The ABCs of Crowdfunding: P is for The Patron-Age

So Michelangelo says to the Prince: “Whattup, Prince. It’s cool that you dig my sculptures and commission me to do one every five years or so, but I still gotta pay rent, go for brunch and pick up my art supplies in between commissions. That’s a lot o’ chedda’, and I need to make it rain!”

If only Michelangelo had a DeLorean, he could’ve taken advantage of a new philosophy of independent cultural enterprise that relies on the direct, regular and ongoing relationship between artists and their paying fans (or, as Michelangelo would’ve referred to them, patrons).

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Crowdfunding ABCs: G is for Goal Setting

We all know that proper goal-setting is a critical part of your crowdfunding campaign success strategy. There are a ton of great posts (like this one) on how to set goals, so I’m not going to belabor those basics.

On this subject, however, there are two concepts I’d like you to ponder in a bigger sense when you’re strategizing for your campaign.

(1) One goal? S T R E T C H it out. Consider the strategy of enticing contributors to reaching beyond your original goal with multiple, or stretch goals. Essentially, a stretch goal refers to any target set beyond a campaign’s original design, as described by CrowdClan’s Michael Ibberson. In other words, he says, it is not necessary for a campaign to achieve their stretch goals in order to cash-out. Some of the biggest ever crowdfunding campaigns have employed stretch goal strategies.

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Don’t try this at home, kids!

So how does it work? Continue reading

Crowdfunding ABCs: F is for Finance First

We love to jump into new things, especially when it comes to MAKING MONEY, and crowdfunding is no exception. I’m guilty of it myself.

You can be successful (and 142,647 Kickstarter projects as of today have been to the tune of $3.6 billion!), but it isn’t a slam dunk. On average, 36% of Kickstarter campaigns succeeded, and Indiegogo’s success rate is even lower: about 34%. The reasons for campaign failures vary, but one thing you CAN bet on is that if you don’t prioritize careful financial planning in advance of your campaign, you run a high risk of not achieving your campaign goal.

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Before you get too discouraged, however, let’s look at some other stats: While 10% of Kickstarter projects finished having never received a single pledge, 80% of projects that raised more than 20% of their goal were successfully funded (meaning they reached their goal, as Kickstarter is a fixed funding model, requiring you to make your goal to receive funding). And let’s not forget that one of the reasons for Indiegogo’s low percentage of successes is that they will accept any project; unlike Kickstarter projects which are curated.

Giving yourself the best chance for success in crowdfunding means making sure that crowdfunding is the best financing option for your project or company. Financial planning for your first crowdfunding campaign (whether rewards-based for a project, or equity-based for a company) starts way before the actual campaign—or at least it should.

You need to be able answer four key dollar-related questions before you even decide if CF is your best option, and if so, to design your strategy:

  1. WHERE are you going?
  2. HOW MUCH do you need?
  3. WHY do you need it?; and
  4. WHAT KIND of money do you need? Continue reading