Best practice in reward-based crowdfunding
Next Chapter is a rewards-based crowdfunding platform for female entrepreneurs in Asia. On March 16th, we went to Next Chapter's event to learn more about crowdfunding best practices, moderated by Nicole Denholder, founder of Next Chapter. The event united 4 entrepreneurs who work with Next Chapter to crowdfund their business idea. (scroll to the bottom to check out the brief introduction of the four entrepreneurs!).
During the event, the four entrepreneurs shared their crowdfunding experience, and here is what we have learned from them:
1. The visibility
"At the beginning, no one is going to know about your project, so you need to get the word out, get your friends to share with their network," said Jennifer Chin, founder of Whizpa, an education review website.
It is important to reach out to your network and let them know about the campaign. Take the time to generate buzz around your network, reach out to your friends and family via social media channels and personal emails, get your friends to share with their network and go from there.
Other than reaching out to your network to create noise for your project, you also need to reach out to your target audience via personal emails, press, and digital media.
"For crowdfunding campaigns, there's about three percent of conversion rate on Twitter, about twelve percent on Facebook, and close to twenty percent of conversion rate on emails," said Nicole.
Nicole also points out that digital media channels like Facebook is great for branding and reaching out. And with the press has a longer term outcome of building your brand and building up the SEO.
Laura Ho, an illustrator that crowdfunded for her hand-crafted Christmas cards, reveals that aside from the list of clients and customers that she has compelled in the early stage, a lot of her leads were coming from Facebook groups. Laura has also connected with retail stores like Bookazine and another online shop through Facebook groups. She told us that it is all about hustling.
"I keep asking people to let me into their facebook groups so I can communicate with people on several facebook groups. Most of my target audience are expat ladies or people who appreciate local artist a lot. Once I got into the page, I got recommendations from people inside the page, so money started rolling in quicker. If I were to do it again, I would have started earlier to connect with my target audience," she says.
On the other hand, Stephanie Poon, founder of Zarie who is famous for its leggings with cosmetic benefits, took a different approach to reach out to her target audience. Taking the advantage of her marketing background, Stephanie did a lot of marketing and PR work one month ahead of the campaign. She reached out to her friends in the PR field, and they are willing to reach out to famous bloggers and influencers on Stephanie's behave. "Halfway through the campaign I was able to get Amanda S to wear my legging, people saw it and it went viral," said Stephanie. She also stresses the importance of preparation. "It's just a black pair of legging and it takes a lot of communication to get the press going for you. Don't underestimate how long and how much effort it takes (to do the press). If I can start it all over again, I would have planned it three months ahead of time."
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2. The communication
To launch a successful campaign, it is of vital importance to keep your communication with potential backers straightforward and clear. "When you are communicating with people who might not get the idea of crowdfunding or your project, you have to be smart and keep it simple, otherwise it would be hard to find your donors," said Sharon Vipond, founder of the social enterprise, Knots & Strokes.
Sharon also highlights the importance of showing backers appreciation and keeping them informed after finishing the campaign. "You have to send out thank you card to your donors because they are the ones that make the campaign successful, so make sure they understand the appreciation," she says. She also mentioned that it is essential to find time doing a follow-up with backers to inform them the updates on the project.
On the other hand, Stephaine stresses the importance of showcasing your passion and your story. "You have to make a very compelling story about your campaign about you and why you are doing this, not just your product. Because there is fabulous product everywhere, so the reason behind why you are doing this campaign is important," said Stephanie. It is critical to have a compelling story that gets you donations and publicity.
Your passion matters! Showcase your #startuppassion and your product on WHub for FREE to gain more visibility, and connect with like-minded entrepreneurs!
3. The funding goal
Your goal aligns your supporters with your crowdfunding campaign. It is essential to find a realistic goal. For reward-based campaigns, think about the cost to produce and deliver your product. You should also some research on how much did similar crowdfunding campaigns raise.
Nicole reveals that according to statistics from Indiegogo and Kickstarter, projects with less than US$10,000 goals have higher success rates.
You might also want to consider the possibility of meeting the goal within the time frame you choose, since you may not be able to get any money if you fail to meet the goal within the time frame.
4. The reward
Rewards are items, recognition, or a service that you will get for backing a crowdfunding campaign. For reward-based campaigns, it is important to come up with attractive rewards to serves as an incentive to encourage people to support a campaign.
Jennifer says she needs to be creative with her reward since Whizpa is an education review website, she doesn't have products to give out as rewards. Alternatively, Jennifer decided to reach out to some education service providers, looking for sponsorship. "I involve with other education providers and they are keen to see the project go through. They sponsored classes, like free basketball classes and ballet classes, in the hope of getting more visibility and getting return customers," said Jennifer.
Stephanie, on the other hand, remind us to keep the reward simple. Crowdfunding for her leggings, Stephanie included 4 types of leggings with different style and patterns as rewards to her backers. However, she said that people were confused by the big selection of products. She thinks it is important to give people some options while keeping it simple to avoid causing confusion.
5. The next step for your business
Many questions that what comes next after the campaign. Nicole says it is important to build the foundation for your business during the campaign to help it go further afterwards. The contact and connections you have gathered during the campaign, the sales pitch and distribution network are something you can utilize after the campaign has finished.
Stephanie mentioned that many of her returning clients are those who backed her campaign. On the other side, Laura said that she has a clearer vision of her future career path after finishing a crowdfunding campaign on her own.
"I was doing it all by myself. From coming up with the idea, the pricing, handling logistics to the sale...The campaign helps me get better at my craft and sale skill. The crowdfunding campaign is great to help me put together all the skillset I need that I probably would not have learned from just a 9 to 5 job," said Laura
Stephanie Poon, founder of Zarie, who uses innovative fabrics and design to create a suite of athleisure wear that can accommodate all kinds of lifestyle. She aims to raise US$15,000 and raised US$16,668 at the end of the campaign.
Jennifer Chin, founder of Whizpa, an education review website to revolutionize the way parents find activities for their children. Jennifer aims to raise US$5,000. Whizpa Crowdfunding Campaign is now live on Next Chapter from 8 March to 15 May 2017.
Click here to support their campaign.
Laura Ho, founder of HK - A City That Never Snows, Christmas Cards, who started the campaign crowdfunding Christmas cards illustrated by herself. Laura attempts to raise US$1,600 and has successfully secured US$2,240.
Sharon Vipond, founder of Knots & Strokes, a social enterprise that partners with artists and women’s artisanal fair trade organizations in the global south. Sharon originally targets to raise US$8,000 and has secured US$8,302.