprisingly time consuming, and you won’t get reply to most of your emails. Thus, don’t just contact 10 journalists. Contact 100. Or 1000. Aim high — find a journalist from a large newspaper, who has been covering your niche. Just remember to send tailored and personalized e-mails to each person. Tools such as YesWare are useful for personalized, but scaled outreach.
Tip: Do not write a public press release! Press release implies that there is no scoop anymore. Focus on a story idea instead. And pitch it to directly to one journalist, not in the mass email chain. There are many good articles on how to interact with the media. For example The press release is dead by Mike Butcher from TechCruch.
PR professionals — are they any good?
Beware, most traditional PR companies are utterly useless for crowdfunding. They merely provide you copywriting services.
However, there are some novel agencies and freelancers who can do e-mail pitching to thousands of journalists, and do this quickly. We had external help for 2 months, and it was definitely worth every penny. Based on my experience, most of this talent seems to reside in the US, not in Europe.
Convert to Organic Traffic
Not only did the media hits turn into instant sales, but the articles also built our SEO, and thus increased organic traffic to our website in the long run. Google ranks search results with the PageRank algorithm. PageRank basically counts the number and quality of links to a webpage to determine a rough estimate of how important the website is. The assumption is that more important websites are likely to receive more links from other websites. Also, TIME Magazine, Wires, Business Insider etc. are great quality links.
4. Paid Facebook Advertising
Crowdfunding campaigns have recently seen a boom in digital advertising, especially in paid Facebook ads. This was also emphasized by Indiegogo UK’s Director Anastasia Emmanuel on 12th Nov, 2015 in an event “Building crowdfunding success” organized during Slush 2015 where we both were invited to speak about key ingredients for successful crowdfunding campaign.
When it comes to Facebook marketing, there are two simple, but useful tools: Retargeting and Lookalike Audiences. Retargeting enables you to show ads to people who have visited your campaign page, while Lookalike Audience lets you to upload your email list (or even a list of phone numbers) to Facebook and its algorithms target people with similar interests.
Anastasia mentioned an example of a drone-project that got $12 return for every $1 invested. They put in $100,000 in Facebook marketing to generate $1.2M worth of pledges.
On the cautionary side, my own experience is that the glory days of Facebook marketing have passed. A few years back, bid prices were super cheap and people were building enormous e-mail lists. Today, Facebook ads are much more competitive. Still, they can be useful. Just be prepared that learning the tricks and optimizing the campaigns take time.
We didn’t use paid Facebook advertising for the Ambronite crowdfunding campaign. Looking back, this could’ve been a great opportunity.
Shooting the video
We hired Uber Creative and they did splendid job. Many of the awesome ideas for the video were brainstormed together with Jasu and Mikko from Uber Creative.
I’d definitely recommend hiring a professional video freelancer to shoot and edit the video. Just hire carefully so that you can trust their level of professionalism. References are easy to check from previous videos, but the prices vary a lot. We got offers everywhere between $3,000 to $60,000.
You definitely should be the mastermind behind the script and plan what you’re going to say. Just leave room for the video team to have their say on the rest (shooting locations, video angles, etc.). They usually come up with amazing creative ideas that you wouldn’t have thought of. That’s why it’s better to plan this together.
In retrospect, we wasted a bit too much time tinkering our script and thinking about exact video shooting locations before hiring Jasu & Mikko.
The crowdfunding campaign and video are going to show a big part of who you are and what you stand for as a company, so prepare them well.
Running the campaign
Day 1 — The Launch Plan
The first two days of the campaign were extremely hectic. Our team spent most of the time in front of computers. There were a lot of queries coming in and we had to respond to all of them. This really showed us the nature of a wired world we live in.
Also, we were able to enjoy Ambronite meals every day, which proved to be a very convenient “launch meal”. That said, we had to schedule time to actually leave the computer screen with the team to get some exercise and fresh air.
Twelve hours before the launch, we pinged our newsletter subscribers about it. They would be prepared to make the pledge to get an early-bird discount, which was only available for first 48 hours.
When we launched we 1) Sent a newsletter to our e-mail list 2) Sent a reminder to those who placed pre-orders 3) Shared our message on Facebook and Twitter.
One of your greatest resources is your friends and family. A few days before the launch we personally reached out to 100 of our friends over Facebook. We told them about the initiative and how excited we were, and asked if they would like to help and share the campaign during the launch date. Of course your friends want to help. Always remember to be grateful and say thanks even for a tiny bit of help.
Also, the media interviewed us a few days before the launch, so the journalists were waiting to publish their stories within the first days of the campaign.
Day 60 — Final Day of Crowdfunding: How to Top Six Figures
During the last hours, the team was stressed out — we were worried whether we were going to cross six figures in revenue or not. It was so close, but there was not much time left. Suddenly, the campaign was well over $100,000. One of my American acquaintances, I met him for casual chat during the Burning Man festival the year before, pledged $2,599 USD for one year’s worth of Ambronite meals. After pledging, he sent me a message: “Wanted to make sure you topped $100k. And I couldn’t pass up the free shipping option! :}”
Lesson learned: random interactions matter. Stay grateful and keep sharing your passion wherever you are :-)
Day 90 — After the campaign?
Managing more than 200 backers after the campaign is a pain if you are going to rely on Excel only. Backerkit is a great (almost de-facto) online platform to manage your pre-orders. You can simply import your pre-order excel from Indiegogo or Kickstarter. Backerkit handles address confirmations and you can conduct a survey through it (and learn a lot from you customers). The platform has a price tag, but it allows to upsell more products to your current backers, which covers the cost. 100% recommended.
Day 120 — How We Leveraged Our Crowdfunding Backers in R&D
The unique aspect of crowdfunding is to have paying customers before they have even used you products.
Your crowdfunding backers will be a major asset to you in many ways, not just financially.
When our crowdfunding campaign was over, we had a nearly finished version of our recipe developed. We wanted to understand more about what our customer thought and we sent out free samples to 50 of the backers. We asked for a 15-minute call in return. That helped us to understand how our customers used Ambronite, what they thought about the taste, labels and so on. This was valuable input and we were able to hone the actual product to be even better when shipping the final version to backers.
Before you start to work on your campaign
Motivation and Timing to Launch Crowdfunding
Revenue should not be the sole target of crowdfunding. Many times your profit will turn out to be pretty thin from the campaign itself. However, a successful campaign will bring you much more — media coverage, early customers, a community. It will also leave a public stamp of your success. It becomes part of your story and helps with other aspects, for example to raise funding from traditional investors. Our successful crowdfunding campaign was naturally a part of our pitch when we raised $600,000 in funding later.
When to launch?
It’s good to be confident that you can actually manufacture and deliver what you’ve promised. Being late for a month or two is fine. People accept that when they participate in a crowdfunding project. However, it’s not necessarily a good idea to raise money before understanding your manufacturing process.
We already had some 200 paying customers before launching our campaign. We had iterated our product and understood customer priorities at some level. Also, we had a nearly finished recipe and a partnership with a co-packer before the launch. Still, it took us five months to get the product to backers.
Crowdfunding looks much easier what it is
A campaign is much more time-consuming to prepare than many assume, and it’s even harder to be successful. To put things into perspective, only 1.99% of successfull Kickstarter projects raise more than $100,000.
Yet, crowdfunding is definitely worth the effort if you plan to launch a consumer good and build a start-up around it. Just remember that it’s extremely rare for a campaign to go viral. To be successful, you need to systematically and willfully build your presence. Great video and a honed profile page are important, but won’t bring you any sales alone. Focus on building traffic: engage your friends, build an e-mail list, plan your media outreach and learn digital marketing.
Co-founder at Ambronite