More and more start-ups venture crowdfunding to finance their entrepreneurial journey. But what does one actually do to succeed?
The innovative laser razor Skarp is right now crushing the Swedish crowdfunding record. So far this year more than 20.000 people have donated almos $4 million, with six days left of the campaign.
But there are other companies which have had successful crowdfunding campaigns. A little over a year ago, headphone company Earin started their crowdfunding campaign. It became the most successful in Sweden ever.
“All of the people in the company worked at Nokia in Copenhagen previously. When it was closed down, a lot of us talked about starting their own business and crowdfund them. We were inspired by our colleagues who kick-started the fitness watch Leikr”, the company’s co-founder Olle Lindén says.
The company manufactures wireless headphones and spent a year developing a prototype before launching their campaign on the site Kickstarter. When the campaign was finished they had raised over $1.5 million.
By his own accounts they didn’t have a super clear strategy to spread the campaign, which media start-up Blank Spot Project on the other hand did. Brit Stakston, co-founder and digital strategist at the company explains how they had main focus areas during their campaign.
“First of all we were very clear from the start with our idea. ´Give us $120.000 and we will provide a site for foreign correspondents and two longer stories. We started the entire campaign with a seven hour long live broadcast on our site and focused a lot on getting the talk going”, she says.
Another important part was to continuously communicate the result of the campaign. They kept stating for anyone wanting to listen how much they had raised, how much money was missing and how much time was left.
“The third part was our work with nurturing our relations with our backers. We worked very actively with ambassadors and all those giving us money. Among others were celebrities, but also a group of regular people who baked cookies to raise money for us”, Brit Stakston says.
Central to the entire project was the proposition that people actually are willing to pay for quality journalism. But it also put focus on making it as simple as possible for people to actually support them.
“That was the last part of the campaign, ’support us´! We made it as simple as we could for people to give money. Among other things, we made sure that the campaign would reach its goal around the time people were getting their paychecks. People simply have some extra money then”, she says.
But everyone is not as media savvy as one of Sweden’s most prominent digital strategists. Earin’s co-founder Olle Lindén describes the lever of detail as an important part of their success.
“We worked hard to be as transparent as possible. We explained exactly how far we had reached and how the product worked. We put up lengthy descriptions of the product and the company and tried to be as clear as possible. I believe that it is important for people to understand how you will be able to fulfill what you have said you will”, he says.
That clarity and transparency is something Brit Stakston recognizes, but it means something completely different at Blank Spot Project.
“We had no details at all. We broke the Nordic record for number of backers, and we did that with an idea for a news outlet. We were not detailed but we were very clear about our vision. We know quality journalism and it is costly. But we believe that people are willing to pay for it. We have the scope of cost now under all our reports, to show what the money have actually been used for”, she says.
She admits however that there are other companies who might benefit from describing the product in least detail.
The method for succeeding with a crowdfunding campaign might differ between companies but there are some things you really should not do. Olle Lindén from Earin believes that most of all it is important to ask for a moderate amount of money and motivate the sum. If you don’t ask for enough, you will not break even. If you ask for too much you will not reach the target.
“You must have control over what you promise is that promise kept in the campaign. It has to be permeated by this being real from start to finish. And I believe it becomes easier the further you have reached in product development”, he says.
According to Brit Stakston, the most important is to not lose contact with your backers.
“Every single one of these people gives money, for you to do what you want to do. You have to take very good care of your ambassadors”, she says.