Yesterday I spoke about the perks and pitfalls of crowdfunding at Digital Hollywood 2013. The extraordinary panel included notable L.A. business leaders: Mark J. Landay, Harvard Business School Angels of Southern California Co-Chair; John Shiple, FreelanceCTO.com Founder; Brian MacMahon, Your Office Agent founder; and Victoria Silchenko, Chair of the Los Angeles Venture Association.
According to Massolution’s 2013 Crowdfunding Industry Report, crowdfunding soared to $2.7 billion in 2012, up 81% from 2011. Donation, sales, and rewards-based platforms such as Kickstarter and Indiegogo grew 85% to $1.4 billion. Lending-based crowdfunding grew 111% to $1.2 billion. Equity-based crowdfunding grew 30% to $116 million. With the JOBS Act and pending new policy formulation, many are speculating that equity crowdfunding could be the real game changer. Last week, AngelList announced that they are rolling out AngelList Invest, their own equity crowdfunding service.
Crowdfunding campaign success is not just about the dollars raised. It’s about validation, proof of concept, learning, and research. To that end, many Digital Hollywood audience members were shocked when I suggested that Zach Braff’s new “Wish I Was Here” crowdfunding campaign was the most successful crowdfunding campaign of all time — more successful than the recent over-hyped Veronica Mars Crowdfunding Campaign. Here’s my rationale…
While the Veronica Mars crowdfunding campaign raised more capital and wooed more backers than any crowdfunding campaign in history….it was already a known Hollywood franchise. Warner Bros. owns all rights to Veronica Mars. Strings were attached. Asking fans to donate to something they already know is very different from asking fans to donate to a completely new independent project (even if Braff himself is a known entity). Braff is a celebrity, but in the end he is still just a passionate person with a small nugget of an undeveloped idea. Braff’s crowdfunding success without the association/backing of a big studio reveals the promise of crowdfunding for entrepreneurs. Braff has also received volumes of critical feedback about his idea; he now knows his biggest barriers and challenges before starting production as an independent filmmaker (note: he’s got plenty). Braff’s crowdfunding campaign success means much more than the Veronica Mars campaign — ultimately making it the most successful crowdfunding campaign of all time. And Braff still has 25 more days of fundraising to go before his campaign ends.
Want to launch your own crowdfunding campaign? Heed the 5 P’s of Crowdfunding:
Want to create a great crowdfunding campaign? Have a clear vision, value proposition, and a well-defined target. Pick milestones for your deadline. Determine the “best fit” platform based on your campaign goals and needs.
A good crowdfunding pitch is like any good investor pitch. Tell a compelling story. You need a great title and greater visuals. Explain the problem you solve. Pitch the impact your product/service/cause provides to the world. Explain how you plan to use the funds you raise.
Incentivize campaign backers with giveaways, keepsakes, experiences, even third party rewards. If you are running an equity crowdfunding campaign, explain how you will return profits. For many campaign contributors, “feeling like they made a difference” can be a perk in itself.
- Production Video
Crowdfunding campaigns with videos raise 120% more than those without one. Your video should be both entertaining and educational. Humor is handy.
The most critical (and challenging!) part of crowdfunding is promotion. You need to attract interest and inspire contributions. Use social media and traditional media to build buzz. Ask others to share your crowdfunding campaign with their friends and networks. Consider holding a live or virtual campaign kickoff event. And don’t forget to say thank you.
Hungry for more details? CLICK on the image above to expand our nifty Crowdfunding Infographic.