McCarter & English, LLP hold an ongoing series at the Cambridge Innovation Center on legal and business topics for entrepreneurs and emerging companies. Programs are held monthly and are open to the greater Boston entrepreneurial community. Last month, the lecture focused on rewards-based crowdfunding and the elements needed to create a successful campaign.
The presentation, titled “Kickstarter Hierarchy of Successfulness,” was given by Nelson de Witt, a Kickstarter veteran and author of A Kickstarter’s Guide to Kickstarter. Mr. de Witt focused on how crowdfunding campaigns require significant amounts of planning and work in order to ensure success. There is a perception that posting a project online will be enough to make it go viral and raise significant amounts of money. The reality, however, is that 57% of projects fail and 92% of projects that are successful raise less than $20,000.
Only a handful of people, friends and family (and friends of friends) tend to contribute to campaigns, and the average pledge is around $70. These are important figures to consider when creating a crowdfunding goal and compiling lists of contacts. It is the responsibility of a project creator to draw the audience and raise funds. Mr. de Witt emphasized the need to gain support early on in the campaign – this drives momentum and attracts more supporters. Campaigns with shorter deadlines gives a sense of urgency and force people to participate early on. When a campaign reaches 30% of its goal, called the tipping point, the likelihood of success increases significantly.
In order to gain the support of the audience, project leaders must create an engaging campaign and have a compelling story. Visual media is a powerful tool that increases engagement by putting a voice and face to the project. It is a way for people to not only get excited about the product, but also the story behind the project. The campaign should also offer a way for the funder to connect with the project either physically or through an experience.
Mr. de Witt concluded the lecture by emphasizing that it is not the site that brings people to a project, but rather the campaign leader. Much thought must be put into the story, presentation, and outreach of the campaign. Without a balance of all of these components, the campaign will not be able to succeed. Crowdfunding requires significant amounts of work, but it is a great tool to jumpstart an idea or business for those willing to put in the time.