Crowdfunding For Startups: 8 Tips For Launching

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startup crowdfunding

For a people who revere startup culture and the idea that one can bootstrap one’s way to business success, we seem to prefer the TV version to the real thing — especially as of late. It turns out that new business creation recently approached its 40-year low. Banks are retaining their Great Recession-era tight-fistedness and the costs of education, housing and healthcare continue daily to expand beyond the ability of most Americans to keep pace. Frankly, our veneration of the entrepreneurial spirit does not appear to extend to supporting policies that would actually increase people’s ability to take the financial risks required to start their own business.

Due to these factors — along with the legalization of equity crowdfunding accomplished via the passage of the JOBS Act in 2012 — crowdfunding has arisen as a means of raising startup funds. You may only be familiar with crowdfunding in the context of all the medical- and disaster-based campaigns that have been making the news lately, but crowdfunding is a viable way to raise money for businesses as well.

The fact is, for the right kind of new enterprise, a crowdfunding campaign can be a great way to raise a much-needed initial infusion of capital. The biggest crowdfunding site for startups, Kickstarter (see our review), has seen over $3.4 billion USD raised by product-oriented business projects. To be fair, this money didn’t just fall into the laps of the startups in question. Crowdfunding takes some work to get right. However, it’s hard to imagine that the campaigners who raised that $3.4 billion could have raised that same sum via conventional means.

Just know that you’ll have a lot of competition for those crowdfunding dollars. You need to go into it with more than just a good story (not to discount the value of a good story!) — you’ll need to tailor your campaign to suit your particular enterprise, and you’ll need to give your potential backers a personal stake in supporting you with the promise of rewards, profit, or both.

Here’s what you should do to prepare before you begin.

Table of Contents

1) Learn Which Type Of Crowdfunding Suits You Best

If you know anything about non-charitable crowdfunding, you’ve likely heard of Kickstarter and its rewards-based crowdfunding model. What you might not be aware of is that Kickstarter is but one method of crowdfunding available to startups.

Rewards Crowdfunding

Rewards crowdfunding is what most people think of when they hear the term “crowdfunding.” Along with Kickstarter, Indiegogo (see our review), Patreon (see our review), and GoFundMe (see our review) are examples of popular platforms offering rewards crowdfunding. I’ll get into the differences between these platforms later on, but suffice it to say, these platforms generally involve raising money from The Crowd in exchange for rewards that are directly related to your startup’s mission. The platform will then take a cut of what you raise (except in the case of GoFundMe).

Equity Crowdfunding

Equity crowdfunding is a different beast entirely. The field of equity crowdfunding is a new one. It was legalized by the JOBS Act, which was signed into law in 2012 and whose provisions have gradually taken effect over the last few years. The JOBS Act was seen as a way to facilitate greater access to capital in the wake of the 2008 financial crisis.

Equity crowdfunding differs from traditional rewards crowdfunding in that instead of backing a project in exchange for exclusive illustrations or a gadget or tickets to a performance, backers become investors who receive an ownership stake in the company. Investing is much more heavily regulated than rewards crowdfunding, so it’s a more legally complex way of raising funds than using Kickstarter. What’s more, the JOBS Act provides for two similar yet distinct forms of equity crowdfunding: the type in which you raise money from accredited investors only (which basically means rich people) and the type in which you can raise money from non-accredited investors (everyone else). Most equity crowdfunding platforms, including Crowdfunder (see our review) and Fundable (see our review), offer equity crowdfunding for accredited investors only, while a few upstart companies like Wefunder (see our review) offer equity crowdfunding for all (sometimes referred to as Regulation Crowdfunding).

Debt Crowdfunding

Debt crowdfunding, like equity crowdfunding, involves investing in a security of the company in question. However, with debt crowdfunding, the investor is a lender who gets paid back on a fixed schedule with interest. From the perspective of a startup, getting into debt crowdfunding means you’re borrowing money — not from a bank, but from a crowd of investors. Kiva U.S. (see our review), Lending Club (see our review) and Prosper (see our review) are all prominent debt crowdfunding outfits.

If you’re wondering which of these three types of crowdfunding best fits your startup, here’s a quick rundown for you:

  • Rewards crowdfunding is best suited to startups in the business of producing content for people to consume. Artists, gadget makers, podcasters, filmmakers, and board game producers have all made good use of rewards crowdfunding.
  • Equity crowdfunding makes sense for startups with exponential growth potential that do not produce a singular product or experience to share with a crowd of backers.
  • Debt crowdfunding is for startups that need cash for a defined purpose and that have the ability to pay back the loan.

For more information on the subject, I recently wrote an article comparing and contrasting these three types of crowdfunding. Check it out!

2) Research Different Platforms To Understand Their Differences

Simply knowing the difference between the three varieties of crowdfunding doesn’t provide enough information for you to settle on a platform. For one thing, crowdfunders like Indiegogo and Fundable offer both rewards and equity crowdfunding. For another, the terms, fees, content policies, and even the structure of the crowdfunding campaigns themselves differ from platform to platform.

For instance, you might be trying to raise funds to build your own board game company and have your sights set on Kickstarter. However, Kickstarter is a more exclusive platform than most rewards crowdfunders — it might not accept your campaign proposal. What’s more, you might find Kickstarter’s all-or-nothing funding policy intimidating. With all-or-nothing funding, if you raise less than your stated goal amount during the length of your campaign, you get nothing at all. You might find a platform like Indiegogo more to your liking, as Indiegogo accepts any campaign that doesn’t violate its rules while allowing you to collect whatever you raise with your campaign regardless of whether you’ve hit your goal.

Let’s say you’re an artist collective seeking to put on monthly art exhibitions. The Kickstarter/Indiegogo fundraising-for-a-one-time-event model of crowdfunding may not be for you. You might find Patreon to be a better fit. With Patreon, backers (or “patrons”) sign up to support you on an ongoing basis, either per month or per creation. You won’t have to gin up a new crowdfunding campaign every time you want to start a big project.

Likewise, equity crowdfunders vary greatly in their policies — SeedInvest (see our review), for example, boasts of only accepting 1% of those who apply to crowdfund on its site, whereas EquityNet (see our review) accepts any startup applying to use its services.

3) Check Out Other Crowdfunding Campaigns To See What Works (And What Doesn’t)

When you’re raising money via crowdfunding, you have one big advantage over those trying to raise money via other means. If you’re applying for a bank loan, you don’t get to browse through every loan application ever submitted to the bank or view the result of every application. But with crowdfunding, in most cases, the data is there for everyone to see!

Kickstarter is typical for a crowdfunding site in that every campaign ever posted to its website is left up permanently, regardless of whether the campaign succeeded or not. For the creator whose ridiculous campaign never really got off the ground, this permanent record of failure may not seem like such a boon. However, if you’re a startup looking to identify patterns in past crowdfunding campaigns that correlate with success — as well as patterns that correlate with not-success — this data is quite valuable indeed. I would strongly advise you to make use of it! Don’t be too proud to emulate what has been shown to work.

4) Be An Intensive Self-Promoter

If you’re the modest, retiring sort who spurns self-promotion, get ready to change your approach  — that is, if you want your campaign to succeed. Spend some time promoting your startup’s cause before taking the crowdfunding plunge (Indiegogo recommends at least two months of prep time before launch).

Do the legwork necessary to build up your social media following before starting your crowdfunding campaign, so that when you launch your campaign, you’ll have a built-in audience that is already receptive to your message. Contact journalists who cover your field. Build an email list. Consider buying ads on Facebook or Twitter to promote your campaign. Unfortunately, with crowdfunding as with so much else in our fallen world, you have to spend money to make money.

Remember to tailor your self-promotional efforts to fit your audience. If you’re looking to conduct business with accredited investors, a hard-nosed, data-focused approach may bear more fruit than a flashier look-how-cool-we-are campaign.

5) Create A Professional Video

I suppose I could have included this point in the previous section, but I think it deserves to be emphasized on its own. According to Kickstarter, posting a video to go along with your campaign increases your likelihood of ultimately succeeding from 30% to 50%.

Here’s another example of “spend money to make money” — a professional video with decent production values will make your potential backers more confident in the potential of your enterprise than something produced on the cheap. I’d love to live in a world where one could devote all one’s energies towards their true passions and not have to set aside time and resources for salesmanship, but we don’t live in that world. So, make a video. Keep it to just 2-3 minutes. You can get personal, but make sure to hit all your main points about your startup and its potential. Don’t forget to mention the benefits backers stand to earn!

6) Get Commitments From Backers Before Launching Your Campaign

It might not be fair, but it’s not easy to attract backers when your campaign first launches. An adverse first impression can easily dissuade someone from contributing to your campaign, and seeing “$0 pledged” next to your project can be enough to cause a prospective backer’s wallet to close. That’s why it’s important to line up commitments from backers before your campaign launches.

Time to make your family and friends prove their love to you by securing their backing before your campaign goes live! Gather commitments from your followers as well. Remember how I mentioned that you should build an email list of potential backers? Here’s where you can put that list to good use. Email your followers immediately when your campaign goes live. Get some pledges early and it will be all the easier to get subsequent commitments from backers. Data provided by Kickstarter backs this up — while their overall project success rate is just a hair under 36%, projects that raise over 20% of their goal have a 78% success rate.

7) Don’t Be Afraid To Use Analytics

The use of analytics is the only way you’ll be able to tell just what kind of traffic to your campaign page is converting to pledges. Use whatever analytical tools are available to see where your pledges are coming from and how you can boost them.

For instance, Kickstarter’s Project Dashboard gives you access to a trove of data regarding exactly where your backers are coming from. This data is invaluable when determining where you should focus your marketing.

kickstarter

8) Stay In Touch With Your Backers

Show your backers that you respect them by staying in touch with them. Keep them updated on your progress. After all, these are people who made a financial commitment to you knowing that there’s no guarantee that your plans will come to fruition.

Monitor social media chatter related to your campaign to see if particular concerns pop up repeatedly. If so, do what needs to be done to address these concerns. After all, you’ll want to stay in their good graces if you want to launch another crowdfunding campaign in the future!

Final Thoughts

Crowdfunding doesn’t work out for every startup that tries it. If you do your due diligence, however, you greatly increase the likelihood that your campaign will reach its funding goals. Follow these tips, and you’ll have a fighting chance to get the funding you need so that you can ultimately focus on growing your startup, not on fundraising!

Jason Vissers

Jason Vissers is a writer, cereal chef and Netflix aficionado from San Diego. A native Californian who enjoys the beach, Jason nonetheless prefers to do his surfing on the World Wide Web, the raddest wave of them all. Jason can’t eat raisins.

Jason Vissers

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How You Can Advertise On OutBrain: My Experience & 4 Suggestions for Advertising With OutBrain

Outbrain IRL

Ever went to the finish of the article on the internet and seen &#8220From Around Web&#8221 or &#8220Recommended Content?&#8221 Normally the headlines are really shocking, and also the images eye-catching. Frequently they&#8217re just plain weird.

Individuals are most likely OutBrain ads, or Taboola ads &#8211 OutBrain&#8217s primary competitor. Technically though, they aren&#8217t ads. They are able to&#8217t be ads. OutBrain is really a &#8220content discovery platform&#8221 that are experts in putting compensated links where visitors searching for another thing to see.

OutBrain/Taboola ads are underused by advertisers since they’re new, a little odd, and difficult to do well. They’re neither ads nor caused by PR&#8230so they don&#8217t really squeeze into an average internet marketing model. However they are cheap and provide you with normally costly use of premium online publishers, plus they appear exactly when visitors searching for another thing to click.

I’d only heard tales of massive failure or of wistful potential. But never from anybody who’d really attempted out an offer. And So I ran a couple of campaigns.

Skip lower to my tips on making OutBrain/content discovery work, or continue studying in my walk-through of methods to market on OutBrain particularly.

What &amp Why of OutBrain

OutBrain calls itself a &#8220content discovery platform&#8221 and offers exactly the same kind of plan to different audiences. Publishers may use OutBrain to delegate their related posts functionality making money off readers who wish to keep studying something. Quite simply, OutBrain helps publishers earn more money whether people stay (and browse related posts &amp see more ads) or click and then leave (by which situation the writer earns money in the click to depart).

Advertisers may use OutBrain to obtain cheap use of premium publishers that have a big audience, but additionally premium ad rates. Advertisers can advertise on CNN.com in excess of $5 to $10+ per 1000 impressions (ie, not clicks) or they are able to advertise on OutBrain for under $.35 per click&#8230with a catch. Here&#8217s how OutBrain describes their professional services:

Increase your audience by disbursing your articles on other sites, where individuals are searching for something different to uncover. The crowd originating from Outbrain has already been in content consumption mode, therefore more engaged and more prone to stay longer.

The issue though is your advertisement can&#8217t be an advert. It needs to be content &#8211 or at best seem to be content. The lines here get quite fuzzy for publishers and advertisers, and OutBrain is very lenient on the type of content as lengthy as the website landing page isn&#8217t an upright up ad + offer.

In either case, the important thing takeaway is the fact that OutBrain is much like an advertisement network for content. You receive cheap incredible achieve as lengthy while you abide by the guidelines. The guidelines are odd, therefore it&#8217s helpful to determine who exactly is advertising on OutBrain, and what’s presently working.

Who Uses OutBrain?

Most OutBrain ads are an advertisement rate arbitrage play. Advertisers (who’re publishers themselves) pay $.XX for any click via OutBrain, after which monetize that visit by themselves site with premium ads that shell out $.YY.

For instance, any adverse health site might promote content on the general purpose site for $.15 per click because once that visit find their website, they are able to promote a higher dollar pharmaceutical ad. Within the image at the outset of this publish, someone would follow the link to &#8220Foods That May Cause An Irregular Heartbeat&#8221  &#8211 plus they find this:

OutBrain Advertiser Example with Pharmaceutical Ad

Or they might click another OutBrain ad and find a webpage just stuffed filled with poor ads.

Low Quality OutBrain Advertiser

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As lengthy because the arbitrage is sensible, the publishers keep going with it. Publishers with OutBrain ads get compensated for clicks departing their website, and advertisers reach monetize the visitors with premium ads next. This tactic is OutBrain&#8217s bread and butter.

In my experience, the information on this tactic signifies a large chance. Arbitrage means the marketplace isn&#8217t working, then one is under-priced based on its value.

Quite simply, insufficient companies are benefiting from OutBrain. It shouldn’t be that cheap in accordance with display &amp CPC ads. And you will find some companies taking notice.

Example of content marketing on OutBrain

AllState is really a high margin business having a lengthy sales cycle. It really wants to position itself like a brand to depend on.

What is your opinion includes a better Return on investment &#8211 having to pay $10+ CPM for any advertising that informs people they are able to rely on AllState&#8230or a bit of content that gives a action plan to outlive winter together with your vehicle that will get actual clicks for $.20 per click?

I&#8217d like to see their Analytics, however i&#8217d bet on OutBrain. People finish up studying valuable content on AllState&#8217s website. May possibly not be an advertisement&#8230but the information essentially endures a large ad for AllState.

In either case, I&#8217d argue it&#8217s worth an evaluation a minimum of. You will get visits to your website using content you have for any rock-bottom ad cost.

How You Can Advertise On OutBrain

First, mind to OutBrain. You&#8217ll be registering for a free account to get traffic &#8211 err&#8230 &#8220Amplify Your Articles.&#8221

Signup for OutBrain

Second, you&#8217ll need to decide if you wish to advertise an Feed or perhaps a hands-selected bit of content. If OutBrain becomes a good funnel, the Feed can be very helpful. However for an evaluation, I&#8217d begin with the hands-selected campaign. Make sure your articles is prepared and all set. You are able to&#8217t edit the OutBrain headline &#8211 they pull whatever may be the title from the page.

OutBrain options for content discovery - hand-picked or RSS

Third, you&#8217ll set your financial allowance parameters. I personally use the network suggested amount for test campaigns just to get a great feeling of potential traffic. El born area will be the first factor to optimize following the test though.

Be cautious using the start dates. OutBrain comes with to approve your articles prior to it going live (may take a couple of days for approval). Should you&#8217re on the tight test budget, set an absolute start days a couple of days out with an finish date. Make sure to watch Analytics on individuals days.

OutBrain campaign dates and budget parameters

Not to mention, should you budget more per click, you&#8217ll increase website traffic.

OutBrain budgeting

4th, watch out for your approval email. That&#8217s it!

OutBrain final approval for campaign to run

Advertising on OutBrain is the fact that easy. However, certainly one of my concerns/complaints is the way little control you’ve within the settings. Your placements are automated. From my experience, OutBrain is actually proficient at finding appropriate placements&#8230but you don&#8217t possess the granular control that you will get with Google Display Network.

You’re able to Geo-target&#8230and that&#8217s about this. Here&#8217s exactly what the Dashboard appears like.

OutBrain dashboard options

Suggestions For Effectively Using OutBrain

OutBrain is a terrific way to get reduced visitors to your articles. But traffic that doesn&#8217t construct your business doesn&#8217t matter. Should you&#8217re a publishing based business, you might be able to create a experience ad rate arbitrage, but otherwise, listed here are 4 uses of OutBrain advertising to construct your company.

1. Choose Social Shares

Going viral isn’t luck. There&#8217s always something which will get the snowball moving. Whether or not this&#8217s a reddit submission, an e-mail for an editor, or perhaps a formerly built social audience, viral content starts somewhere.

Using some kind of compensated &#8220accelerant&#8221 could be a terrific way to attempt to engineer organic social shares. That&#8217s the entire reason for promoted Facebook posts and promoted tweets. OutBrain is really a cheap, and useful method to generate organic social shares. Unlike promoted tweets, etc &#8211 OutBrain ads don&#8217t seem like ads. They’re content that visitors &#8220discover.&#8221

The important thing though would be to make certain your articles is definitely shared. Make certain your Twitter cards have established yourself fix your Facebook markup be sure that the right share buttons are in the best place around the publish.

Appraise the audience you are able to achieve using the money spent on OutBrain. Even when your articles doesn&#8217t go viral, you are able to frequently obtain a really efficient overall CPM with relatively couple of social shares generated through the initial OutBrain campaign. This publish will help you dig in to the figures for that social share strategy.

2. Get Opt-ins having a bribe

The OutBrain audience is searching for happy to read. They aren’t searching to purchase (as well as OutBrain&#8217s ban on advertising), and they’re most likely likely to bounce.

However that doesn&#8217t imply that they wouldn&#8217t want to consider more details. Attempt to get email signups at the best or Facebook likes/Twitter follows at worst to be able to sell to them later when they might be thinking about buying.

They’re in your site simply because they much like your content (or at best your headline). Offer something complementary towards the content just to have their information. Measure OutBrain traffic according to whatever it might normally cost to obtain a register conversion.

This tactic will probably be the nearest to direct response while you&#8217ll get with OutBrain. However if you simply can effectively get emails together with your content, OutBrain will be among the least expensive methods to drive traffic towards your articles.

3. Develop a re-targeting audience

This tactic may be the compensated form of getting opt-ins. It&#8217s a method that you ought to have in position, even though you don&#8217t really use re-targeting ads. The last factor you would like when choosing OutBrain visitors are to possess a huge hurry of traffic to your website which in turn leaves, and completely forgets in regards to you without any method to help remind them with regards to you.

Google Analytics enables you to definitely fairly easily build audiences according to website landing page. You are able to build these audiences to complete retargeting ads later (ie, &#8220the ads that go wherever you go&#8221) in situation or additionally with other strategies.

Retargeting is usually cheaper and more efficient that the majority other kinds of compensated advertising because you&#8217re advertising to those who have already visited your website.

The bottom line is to construct an offer that&#8217s very targeted and never annoying for the OutBrain audience. It may be new content or perhaps a complementary product/service offer, however it won&#8217t work whether it&#8217s only a general campaign.

You are able to measure OutBrain with multi-funnel Analytics (ie, what conversions made it happen eventually help with). Or appraise the OutBrain + Re-targeting from the cost of purchasing targeted CPC or CPM ad. It&#8217s kind of like having to pay $.25 vinegar + $.50 sodium bicarbonate to unclog your kitchen area sink rather from the $3.00 small bottle of Drano.

4. User-testing for the content

Should you&#8217re spending considerable time and cash on premium content (or perhaps doing an offline print run), you&#8217ll need to know how you can edit it before launch. Since OutBrain is really cheap, it’s really a great place to check headlines and responses for your content &#8211 sort just like a soft launch with user testing for content.

Run multiple small campaigns with various headlines to check out click-through rate. Use a scroll depth wordpress plugin or adjust your bounce rate in the search engines Analytics so that exist a obvious picture of methods users communicate with the information.

Measure this OutBrain strategy in line with the enhancements and time saved together with your budget.

Next Steps

Build content in your site that&#8217s really interesting. Define what you would like to get away from OutBrain. Social shares? Email newbies? Branding? Choose how that content will make it happen &#8211 have you got a bribe for email newbies? Would the information make social sharers look great discussing it?

Mind to OutBrain.com, setup a free account, define test budget, submit content for approval, watch Analytics carefully following the content goes live. Evaluate the information and choose how to proceed after that.

The publish How You Can Advertise On OutBrain: My Experience &#038 4 Suggestions for Advertising With OutBrain made an appearance first on ShivarWeb.

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