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    Cash from the Crowd: How to crowdfund your ideas and gain fans for your success
    Cash from the Crowd: How to crowdfund your ideas and gain fans for your success
    Cash from the Crowd: How to crowdfund your ideas and gain fans for your success
    Ebook198 pages2 hours

    Cash from the Crowd: How to crowdfund your ideas and gain fans for your success

    By Sally Outlaw

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    About this ebook

    CROWDFUNDINGraising capital in small increments from a large number of people will inject over $5 billion into the economy this year and is becoming a powerful way to fund new ideas and generate buzz for new products and ventures. Although crowdfunding has the potential to be an amazing boost to entrepreneurs, only 40% of projects succeed in reaching their funding goal. Crowdfunding platform founder Sally Outlaw reveals how entrepreneurs can shift these odds in their favor.


    Want to know which marketing efforts result in a 35% higher rate of contributions? OR, what is the best time and day to launch or promote a campaign? The answers to these and more are here.
    LanguageEnglish
    PublisherEntrepreneur Press
    Release dateOct 15, 2013
    ISBN9781613082607
    Cash from the Crowd: How to crowdfund your ideas and gain fans for your success

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    • 4/5
      Crowdfunding veteran Sally Outlaw (peerbackers.com and Crowdfunding Academy) wrote Cash from the Crowd to help you raise capital for your project or business in small chunks from the crowd, your fans, friends, followers, business contacts. With Kickstarter or Indiegogo campaigns filling your today’s inbox, honesty requires to realize that only 40% of the initiated projects succeed in reaching their funding goals. Platforms like Kickstarter demand a lot of preparation and do actively filter applications for admittance. You better use the tips from this book to arrange your pre-campagin, campaign creation and launch until the post-launch activities. From scrutinizing your (online) address books, pitching your product, setting up the reward scheme and financial planning to PR strategies and use of social media.Sally also pays attention to micro lending / peer-to-peer lending and equityy sharing which are of course different in engagement with the crowd than pre-sales packed as crowdfunding. Outlaw’s story is illustrated with lessons learned from a group of crowdfunded campaigns. Videos of successful campaign videos are linked to. As an addendum: Crowdfunding Toolkit – the resources you need during & after your campaign.

    Book preview

    Cash from the Crowd - Sally Outlaw

    001001

    Table of Contents

    Title Page

    Acknowledgments

    Preface

    Introduction

    chapter 1 - CROWDFUNDING EXPLAINED

    History and Overview

    Benefits Beyond Capital

    Convincing the Crowd

    Your Crowdfunding Potential

    chapter 2 - TYPES OF CROWDFUNDING

    Platform Models Defined

    Who Should Consider Which Funding Approach?

    Sampling of Key Crowdfunding Websites

    Choosing a Crowdfunding Platform Checklist

    chapter 3 - PREPARING A SUCCESSFUL CROWDFUNDING CAMPAIGN

    Reviewing Guidelines and Projects

    Gathering Your Crowd—Those You Know and Those You Don’t

    Building Your Campaign Elements

    Campaign Timeframe: Shorter Is Usually Better

    Video—Power in Your Pocket

    Video Tips from a Pro

    Are You Ready? A Pre-Launch Checklist

    chapter 4 - THE ART OF THE ASK (CAMPAIGN LAUNCH)

    Driving Traffic to Your Project

    Real-World Gatherings

    Overcoming Mid-Campaign Blues

    Re-Launching a Failed Campaign

    Your Campaign Launch Checklist

    chapter 5 - KEEPING YOUR BACKERS HAPPY

    Managing Donor Expectations

    Reward Fulfillment

    Reward Manufacturing

    Tax Considerations: Don’t Forget the IRS

    Post-Campaign Checklist

    chapter 6 - EQUITY OFFERS–SHARE IN THE FUN(D)

    First, the Facts

    Latest Developments

    How to Prepare

    Educational Resources for All Forms of Crowdfunding

    conclusion

    appendix a - CROWDFUNDING TOOLKIT

    appendix b - FREQUENTLY ASKED QUESTIONS

    ABOUT THE AUTHOR

    Teaser chapter

    Subscribe to Entrepreneur Magazine

    Copyright Page

    ACKNOWLEDGMENTS

    Thanks first to all those who take financing their dreams into their own hands and crowdfund. You are helping to shape an industry, transform our country, and get our economy back on track.

    I also offer much appreciation to those who took the time to speak with me about their campaigns and industry insights, as well as to my business partner Andrew Rachmell; my family Mark, Madison, and Brendan Outlaw, who endured my takeover of the dining room table while I wrote and Jeanine Lovely whose hours of interview transcription allowed me to focus on content creation.

    It has also been a pleasure to work with Jillian McTigue, director of Entrepreneur Press, and Roe D’Angelo, who I thank for her brilliant editing and continuous encouragement! Much appreciation also goes out to Karen Billipp of Eliot House Productions for her patience and skill in composing the book.

    PREFACE

    I’m one of you. An entrepreneur who needs funds but who does not have the benefit of a robust Rolodex of angel investors, venture capitalists, or heck, even a plethora of wealthy friends on whom I can call. Over the years I have managed to launch and grow several companies, but each time the process of scraping together the funding was daunting. How do hardworking and dedicated entrepreneurs without connections raise capital? There had to be a better way.

    So I’m home one Friday night and I see a TV news piece about a man in England who was tired of only billionaires owning sports teams. He decided to fund a soccer team via the web by offering as many people as possible the chance to give just a little bit (about $50 each) to become owners of a team that they would recruit and manage. He raised $400,000 in the first 48 hours the opportunity went live on the internet. As I watched this story unfold, my first thought was, Why can’t this approach be used for businesses? That night was the beginning of my efforts to launch a funding platform to support entrepreneurs, and the start of a now multiyear journey to shape an entirely new industry.

    I bring to this book the unique perspective of serial entrepreneur, founder of a leading crowdfunding platform, and former crowdfunding campaign owner (yes, I crowdfunded, in part, the launch of my company’s website). Perhaps most significantly, I have personally reviewed thousands of submissions to our crowdfunding website and have consulted with many of those who have been most successful on our platform. I know what it takes to run a successful campaign and I want to help every entrepreneur I can to reach their funding goal (to this end we also launched Crowdfunding Academy where we offer education, support, and even experts to give you custom feedback on your campaign).

    It is exciting for me to see that with the rise of crowdfunding, entrepreneurs no longer have to confront the gatekeepers who control access to things like money and sales channels. We can now go directly to the crowd to share our message, pre-sell our products, and thanks to things like 3D printing, get access to the inexpensive tools we need to see our visions come to life.

    INTRODUCTION

    If, like me, you don’t have an impressive list of investors at hand, this book is for you. Take heart in the fact that while you may not know one person who can write you a check for $5,000, I bet you know 100 people who, if you had a good idea, would each give you $50. Raising money this way—from many people in small increments—is the essence of crowdfunding.

    Crowdfunding, where individuals appeal for contributions from the public using an online platform, is becoming a powerful way to fund new entrepreneurial projects and ventures. Massolution, a research and advisory firm specializing in crowdsourcing, reported that in 2012 crowdfunding platforms grew 81 percent and raised $2.7 billion; they are forecasted to bring in over $5.1 billion in 2013. Although this has the potential to be a tremendous financial boon to entrepreneurs and innovators, on average 60 percent of all crowdfunding projects fail.

    So what does it take to win the hearts and wallets of potential backers? By applying the advice and strategies in this book, you can properly prepare and communicate your project with passion, creativity, and the effectiveness required to fund your dream.

    Along with a brief introduction to what crowdfunding is and for whom it works best, this book offers tips, best practices, and resources for creating and running a successful crowdfunding campaign. The advice covered is segmented into Pre-Campaign, Campaign Launch, and Post-Launch sections and includes insights from successful and unsuccessful project owners. The book closes with an overview of the new laws currently being shaped that will soon allow for equity crowdfunding investment and includes helpful checklists, as well as links to examples of effective campaign videos.

    Even though this book focuses on entrepreneurial campaigns, the advice can be applied to any form of crowdfunding, whether for social causes, art and science efforts, educational endeavors, or any other ideas that need support.

    As John Allston once said, The only thing you take with you when you’re gone is what you leave behind, so . . . go build something!

    chapter 1

    CROWDFUNDING EXPLAINED

    Reality Check: Having a good idea is not enough—you

    have to convince the crowd.

    While the term crowdfunding is seemingly self-explanatory—funding from a crowd—it can also be misleading and might in part be to blame for why the majority of funding campaigns fail. For the most part, crowds are not roaming these funding platforms looking for random projects to support (but yes, you can attract strangers to your campaign by employing the tips and techniques covered in this book). For crowdfunding to work, you need a combination of elements, including a great idea, an engaged following, compelling thank-you perks, and several months that you can dedicate to your campaign.

    Crowdfunding is where you raise money by asking the crowd to directly fund your idea or venture in small increments (e.g., $25 or $50 per person), and then pool this money to meet a funding goal. You post your idea on a crowdfunding website and use its built-in templates to create your presentation, including things like a funding goal and fundraising timeline, an explanatory video, and thank-you perks you offer as incentives to contribute, and use the provided social media tools to promote your posted project to the world. Success requires a strong community from which you can draw support, whether you are lucky enough to start with one or must build one before you begin your campaign. Project owners must take an active role in running what is truly a full-fledged fundraising campaign, including consistently promoting their project page via every channel imaginable. Think politics—do you see those campaign ads just once?

    History and Overview

    Crowdfunding is not new; it’s been successfully used by politicians soliciting campaign donations and by social organizations raising money to meet the needs of victims of tragedies. Long before technologies and social media advanced, publisher Joseph Pulitzer used crowdfunding in 1885 to raise the $100,000 needed to complete payment of the pedestal of the Statue of Liberty. When efforts to raise $250,000 for the granite base fell short, Mr. Pulitzer used his newspaper, The New York World, to solicit donations from 160,000 readers (with each giving a dollar or two) and got the capital needed to complete the task. This great demonstration of the power of the crowd to come together to make something happen is on display every day in the New York Harbor as a reminder of what we can do when we each give just a little of what we have to support each other.

    Technology has made connecting with each other ubiquitous and introduced easy online payments, and as a result, a robust crowdfunding ecosystem is developing. When we started our crowdfunding website peerbackers.com, there were only a handful of active funding platforms; now there are hundreds of sites. Third-party providers supporting these platforms are quickly expanding as well, offering services such as reward fulfillment, marketplaces for completed crowdfunded products, background checks, and industry trade associations.

    We have seen thousands of success stories emerge from the crowdfunding ecosystem, from the 3D printing pen that started with a goal of $30,000 on Kickstarter and ended with well over $2 million, to the more modest (and more customary) achievements of entrepreneurs like Margot Broom, who raised the $10,000 she needed on peerbackers to move her growing yoga studio into a new space (see Figure 1.1). Crowdfunding is not only a viable and relatively rapid way to get the financing you need for your venture, it is also an exciting way to develop your business or products in collaboration with those who back you.

    NOT ALL CROWDFUNDING IS ONLINE

    There are an increasing number of off-line events that are adding a live crowdfunding component. For example, Jason Calacanis’s annual LAUNCH Festival, where startups pitch for investment, included a real-time, live crowdfunding element this year. Potential investors could commit virtual dollars via a phone app during the entrepreneur’s onstage pitch. The investors could then follow up post-pitch to discuss their interest. Although any audience member could virtually invest, due to SEC regulations, only accredited investors could actually follow-up with real dollars.

    The advantage over online crowdfunding is exclusivity and engagement. Investors attending a live event have exclusive access to the investment

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