Crowdfunding: Don’t Assume that Your ‘Crowd’ Gives a Sh*t
Kirsty Ranger, Founder and CEO of IdeaSquares, writes about two crowdfunding mistakes people make all too often…
I’ve supported companies in raising hundreds of thousands of pounds for their startups via crowdfunding and I’ve also watched companies who have seemingly great business ideas launch painfully slow moving crowdfunding campaigns. My own experience of success in crowdfunding, coupled with my experience of helping others has led me to see two very common mistakes people make when gathering their ‘crowd’.
Mistake number 1: Assuming that people give a sh*t!
Nobody cares! Well, that’s not strictly true. Some people care, but not as many as you might think. When it comes to gathering your crowd, you might think “I’ve got loads of people who support me! This round will be a breeze!” Sure, lots of people have said what a good idea you have, and have even shown interest in investing. Does this mean they’ll actually spend time reviewing your crowdfunding campaign when it’s live? Or part with their money? No.
Yes, a handful of people in your network may buy a share or two, or pledge a bit of their hard earned cash and, if you’re lucky, one or two might make significant contributions. But the truth is, that the vast majority of your perceived ‘crowd’ of supporters, will not show the blindest bit of interest in your crowdfunding campaign. It’s not because they’re bad people, or because they lied and they really don’t like your idea. They just won’t.
So, avoid the disappointment of a tumble-weed launch, by priming your crowd well in advance. Don’t just assume that people in your network will invest, support and share your campaign when it goes live. Before you launch you need to find a way to get a more accurate measure of how big your crowd of potential investors really is.
Mistake number 2: Not communicating the importance of when your crowd should take action.
Yes, you will be grateful of investment from your network at any point. But your network should be the ones to immediately seed your raise and then ideally, throughout the campaign, share their support with their own networks. There are two things that are important in the first few hours of launching your campaign.
1. That the % bar moves, constantly.
2. That the number of investors increases, quickly!
In the first moments, hours, day of your campaign going live, before external investors have had a chance to look over it, it may only be your network that you can rely upon to achieve points 1 and 2 above. If you don’t achieve points 1 and 2, external investors are much less likely to invest. Some people will take the leap of faith and back campaigns with low initial support, but the majority of people back winners. So start winning, fast. As the entrepreneur, it’s your job to stress to your network the importance of being ready to invest as soon as you go live, which is made more difficult by the hard truth of mistake number 1…
Don’t get me wrong, crowdfunding is a great way to fund your startup and if you put in enough effort and planning, you will likely be successful. But as I’ve said before, it isn’t easy. Gathering the crowd is really crucial to a successful raise. If you’re thinking of crowdfunding, start preparing your crowd now to increase the likelihood of them supporting you when you go live.
Conveniently, my business IdeaSquares has just launched a handy pre-crowdfunding tool, designed to help you to gather your crowd prior to launching your crowdfunding round. Create a square, select the number of supporters you think you need (be realistic and remember the above mistakes) and the amount of time you would like to gather them in (e.g. if you go live in 40 days, choose 40 days!). Then, if you hit 100% of your pre-crowdfunding support target with us, we’ll direct your supporters to your crowdfunding campaign the moment that you launch. This gives you the opportunity to test how many of your crowd will actually take action when you ask them to and hopefully gives you a better marker of how likely they are to convert to investors.
The inability to deliver a crowd is one of the main reasons entrepreneurs aren’t successful when crowdfunding. If you’re thinking of crowdfunding soon, contact us to see how we can help.