Kickstarter, an early crowdfunding platform founded in 2009 has been successful to say the least. According to Statistia Research, between July 2012 and November 2022, the commutative value of funding pledges amounted to approximately $6.95 billion U.S. dollars. It offered emerging entrepreneurs an almost risk-free way to test the viability of their products before they actually had to build them. This funding process also provided entrepreneurs with ‘no strings’ capital if they attained their fundraising goal. So, what has changed in the past 14 years? Quite a bit.
For one thing, you can now find other entrepreneurs who will actually help you be successful on these crowdfunding platforms by doing the market research and helping build your marketing campaigns. One of these companies is LaunchBoom, a crowdfunding marketing agency with more than $100 million in funded campaigns. They utilize predictive analytics to evaluate your potential fundraising success; then based on research and insights, they will build the marketing campaign to launch the crowdfunding campaign on either Kickstarter or Indiegogo.
Recently, we had the opportunity to sit down with the founder and CEO of LaunchBoom, Mark Pecota who provided his perspective on crowdfunding today via his answers to our questions below.
Why should an entrepreneur still use crowdfunding today? Crowdfunding is still a great way to reduces risk for product inventors/creators. In traditional product launches, you’d have to invest a huge amount of money into building your product inventory before you launch. But in crowdfunding, that investment can wait. All you need is a functional prototype. Because with crowdfunding, you can presell your product, collect the money, then manufacture it.
What is the one thing entrepreneurs don’t understand about crowdfunding? Crowdfunding launches are actually won during the prelaunch phase of the campaign. Instead of investing in inventory, you must invest in marketing. By far the most important factor to success is whether or not you have a big enough email list prior to launching the campaign.
How do you build a good email list? To build your email list, we recommend building a Reservation Funnel and driving traffic with Meta ads (Instagram & Facebook). With this funnel, you can collect email addresses, but more importantly, people can put down a $1 deposit to reserve the best discount on your product when you launch. We’ve found that people that put down a $1 deposit are 30x more likely to buy than someone that just gives their email address. Building a potential customer list in this way will allow you to get funded more quickly.
What is the most important goal in crowdfunding? While achieving the overall fundraising goal is great, getting funded quickly on crowdfunding is actually critical. This will move you higher in the rankings on the crowdfunding platforms which will bring organic traffic to your campaign. Also, since the amount you’ve raised is public, it will instill confidence in future visitors that your campaign is popular and increase your overall conversion rates.
What comes after the fundraising campaign? Remember that crowdfunding is just the first step in your overall goal of bringing a product to market. If done correctly, you’ll be able to produce your initial product with the confidence that there is customer demand. You can leverage your early success to transition to ecommerce brand building and selling which is where the real company journey begins.
What are the core things an entrepreneur has to get right to have a successful campaign?
– Develop a product that solves a big problem in a unique way.
– Position your product to standout in the marketplace.
– Drive traffic through paid media (Meta works the best for lead generation).
– Collect emails and $1 deposits with a Reservation Funnel.
– Use email marketing to reach your funding goal on the first day.
– Make the product you said you would.
– Deliver your product on-time.
‘Since starting LaunchBoom, I have met a lot of entrepreneurs looking to be successful on their crowdfunding campaign,’ says Mark Pecota. ‘Who becomes successful is not always based on the best initial product but maybe on this underrated Steve Job’s quote: ‘Half of what separates successful entrepreneurs from non-successful ones is pure perseverance.’