This section will take you through the major steps of how to approach rewards-based crowdfunding, and gives you some more detailed tips and pointers. Please note, that these suggested steps are offered as guidelines only. You might find each step more or less complicated, depending on your project, the size of your team, and the amount of time you are able to commit.
The early days of your crowdfunding campaign should be dedicated to looking into rewards-based crowdfunding and preparing your offer. You should
- research potential platforms, the features and terms they offer
- ensure you understand the rules and legal requirements of the platform
- create a timeline and a cost plan
- understand market trends by looking at how much is pledged for current crowdfunding campaigns and what is expected in return, which will help give you a benchmark for your campaign
- contact platforms that closely fit your needs
- carefully prepare and check any financial documents that are required by the platform
- start building your crowd on social media
If your application to the platform is successful, you should be able to tell your story in a compelling way, with easily understandable descriptions of your product or service. But this is not easy: you will certainly need feedback from friends and potential customers to keep you on track. It’s important that you tell your story in a logical but passionate way, and do it in a visually pleasing, engaging, format.
Some of the most effective campaigns include a very short two-minute (or less) video. In it you should clearly
- say what it is you hope to do and why
- introduce yourself and your team
- say how you will spend the money
- if you raise more than your target (called a stretch target), show how that additional money will be spent to further enhance the business
Your rewards need to be exciting; at least one of them should be unique to the crowdfunding campaign, something only your backers will have. Research other campaigns for inspiration. Don't forget that pre-selling your product is already a good reward for your crowd. It’s more difficult if your business offers a service, rather than a new product, but it’s about getting creative and coming up with rewards that your crowd will like and want.
During the fundraising period, you should be active with the crowd, online and offline. A rewards crowdfunding campaign works best if consumers can see the passion behind the project or business. You should approach the project with energy and enthusiasm.
- motivate your crowd, letting them know that the campaign is live as well as encouraging them to participate and to share it with their friends
- be active on social media promoting the campaign and making it more visible
- talk to journalists, conferences, trade fairs, etc
- respond to questions, suggestions and queries
Don't forget: If you intend to pre-sell your product, you might have to register as a VAT payer. Check with your local authority.
If you have been successful in raising your funds you can’t just take the money and move on: there is much more work to be done. If you haven’t reached your target, please don’t worry. You can learn from your mistakes and try again.
Remember to thank your crowd, and maintain connections with those who were particularly interested in your product. If you were not successful, ask for tips on how to improve.
If you were successful, ensure that you can deliver on your promises of rewards to all your backers in the time frame promised by creating a time plan. Finally, remember to conduct all administrative tasks.
Download an example rewards crowdfunding case study: Carla’s designer lights