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Dos & Don’ts of Crowdfunding (from those who’ve been there)

February 16, 2017

by Brona Cosgrave and Cheryl Clements

Google the word “crowdfunding,” and you’ll come up with literally millions of articles about what you should and shouldn’t do. It can be tough to sort through it all, much less tell which pieces of advice are really worth following.

Lucky for you, we reached out to our first group of PieShellers to ask them what they thought people should know before launching a crowdfunding project. We also added a few pieces of advice from the professionals at PieShell!

Here’s what our PieShellers had to say.

Do Prepare

The popular perception of crowdfunding is that it’s a way to circumvent the hassles that come with raising money through traditional avenues like banks and investors. While that’s partially true, what people forget to tell you is that crowdfunding comes with its own suite of challenges.

Anyone who’s crowdfunded will tell you that it’s not a “build it and they will come” type of thing. It requires preparation and lots of it.

One thing to prepare: the crowd itself. Building community around your business or your personal brand is essential for crowdfunding. Having a network that you stay in touch with, whether it’s through an e-newsletter or social media is crucial. Building the crowd doesn’t happen overnight.

The other big thing to prepare ahead of your launch is a marketing plan that includes who you’re trying to reach and how you plan to reach them. Erika Kerekes, founder of Not Ketchup said that she wished she would have been a little bit more organized about reaching out to her supporters. “I would get more organized about the list of people to whom I wanted to reach out personally. I would comb through my email address book and Facebook friends BEFORE the campaign started, make a list with priorities, and get key people on board BEFORE the campaign started,” she said.

Erika’s comment perfectly illustrates the importance of preparing a marketing and outreach plan before you go live.

Don’t Ask for Too Much

There are some crazy examples of crowdfunding projects that have raised tons of money by going viral or leveraging a huge fan base. Don’t count on that happening.

Picking a realistic goal will increase your chances of success. Keep reading to learn more about how much you can expect to raise through crowdfunding.

Most successful crowdfunding projects raise under $10,000. That’s because most contributions are small, averaging $25, and the majority come from people you know. Unless you’ve got friends with deep pockets, pick a goal that reflects the amount you can expect to raise through your personal network and consider narrowing the scope of your project to fit the amount you expect to raise.

PieShell’s stepping-stones are designed to make people think carefully about their ask, and to help people take a more balanced approach to crowdfunding. They help people think about how to reach the next step in your business, rather than fulfilling their overall vision. Don’t worry, you’ll get there eventually!

Do Listen To the Crowd

One of the big advantages of crowdfunding isn’t just the opportunity to raise money, it’s the opportunity to do market research. Sometimes, the insights you gain from crowdfunding are even more valuable than the money itself.

Victor Penev, the founder of Edamam said, “Think of the crowdfunding not as fundraising, but as market research… The campaign showed that we do not have a strong appeal to the end consumer. In this sense, the campaign was a great research tool.”

Although it can be disappointing to learn that there isn’t widespread demand for your product, or that you haven’t nailed down the right value proposition, these are incredibly important lessons that will ultimately make you more successful. Crowdfunding may prompt you to pivot your company, rethink your product, or simply gain a better understanding of your consumer. In the end, these are all positive takeaways that will contribute to your success.

Don’t Let Your Ego Get in the Way

Crowdfunding is an emotional process. It involves putting yourself out there over and over again, until you get the results you want.

Successful campaign owners reach out to their community in person, by phone, via email, through news outlets and blogs, and with social media. Why? Because people respond differently to different types of communication and it takes multiple asks for most people to make a contribution.

Sure, we live in a digital world, but there’s no replacement for meeting with someone face-to-face. Some of your largest contributions will come from the people that you take the time to talk to in person.

It can feel surprisingly vulnerable to ask for contributions, and it can be tempting to hide behind your product or stick to digital forms communication. Don’t. Crowdfunding is about you, the founder, more than your product or business. So putting yourself out there, no matter how uncomfortable or scary, is essential. Commit to leaving your ego at the door for the duration of your crowdfunding project and adopt a “do whatever it takes” mentality.

This article was sourced from PieShell. Sign up for their email updates and follow PieShell on Facebook, Twitter, and Instagram to stay updated on new projects, food trends and crowdfunding tips!