Greg Jacobs explains in this talk with Chris. How he has used crowdfunding to fund his products. The crowdfunding campaign that he has ran got backed for a little over $500.000. He reversed engineered it in the same way our students learn in design thinking. In other words he used the crowdfunding as an experiment if people were interested in his product. With the new trend of digital crowdfunding he could now do this without spending enormous amounts of money on manufacturing costs. He analysed the manufacturing costs of the product and used crowdfunding as a marketing tool to see if it was viable to create the product. And you could really say he was with a funding of $500.000.
Keep me posted!
He says that still 9 out of 10 crowdfunding campaigns fail. According to him the reason for this is that many people just put the crowdfunding campaign online and do nothing else with it and wait till the money rolls in. Use your networks to spread the word to as many people as possible. Be proactive and provide updates and attractive content so you pull people and they stay interested.
Another interesting thing what was said during the movie is that crowdfunding solves a problem. People that normally couldn’t fund themselves can because of crowdfunding. Normally they could have gone to a bank or an angel investor or even family. The problem is that angel investors and banks aren’t lending you always the money that you need and family most of the time just doesn’t have the capital for it. So to fund your projects or products through crowdfunding really enables people that otherwise wouldn’t have a chance to fund themselves.
The three biggest obstacles in crowdfunding
1. Product Selection and Niche
He says there are basically two groups of people who want to use a crowdfunding campaign to offset their product. Some people try to view a crowdfunding campaign as a purely entrepreneurial endeavour. This means in his words that they create a product that I can sell the most from and you can get the most money from. Other people, which he calls inventors, which could say phrases like “I have this idea for years and I want to get it out there”. He says the “entrepreneurial groep” usually doesn’t have a big problem with doing this because they adjust to the market to sell their product. The “inventors” on the other hand can experience sometimes problems because they want to market to mold to their vision. A smaller chance of success, but if they succeed they usually do it grandly.
2. Getting the prelaunch traffic
If you just throw your crowdfunding campaign online than 9 out of 10 crowdfunding campaigns fail so you have to have a coherent plan before launching. You need to get as much traffic to your page, but this crowd needs to get build up even before launching the campaign.
3. Product delivery
Product offset in other words. Backers need to know what the product is all about. They need to hear the story behind it and feel interested about it.
The contra intuitive way to go about crowdfunding
Let me start of by quoting Greg Jacobs: “The biggest difference between the failures and the successes in crowdfunding is that the successful crowdfunding campaigns have always a good prelaunch.” To prepare for a great prelaunch is to know where the first 50% of your backers are going to come from. The other 50% Greg calls crowdfunding groupies that you don’t know, but are very enthused about crowdfunding and support many projects. Once you are sure about the 50%, you have a very high chance to score big on your crowdfunding.
The way to go about crowdfunding is to not go for the money but go for the reached goal. If your goal is reached this has many benefits.
The two biggest reasons to go for reaching your goal in stead of the precise amount of money that you need is that firstly is that people are more likely to fund your project if your goal has been reached very quickly. Second is that the reach of a goal triggers certain algoritmes of the crowdfunding platform that will generate organic traffic for you.
A couple of very good tips that were mentioned I would like to try and implement in our own crowdfunding campaign. Get more prelaunch traffic. We are already doing this but we could use more ways to try and implement this in our communications. The remark Greg made about setting your target amount lower so that you know you’re going to reach your goal is very helpful. This is the other point we can try and implement, although it will be hard to get a good estimation of the amount of people that will back us. And keep updating is his advice. Keep posting and keep selling your story. We’re on our way!