by Louise Graham
We interviewed Chris, who has over 8 years of experience and has contributed to over £2 million worth of Crowdfunding activity. Chris is the passionate and enthusiastic author of Crowdfunding Intelligence, and has three new books in the pipeline this year. We spoke to him about his experience and what constitutes a successful Crowdfunding campaign.
A question on many people’s minds is: “what exactly is Crowdfunding?”
It’s very simple. It’s asking the crowd for permission to create your vision. In my book Crowdfunding Intelligence I call it ‘crowdconsent’.
And, how does a start-up, brand, or entrepreneur know if Crowdfunding is the right strategy for them?
Firstly, I’d say that Crowdfunding is not the be all and end all. There is a lot in the entrepreneurial press about alternative finance, and Crowdfunding being a saviour, but that’s not necessarily the case.
If you are looking for finance, some key questions to ask yourself are:
i) is it just money that I am looking for? In which case traditional financial institutions may be a better option
ii) am I looking to engage a community, or build a community around my vision? In which case Crowdfunding is an ideal way to move forward
iii) have I already got a community or vision? Then community shares or a co-operative model may be a better way to go.
There are so many Crowdfunding platforms these days. How does a start-up go about choosing the right Crowdfunding platform?
Good question. If we look just in the UK alone there are over 100 Crowdfunding platforms. This includes all models of Crowdfunding: donation, reward, equity, interest, and mixed models. We list all the platforms on our Minivation website.
Auditing is key. Take time to assess all the options. Start by looking at the campaigns on each platform, the type of successes they’ve got, the seasons when they are being launched, what are they asking for, and rewards and promises that they are making. So take all this into account, the pitch, what are they saying, what kind of language they are using and the amount of money coming into each campaign. From that you can start to gauge if that is likely to happen with your campaign and if it is an appropriate platform for you.
If the auditing process becomes just a little bit too much, and someone wants to be handheld through that process, what questions should the consultant be asking?
They will need to understand your vision more than anything. They need to ask about the finances, the team and the product. Be mindful. If the consultant jumps straight in over-enthusiastically and promises you the earth then be very suspicious. A real consultant, someone that really wants to add value for you, will want to know those details first before there any sort of commitment on their side. If they can’t help then they should be able to pass you on to someone that can.
Do you have any tips on the amount to ask for with Crowdfunding?
My advice is to always ask for the top amount. For example if you can create your vision for a set level of 1000 pounds but for 5000 pounds you could create “wow”, then go for the 5000 pounds. It may not work, but you will get valuable feedback from the crowd on your vision. Armed with this you can always make another attempt for the lower amount.
What minimum level of investment do you feel is needed for a successful Crowdfunding campaign?
I’d say anywhere between 500 and 1500 pounds. Most of the time you need a polished video and a polished message to engage the crowd. It’s rare that you can get away with not having that.
What do you think the biggest mistake that companies make when opting to run a Crowdfunding campaign?
That’s easy. Lack of planning, without a doubt. A lack of preparation and a lack of awareness of Crowdfunding. These are the two key reasons that campaigns will fail.
BUILDING AND LAUNCHING
At the start of the interview, you mentioned the definition of Crowdfunding is “crowdconsent”, that is, asking the crowd for permission to create your vision. Can you tell us a little bit more about this ?
With any campaign that you are launching you are making a promise to the crowd. It’s all about taking the time to assess who those individuals are, if they match your campaign, what can you offer them in return, why would they invest and give you their crowdconsent?
There are three layers of what I call “ties” to consider. First are the strong ties, which are your friends and family. Second, there are the weak ties, which are the friends and family of your friends and family. The third are the tertiary ties which are another level of investor that may not have any face to face contact with you but they may like the campaign and see you on Facebook, Twitter, Instagram, or whatever. Outside of this you’ve also got satellite influencers, and these satellite influencers may prevent others from investing in you. Of course, they don’t pop-up until you’ve gone live, and then it can be a bit late.
It’s really making a judgement call on who the crowd are, what they need and what platform they are on, and matching all this up — that should lead to crowdconsent.
So, once you have the crowd, how do you maintain it?
Part of it is actually asking for help, what we call supplication — simple impression management. You need to impress on the crowd that you have the desire to create this vision, but that you need their help to create it.
It’s part of the ‘updating’ process. In Crowdfunding Intelligence we talk about the “push” and the “pull”. The “push” is about you pushing out information — the pitch. The “pull” is the comments and questions being asked by crowd. These are both really important as is it is through them that you are engaging with the crowd, which gives you an opportunity to tell more of the story behind the product.
How do companies share their vision while at the same time making sure that their ideas are protected?
This is a major issue that nobody has managed to resolve yet. I’m currently writing about issues of Intellectual Property in a new book called “The Dark Era” which should be out by the end of 2017.
How do you measure the success of a Crowdfunding campaign?
It depends on what you are going to measure. There are many different ways to view success. I would say that primarily it’s about exposure. You have to ask yourself: what is “success” in your vision? I think it’s important to determine this quite early, as those that focus just on the money quite often won’t succeed as they aren’t creating value or being authentic.
What top tips do you have for after a Crowdfunding campaign?
Number 1. Keep talking. Keep communicating with the people. Keep telling them what’s going on.
Number 2. Be open to ideas. The crowd might have ideas, a skillset, input that you might want to use, and why not?
How long do you recommend between one Crowdfunding campaign and the next?
It really depends on the campaign and on the vision. It’s all about evidence. If you can: prove to the crowd that it’s a serious business; that you’ve moved from being an idea to something concrete that works; and are coming back to offer equity to achieve something together as a community, then you are ready to launch the next campaign. It’s all about making an impression on the crowd and not coming across as greedy.
Where do you see Crowdfunding going in 2017?
My personal view is that I think technology Crowdfunding will increase. I think we are still at the very early stages of the IOT (Internet Of Things), and in the future we will see more connected devices, connected clothing and wearables coming out.
In terms of financing, I think the trend will be towards a reward model for early phase start-ups and businesses, especially in the technology industry. Based on the trends that our trackers see at the moment it looks like the market for equity will reach a plateau and possibly decline slightly by 2020.
Can you tell us a little bit more about Minivation and the work that you do?
Minivation is the educational side of Crowdfunding. On Minivation we have the CPP — the Crowdfunding Planning Page, which includes 5 essential segments available for download: i) pre-campaign, ii) live, iii) pitch, iv) promises, and v) ‘post’. ‘Post’ is important segment, as once you’ve crowdfunded you’ve got a community around you ready to leverage.
Among the creative industries there’s a tendency to think you don’t need a business plan as you aren’t selling a product, but actually you are. Business planning will help you focus on your vision, and those intricate grey areas and how it all connects together.
These are all presented in easy to watch video formats. The idea being that viewers can gain insights and tips for building a more robust campaign.
What other services to do you offer to assist start-ups?
We have a series of consultants here in the UK that we can pass people to.
We’ve also developed a brand new framework for Crowdfunding and are looking to gamify this process. Towards the end of 2017 we should have our first series of games coming out. The idea is that the entrepreneur can step into the game, play the game, and then be able to conceptualise problems and see the issues that they may encounter in their campaign, meaning they should be much better prepared.
At the moment we have a series of board games that we are working on and we hope to digitise those towards the end of 2017 if the games work. We are just at validating the framework, so if you know anyone that’s looking to Crowdfund, we are looking for entrepreneurs and experts like yourself to tell us what they think. It means they also become part of the research we are doing with University of Southampton (Call to action below).
The Think Collective were sent some questions by Manta Watch Camp: a grassroots marine conservation and ecotourism project based in Papua New Guinea. They are considering using Crowdfunding as an innovative way to fundraise for a rehabilitation and education centre, that primarily focuses on protecting mantra stingrays and sharks.
Manta Watch Camp: What advice would you give for choosing tempting incentives for backers if the campaign isn’t product specific?
Yes, this is always a problem. For example if you have a sanctuary like this, then vision is not that specific; the problem could be that you have a nebulous entity that you are seeking crowdconsent for. I would suggest the creative strategy for the campaign would be to focus on one shark or one particular aspect of the centre. For example a shark within a family that maybe has an illness, or needs a bit of special extra attention, or hasn’t developed friendships as much with the other sharks, or is vegetarian…
It’s about finding that emotional tie. Then it’s all about finding your consumer tribe. In this case you can’t sell to them but can offer them something as a support mechanism in order for them to grant you crowdconsent in return. For example, Dartmoor Zoo ran a campaign a few years ago where they offered sponsorship of the animals as a reward. That was the deal. That particular campaign had over 40 rewards, way more than we advised at the time, but they received more than £300,000 for the campaign.
Call to action: If you are interested in participating in the research at the University of Southhampton reach out at firstname.lastname@example.org and we’ll make introductions.
Crowdfunding Intelligence, The Crowded Cases , Crowded Comments: Equity , Crowded Comments: Loans, The Dark Era (covering issues of Intellectual Property), and the Crowdfunding Readiness Assessment (currently in early stages of development).
About Louise Graham:
London-based (for now) Co-Founder The Think Collective. A global network of problem solvers helping entrepreneurs solve their marketing problems in effective and imaginative ways.