Crowdfunding Moves Mainstream

There is no question that crowdfunding is revolutionizing the way business is conducted. Crowdfunding has movedrelatively quicklyfrom an ‘alternative’ financing method to mainstream. These statistics breakdown and help quantify the popularity of crowdfunding…

  • Kickstarter crowdfunding statistics show more than 22,000 projects were successfully funded in 2014.
  • More than 3.3 million people around the world backed a project on Kickstarter in 2014 of which 2.2 million were new backers.
  • More than $1.9 billion has been raised on Kickstarter as of mid-2015 with a success rate of 37% across all projects.

*Statistics are from Crowd101 (link below)

The crowdfunding industry is experiencing huge overall growth. Entrepreneurs are using crowdfunding for proof of concept, early idea validation and customer pre-orders. This is shifting the business funding and financial ecosystem, and really putting the power of fundraising in the hands of individuals.

However, before you head out to launch a crowdfunding campaign, there are a few basics that should be worked out first.

Step 1: Develop your message. Before explaining the benefits of your product, demonstrate the problem(s) it solves. This helps potential investors recognize the problem in their own life and acknowledge that a solution is necessary. Once your message is developed, work on honing it until it is short, concise and perfect.

Step 2: Clarify how much funding you need. This involves research, and lots of it. Pulling a nice round number from the sky is exactly what you shouldn’t do. Prove to investors that you have what it takes by researching each stage in the product development process, and provide realistic estimates for each phase and how you came to these amounts. Meet with product designers, manufacturers and other key players to firm up costs and timeframes for yourself and investors.

Depending on the size of your project, it is a good idea to focus your crowdfunding requests on specific parts of your business or certain phases of development. This way you won’t be asking for too much money, and left disappointed if your goal is not obtained.

Step 3: Avoid a cold start. There is an innate psychological avoidance to being “first”. People tend to hesitate if they see that no one else has backed the campaign yet. Increase your chances of gaining investors by starting out with initial investment capital. This money can be raised with your starter crowd.

A “starter crowd” are those in your inner circle and community that want to see your campaign succeed. These are the people you reach out to before your campaign has even gone live. That way, once your campaign is up and going you already have a certain percentage of funding accounted for and avoid a cold start.

Keep in mind that raising funds is really the first step. If you didn’t reach your goal, find out why. Analyze the feedback and then adjust your goals accordingly. For example, you may find that your message wasn’t getting across clearly and investors weren’t sure what value your product served in the marketplace. Now is the time to address this. Listen closely to what people are saying and adjust your campaign, message or product accordingly.

If you had a successful round of funding, maintain a relationship with your investors and show your gratitude. Work hard at fulfilling the promises made during your campaign because regardless of how much someone invested, they may be willing to invest more during a second round of funding.

Here are a few more powerful statistics to highlight from Crowd101:

  • Keep your community active. Campaigns that updated followers regularly raised 126% more than those with no updates.
  • Teams raise 38% more than one-person campaigns.
  • Campaigns with a day-to-day marketing plan raise almost three times as much! This is a great idea. You’re daily to-do list doesn’t have to be earth shattering but plan on doing at least one thing each day to promote your campaign.

Like infographics? (We do!) Crowd 101 has a great “Crowdfunding Success Statistics & How You Should Raise Money Online” infographic here.


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