A lot of fans of Addicted2Success have shown interest recently in using crowdfunding for their startup. I thought I would make your life easy and bring you some tips from Rick Chen of Pozible, which is the largest crowdfunding platform in the Asia Pacific region and the 3rd largest globally. They have hosted more than 8000 projects and raised around $25 million dollars to date. The platform started out more for the creative arts industry, but now they have branched out into all sorts of different industries.
Pozible uses the reward based crowdfunding model, which is essentially pre-purchasing goods or services. The campaigns on the site must have an outcome so Pozible knows where the money is being spent. You must hit your funding target otherwise the project doesn’t go ahead, and you don’t get any of the pledges. Of course, you can always run the campaign again, but you have to get the pledges from scratch. The reason Pozible uses the all or nothing model is that they ask their users to only put the minimum amount they need. Anything you get on top of your target still gets to go towards you project. This way of thinking works well because if you know the minimum amount you need to do the project is $13k and you don’t get it, then logically speaking, you won’t proceed.
The idea came when Rick and his business partner were trying to figure out how they could help some of their creative friends raise money. One of those friends was brewing his own beer and having people prepurchase it. Rick and his business partner thought that a crowdfunding platform would be the best way for him to do that, and so, Pozible was created.
The most popular pledge amounts in order are $50, then $25 and then $175. In terms of the largest campaign so far, the award goes to a Chinese Smart Watch startup that raised $800k using Pozible.
Below are Rick Chens 7 tips for running a successful crowdfunding campaign.
1. Know the benefits of crowdfunding
One massive takeaway that I got from interviewing Rick Chen was that I always thought the whole point of crowdfunding was about raising money. While raising money is important, the main benefit you get is that it helps you build an audience for your startup and engage with your community. Even if you only raise a small amount, the raving fans you get on the platform are far more valuable, and you can build a business around them. A few Melbourne cafes have used the platform to sell coupons to their surrounding neighborhoods before they open. When the doors finally open they have had people lining up to use their coupon who now know their brand and live locally to their café – what a great way to gain exposure for your startup. As these people sit down, they can see their faces on the wall as part of their reward.
In general, technology projects tend to raise a bit more than art projects, so keep this in mind.
“If you have a product, that is based on some form of technology, you can use the platform to build your product and get real life feedback from your prospective customers”
2. Tell a great story
To be successful with crowdfunding, you must be personal, genuine and be a person with a real life story that is relatable. If your idea is airy-fairy, your chances of success are very low.
Use the format of a video to tell your story as it’s very convincing and very efficient to get your message across in the quickest amount of time. The video should be under 3 and a half minutes maximum. The one thing that should be in your video is a face, and it should be presented like you are telling your story to a friend. The questions you need to answer in the video are why you’re doing this, why your story is important and what people get out of supporting you.
Show evidence about your project like a prototype or what you have already achieved. This makes your story come across as legitimate. You do not need to do a lot of fancy things in the video otherwise it will come across as a branding video, not a pitch video. The video doesn’t have to be very professional and can just be done on your iPhone or webcam, although better quality is always a good thing, even though, the audience are not that picky. Make sure your video is trying to convince the audience and not Pozible of your story.
Don’t forget to include plenty of photos with your campaign. Rick says that photos displayed in a portrait layout work better than landscape because of the page layout of Pozible. Most campaigns on Pozible don’t have enough photos so try and put some really high-quality ones alongside the story. While it’s important to have text, a lot of people, don’t read it so make sure you have a good contrast between photos, video and text to cater for everybody’s needs.
3. Set the right minimum for your pledge
Knowing what target to set for your pledge depends on the actual project itself. Setting the target is a double edge sword because the higher you set it, the harder it is to reach. At the same time, you want to make sure you are asking for enough money to complete your project.
Once you have hit 100% of your target, there are other ways to get more pledges later on. There has been a lot of success on Pozible where campaigns have been reached and then later, a follow-up campaign is launched. An example of this is Adore Home Magazine, which has successfully funded three issues of their magazine on Pozible.
“Ask yourself, if the target of your project is $10k and someone offered you $7k to do it, would you still go ahead. If the answer is yes, then your target is too high”
4. Supporter’s care about the rewards
A good reward system combines tangible products, an experience and recognition together to attract supporters. Often people focus too much on the tangible products and discount the experience and recognition rewards.
A great experience might be if you were a musician you could have people pay $250 and you will come to their home and sing – you can’t buy this in a store. If you’re a startup and you’re trying to start a café, you could have one of your rewards as recognition where if someone pledges a certain amount, you put their name on the wall of the café.
The other thing you should think about when designing your rewards is that if your idea doesn’t work, are the rewards something that you can still deliver regardless?
5. Pre-launch and market your campaign
The maximum length of a campaign is on Pozible is 60 days. 30-50 days is usually a good place to start so that it doesn’t get too long and tedious. Before you even put your campaign up you should make sure that you have already launched it on social media to gather early stage supporters. Don’t make the mistake of launching your campaign with no marketing or traction beforehand. Most of the traction will be built from social media, not from the Pozible site – money won’t just fall out of the sky you must market it. As with any business idea or startup, you also need to have a social media strategy that involves your audience in the form of a content plan.
Rick says you should ask for pledges to your campaign around one to two times per day along with some content for your audience. Make sure you don’t ask for a pledge the same way every day and try and change it up.
One idea is to use the campaign update function on Pozible to tell your audience how far your campaign has come and what you’re working on for the campaign right now. For example, posting on social media the day the prototype becomes ready and then the next day you could say you just went to visit the manufacturer. As you approach the deadline for your project you should let people know and include some visuals, as this has been seen to be very effective in getting those last minute pledges.
6. Don’t be afraid to be quirky
There was a musician in Melbourne that wanted to raise a very small amount of money to buy a pint of beer and a chicken parmigiana at his local pub. His reason for starting the campaign was that it was hard to enjoy some of these simple pleasures being a musician, so he made the decision to turn on crowdfunding. The rewards he had on offer were anything from pledging a dollar so he will think about you when he drinks his beer, all the way up to $40 which allows you to join him in the pub to have a beer and chicken parma with him. As simple as this may sound, this campaign got a lot of media attention, and he got to have dinner with quite a few strangers after his campaign was complete.
While he didn’t make any money from the campaign, this story is very much a form of social engagement and could even be considered art. Could this be a clever way for your startup to test an idea or express your brand?
7. Take your startup overseas
On a platform like Pozible you can accept pledges from all around the world and they currently receive pledges from over 100 countries including China. Having launched in China last year, Pozible have already noticed that a lot of Chinese projects get pledges from overseas. This is a great way to gain overseas attention and money for your idea that could be the difference between success and failure.
If your campaign is not successful the most important thing to do is find out why, before considering to do another one. There is no exact timeframe for relaunching again, just make sure you understand why your idea is not selling. This will help you save money later on because you will have valuable market data around your idea. If you’re thinking of launching the campaign on a multiple crowdfunding platforms at the same time, this is a bad idea because people will support your idea no matter what platform it’s on. If you have two destinations for your prospects to go on and pledge, you will confuse them. Also, if you target is $50k and you set up a campaign on both platforms and only raise $25k on each, you end up having two failed attempts. If you setup on one platform you could potentially hit the $50k target instead of raising zero.
When I asked Rick what his favorite book was, he said that he enjoys content from the website “The School of Life.” This site helps educate people on the skill sets for life such as dealing with stress, managing relationships and staying emotionally healthy.
The future of crowdfunding is bright, and we will see more and more ways for it to be used. Already, Pozible are testing if research projects can be funded by their platform. They are also seeing farming being reinvigorated through crowdfunding, and having rewards be delivered in the form of fresh food from local farmers. Traditionally farmers relied on the big supermarket chains to sell and market their produce; now crowdfunding has helped to level the playing field.