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Personal finance reference guide

Five tips to help you succeed at crowdfunding

Marketplace Contributor Jan 11, 2013

Today there are more than 50 crowdfunding sites in the U.S. and countless projects asking for your donations. If you’re looking to successfully fund your project, here are some useful tips:

1.  Build beyond your network — The people who are most likely to give are a part of your close social network. After that, it’s friends of friends. For some people, the biggest challenge is breaking beyond their close social network. But that’s something you must do in order to succeed. One strategy: pre-work. Put effort into building your network before you launch.

2. Know when to outsource — These days, there are services popping up that deal with everything from marketing your project to the distribution of products/rewards. Some examples of this include: a video producer creating an ad for the product, a copy editor coming up with text for the website, someone handling communication/social media use during the campaign, and hiring someone to distribute the product if your campaign is a success. When you can’t do it all — and do it well — know when to seek help.

3. Make sure the reward is compelling — In order to donate to a project, funders need disposable income. But as the market becomes oversaturated with crowdfunding platforms, people have to be selective about which projects they choose to fund. That’s where your project comes in. You have to give people a compelling reason or reward to want to donate and help your project succeed.

4. Know when to ask people to give — The best time to ask for donations in any given week is at the beginning of the week. People are fresh and more likely to give at the start of a week versus at the end. Another great time to solicit donations is around special events — “It’s my birthday, please help me realize my dream.” And finally, be sure to engage in the pre-sale: Ask ahead of time and tell people to look out for it; tell them that it’s coming.

5. It’s OK to fail — Look, if your project doesn’t launch, of course you’re not going to be happy. But the experience of crowdfunding will give you very honest feedback about your work. It may be painful, but it’s also informative — and more importantly, it will help you improve content. Plus, there are benefits from failing: you make connections with others in similar fields and you’ve got the experience of earning a “mini MBA” (i.e. you get hands-on experience with financial planning, marketing, and fundraising).

For more about crowdfunding, check out an interview on why people give.

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