CROWDFUNDING 101 Part 2: Your Project And Your Crowdfunding Offer.
Defining your crowdfunding project
To recap… crowdfunding is about raising money for a specific project or idea, rather than just raising general funds. This way, your backers know exactly what their money will achieve. Once you’ve decided what the project is that you need to raise funds for, break your project down into key measurable milestones.
Why are milestones useful when crowdfunding on Thundafund?
Crowdfunding is based on what we call an ‘All-or-Nothing’ model – you either hit your fundraising target and receive all the money you’ve raised or, you don’t hit that target and all the funds raised are returned to your backers.
Here at Thundafund milestones can be seen as funding goals. You will need to set two funding goals; the Tipping Point and the Dream Goal.
- Tipping Point is the all important one around which the project either continues or is cancelled. You need to reach your basic funding target here (and cover your project bare essentials) in order for your project to continue with When your target is reached, you bank the capital and continue onto the next 2 milestones until your deadline. If you don’t hit this milestone, your backers capital is returned and your project is closed.
- Dream Goal is the ultimate project dream and the amount needed to realise this dream, within the project deadline.
Milestones can also help to structure your fundraising campaign, offering you the chance to re-ignite your backers and their enthusiasm and engage new crowds. They also prompt you to share your project’s development and success, giving you even more reason to communicate with your networks of supporters.
Setting your monetary targets
How much will it cost to achieve the project you want to crowdfund for?
As we’ve mentioned, crowdfunding can be tough so, if you’ve never done this sort of thing before, or don’t have a big pool of supporters already, then don’t try and raise a stratospheric sum!
As a guide, bare in mind that statistical analysis on US based crowdfunding sites Kickstarter and RocketHub have noticed that:
- The most popular contribution to a project is R100.
- The average contribution to a project is R300.
- To raise R1 000 you would need 10 people to give the average R100 contribution.
- Whereas to raise R5 000 you would need 50 people.
- Think about how many people you feel you can realistically get to give to your project given your current network of supporters, and use this to determine a sensible fundraising target.
Your time limit
As above, think carefully about the project you’re fundraising for (When do you actually need to have the money by? What sort of deadlines are you up against? When would it be ideal to have the money?) but again, be realistic.
There is a tendency to think ‘the longer I give myself, the easier it will be to reach my fundraising target’ but this can be another crowdfunding (and, indeed, fundraising) myth.
A very long time limit may mean your fundraising campaign will lack the urgency or focus it would require to succeed.
In other words:
- Your team becomes complacent about the fundraising campaign (We’ve got 3 months to raise the money – we don’t have to worry about it now…);
- Your backers feel disconnected from your project (Why should I give now to something that isn’t going to happen for 12 months…?) .
Besides, let’s face it, lots of things can change course in a longer time frame which may derail your campaign.
Campaigns tend to do best in the first and last quarters of their timeframe. At the start when enthusiasm is fresh, word spreads and key supporters make their pledges. Then at the end when the pressure is on to reach the target and people who had been meaning to pledge do so before it’s too late.
We suggest 30-45 days but there is no ‘ideal’ project length – just that all projects have to make the most of their initial launch period, sustain a campaign, and make sure there is a final big push!
This is the centre point; the driving point of your campaigns success… Will the crowd back you because they like what you have to offer them in return?
Number 1 Rule: Give fair value. If people feel that they’re over-paying for a reward, it’s unlikely they’re going to back you. Would you back yourself? Entry level rewards between R50 – R500 have proved most popular and it’s also great to ‘crowdsource’ your rewards and see what friends and family would buy and at what price first.
Rewards can involve:
- Experience / Access …
- Thundafund cannot be used to raise money for donation-only causes.
- Creators cannot offer equity or financial incentives (ownership, share of profits, A cash or investment return, repayment/loans, cash-value equivalents, etc).
- Rewards that need to be delivered during your campaign or are delivered over an extended duration such as a year.
- Future discounts, coupons, competitions or raffles, gambling, or lifetime memberships.
- Creators cannot promise to donate a portion of funds raised or future revenue to a cause.
- Thundafund cannot be used to fund software projects not run by the developers themselves.
- Thundafund cannot be used to buy or develop real estate.
- No tobacco, drugs, and drug paraphernalia; or nutritional supplements.
- No offensive material (such as hate speech or propaganda); pornographic material; or projects endorsing or opposing political parties.
- No cosmetic products; medical, health, and personal care products; or infomercial-type products.
- No firearms, weapons, knives, weapon accessories, and replicas of weapons.
Remember, 5 rewards are mandatory. After that, you don’t have to offer every level– just what makes sense for your project.
Each backer investment level is given a name. Why names? Because people want to be a name instead of a number. Who doesn’t want to be a ‘Ground-Breaker’ or ‘World-Changer’ ?
While you can introduce your own backer names, our go-to names are:
- International Delivery: 1 set-price ‘Reward’ titled “International Delivery” is included to cover overseas delivery if required. Backers outside of South Africa purchase this reward alongside their other reward choice.
Thundafund Database Information: During your campaign, when a backer purchases a reward, you receive an automatic email with their Name and Email address from Thundafund. Once your project has successfully hit Milestone 1 and closed, you will receive a full backer database, which includes their delivery addresses. Therefore, you don’t ask your backers to email you – you email them.
Have a look at some of the projects currently on the Thundafund for some inspiration! Look at both past and present projects, successful and ‘misunderstood’. Their updates, rewards and milestones… and BACK one to fully engage with the process of crowdfunding!
Here are a few successful project examples: