Hi there. I'm Katherine Scarrow, the editor of the Report on Small Business. Our #microbizchat on crowdfunding starts at 1 p.m. (ET), but feel free to leave a question for our guests ahead of time.
Looking forward to the chat!
Before we begin, I want to thank Daryl Hatton, Karl Pineault and Laurent Champagne for joining us today for our first ever #microbizchat on how to run a successful crowdfunding campaign. I appreciate you being here.
I'm looking forward to talking about crowdfunding, especially as it become more mainstream. It's clearly an appealing - not to mention empowering - option for entrepreneurs who want to launch products, scale their businesses and even just test out cool new concepts.
But as all three of you know, many campaigns don't reach their goals, which is why I'd like to gain insight into what truly makes a campaign successful.
There's obviously a lot to cover, so let's jump right in!
Daryl: you've been in the crowdfunding game since 2010 - back before it was a truly mainstream way of raising money for projects and businesses. You've also helped raise over $40 million from over 40,000 campaigns in 20 different countries around the world.
Can you share one of the most important pieces advice you offer to entrepreneurs before they launch a campaign?
One of the things I think is SO important in a crowdfunding campaign is making sure you have enough support from your community to get your campaign off to a great start...
Many first time crowdfunders look to the platform to provide you with an audience for your campaign...
What must be understood is that the entrepreneur has to seed the audience with their own supporters who will help spread the message and attract the attention of people outside of your regular network.
Thanks for that: so you need to build momentum even before you launch. Good to know! That's something I definitely want to talk to with the guys from Free Spirit Hostel (who raised $19,974 of their $15,000 goal). But first, let's go back to the idea.
There's a lot of talk about the idea that your project should 'solve a problem.' But as we all know,
many of the big success stories are just really cool and sometimes outrageous concepts: i.e. the Smart Cooler (that makes margaritas and charge phones) - that raised $13,285,226 from more than 60,000 backers in 52 days - or the connected bike by Vanhawks, which raised $820,000 from 802 backers.
Karl: How important is having a good idea before turning to crowdfunding?
I think that if you want people to share your project and maybe give money for it. It has to be an idea that people can see them self in. Maybe an idea that they taught a while ago but never did it.
Laurent: one of your biggest challenges was convincing friends and family that you were serious about the project. What's the best way to convince them to buy into your idea for a hostel?
Well Katherine, it takes time, it took near six months for our close friends and family to really understand that we were so ambitious. The one thing you want to be sure is that when you present it to a larger public, it has been brainstormed and it's ready to face lots of challenges.
I imagine that much of the work you did to convince your friends and family proved helpful when crafting a message for the larger public, which leads me to my next question.
Daryl: what are some key ingredients to a good pitch/message. What should entrepreneurs focus on and what are the best ways to 'sell' their idea to potential backers?
If I can, let me back up a tiny bit and address the question of "what is a good idea"...
One of the great benefits of crowdfunding is that it can help an entrepreneur determine if the market actually "wants" the product or service...
In industry lingo this is called "product / market fit"...
By offering your product to the market and taking "pledges" to purchase it, you can get some incredibly valuable feedback on how much the market is interested and even feedback on what they'd like to see changed in the product...
Because you are only taking pledges, no one actually is charged for the product right away. If you need to rework the offer, you can then communicate the new specs to the market and get more feedback...
Once you have enough people interested in the "new, improved product" you can actually trigger the payments and start product and shipping...
This is an incredibly cost effective way to get market feedback without having to build a sample run and see if you can sell it.
Excellent points, Daryl. Crowdfunding platforms are helpful in helping entrepreneurs test out ideas and iterate based on feedback they receive from potential consumers.
Laurent, I have a question from one of our readers (ShopMob) about the prep work that went into your campaign.
Choose a time of the year where you are going to be available to entertain your campaign. As Daryl said; you have to bring your own supporters to the platform. Therefore, try to organize events or host a blog, a Facebook page, anything to get in reach with your potential donors.
Thanks Laurent. You relied heavily on social media, specifically Facebook. But much of your success also hinged on creating a compelling video.
A number of readers in today's chat want to know more about video, which is key big part of telling your story and informing your potential backers about your product.
Karl: Did you hire someone to help
create a video? How did you know how long to make the video? (i.e. should you try to keep it under say 5 minutes?)
Like in life, in business every thing is related to your contacts. So, we looked around and found some friends that studied in cinema and wanted to help us achieve our dream...
So, we had two person who did an amazing job filming our video with our ideas and concept...
We knew as well that people on the internet love watching video but it has to be short and funny. That's why we think that keeping your video around 2 minutes is the best but it also depend on the offer you want to give to your donors.
Sticking to two minutes must've been challenging, but I suppose the short time frame forced you to stay focused!
Let's talk about goal-setting for a moment. Daryl: How do you know how much money to raise? Oftentimes people say, when setting a goal, you shouldn't confuse how much money you’d like to raise with how much you need to fund your project...can you talk about setting expectations briefly?
And while Daryl tackles that question, I've got another reader question which I'll direct to the guys at The Free Spirit Hostel about media coverage (which they were able to score on The Globe and Mail).
How long is a piece of string? ...
The big thought is to ask for the amount of money that will get you to your next tangible milestone...