If you’re in need of cash for your project, there are three major choices: bootstrap things entirely, search for key investment partners, or draw on the resources of those who love your product through crowdfunding.
The idea of raising millions in a day from enthusiastic fans might be seductive, but over the past five years company founders have revealed to SmartCompany and StartupSmart that even when things go well, a significant amount of planning — and fretting — has been involved.
Here are insights from those who have drawn on their customers and communities to raise the funds to grow — from how to manage the emotional rollercoaster, to why patience really is a virtue in the crowdfunding realm.
Flow | Stuart and Cedar Anderson
Raised $15 million on Kickstarter, 2015
Cedar Anderson on the buzz of a successful campaign and the time it takes up:
“I would wake up at five in the morning and be talking to ABC Radio and then a little bit later I’d be talking to the Washington Post. I think it was three months of sleepless nights.
“It was the craziest, busiest time that’s ever happened to me, being pulled and stretched in every direction. I experienced anxiety for the first time in my life and, at the same time, we [my partner and I] are trying to have a baby.”
Let’s Meet At | Loretta McGill
Raised $7000 through Pozible, 2016
On knowing why you want to raise:
“You have to keep a realistic target. I knew that I needed funds to finalise the site and the last development phase but I also knew there were going to be other costs after launch.
“Crowdfunding is a really tough gig … it takes three times the effort you think it’s going to take.”
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Tile | Mike Farley and Nick Evans
Raised $2.85 million on Selfstarter, 2013
Mike Farley on understanding what you’re selling through a campaign:
“It’s really important to make sure you’ve done all of your due diligence on your technology, so you know you can deliver what you’re promising. Our plan is the same really, but it’s just the units that we have to produce are much higher. This a great problem to have.”
Nuheara | David Cannington and Justin Miller
Raised $US792,944 via Indiegogo, 2016
David Cannington on losing control once you hit “launch”:
“It’s always nerve-wrecking when you push the button at the beginning of a crowdfunding campaign because you just don’t know what’s going to happen.
“Once the campaign gets out of the gate like that it just takes on its own momentum … One of the secrets to executing a successful crowdfunding campaign is the work you put into beforehand.
“If you don’t get those first three days right, you’re screwed.”
Fame and Partners | Nyree Corbee
Raised $50,000 in equity crowdfunding from VentureCrowd, 2014
On understanding your customer and the right platform for a raise:
“The mish mash of the two means that millions of girls are inspiring other girls, every day, with style inspiration; we love that this sharing is shaping a culture of girls that want an individual look. This also happens to provide us with an incredibly rich data source to understand what they want.
“As a team that admires innovation, it was only a natural fit for us to work with VentureCrowd as a funding source. We were thrilled on that basis to offer access to this deal to a wider range of people than a traditional funding route may have.”
Who Gives a Crap | Simon Griffiths
Raised $89,000 on Indiegogo, 2012
On getting your presentation right:
“At the start of 2012 we filmed our first crowdfunding video, but quickly realised that it wasn’t that interesting to watch. Someone in my shared office introduced me to Naked Communications who loved what we were doing and agreed to [help] us to develop a new crowdfunding strategy and video on a revenue share basis.
“We thought it would take one month to re-shoot the campaign, but it ended up taking six, and we launched in July 2012.”
The Buchan Caves Hotel | Lyndal Moore
In 2015, a group of locals led by Moore raised $600,000 via Pozible to rebuild a pub that burned down in the Victorian town in 2014.
On the importance of community and finding a meaning for your project:
“We spoke to Pozible, they said we’ve never had this much reaction to a campaign before … It was a beautiful, collaborative effort.
“As small community in decline from the loss of the pub, they were not in a financial position to rebuild.
“It’s a much bigger story than let’s all drink a beer. It’s about a small community who lost its heart.”
Nura | Kyle Slater and co-founders
Raised $200,000 on Kickstarter, 2016
On the value of honesty in a crowdfunding pitch:
“We don’t want to be one of those Kickstarter companies that doesn’t deliver. We’ve got a really strong team, and we’ve over come a lot of the major barriers regarding credibility.
“Definitely don’t launch too early unless you have a product you can demonstrate. Be honest about your product to your backers, they know it’s your first product and if you’re transparent they will support you.”