Crowdfunding 201: How to (Not) Fail
We’re going to scale things back a little bit on this edition of “Crowdfunding 201” and do kind of a remedial refresher course on how not to run a crowdfunding campaign, or how to avoid basic issues on your crowdfunding campaign.
Do The Work
Crowdfunding is a lot of work.
It’s more work than you think. Anyone who tells you otherwise is lying to you. Put together a team. Make sure everyone is on the same page. And get ready to put in a lot of hours.
How many hours is a lot? Well, how many do you have? That’s not enough. Now figure out how to increase that number.
How many people are in your team? How many Twitter followers do you have? Now how many real Twitter followers do you have? How many Facebook friends? How many YouTube subscribers? How big is your email list? What’s your Klout score? What’s your Kred score? Have you signed up for SocialBro yet?
How engaged are all those people? What percentage can you realistically convert into fans of the campaign? And what percentage of those people can you convert into backers? And how much do you think each backer will average?
How much will your project cost? How much will it really cost? What’s the minimum number you can make it for?
How much will your perks cost? How many backers can you expect to get at the $10 level? How many at the $25 level? At the $250 level? A good campaign will run multiple scenarios to give themselves a range of expected costs.
A red flag for film campaigns is when they over-promise perks and cut their margins too close. Veronica Mars doesn’t have $5.7M to make their movie. Why? Well, first they have to pay Kickstarter (~$285K) and Amazon (~$171K). They’ll have a bunch of backer pledges that won’t go through. Then they have to print and ship 73,914 t-shirts for people who pledged $25 or more.
Do you know how much that’ll cost? Neither do I. So I asked my friend Adam Woods, who runs Camden Printworks. He makes awesome t-shirts. His back-of-the-envelope guess for 75,000 shirts? $200,000. That’s $2.67 a shirt. But then you have to ship them all over the place. Figure a little over $2 a shirt. That should run your total up over $350,000, if you’re lucky.
They’re also sending a sheet of stickers to everyone who gives more than $10. That’s 82,337 people. You can get stickers pretty cheap, for simplicity let’s assume 10 cents each. A US Postage stamp is 46 cents. That’s an extra $46,108 on stickers. That’s $850K so far.
And then they have to make DVDs and Blu-Rays and Posters (shipping posters is expensive) and Headshots and bloody hell that adds up fast, doesn’t it? We’re conservatively looking at over $1.5M in perk fulfillment, and that’s not even counting the man-hours in actually doing it. Plus, a campaign of this size likely hired a publicist or a consultant or both. Maybe a whole team of people working behind the scenes. Yes, they have the help of WB, but you don’t.
We know they looked at all of that before they launched.
Have you answered all (and I mean ALL) of those questions for your upcoming campaign? Then you aren’t even remotely ready to launch.
Probably once a week someone emails me with this project that wants to raise something like $100K, only when I run the numbers on their digital footprint it is clear they can raise something like $5K. That extra 95%? It ain’t happening.
Re-work the project. Or maybe make something else first.