Crowdfunding continues to change
Once upon a time, crowdfunding was done by begging friends and family to invest in your company, then formalized online with sites like Kickstarter and Indiegogo where anyone can chip in smaller amounts to get you on your way. But with so many companies launched to help you crowdfund, and so many new strategies in a rapidly growing ecosystem, what does your company need to know about the future of crowdfunding?
To answer that very question, we tapped the expertise of Kaitlyn Houk is a crowdfunding Campaign Manager at RainFactory Inc., and uses platforms such as Indiegogo and Kickstarter to launch and run some of the most successful crowdfunding campaigns to date, most notably JIBO (the world’s first family robot which raised $2.29M), SKULLY AR-1 (the world’s smartest motorcycle helmet, $2.45M), Luna (the mattress cover to make any bed smart, $1.1M), and Snap Judgment (the NPR radio show that tells stories with a beat, $209k). Her expertise is marketing and fundraising, and Houk spends her days sitting side-by-side with entrepreneurs every day to advise and execute on crowdfunding campaign strategy, inciting thousands to bring each new product vision to life. She has a BA in Political Science and Economics from the University of Virginia.
In other words, she doesn’t bleed red or blue, she bleeds green.
“Crowdfunding platforms have both flattened and broadened the fundraising landscape,” Houk opined. “Anyone with an internet connection can tap into this great fabric for raising support and acquiring customers. Even though crowdfunding is an open door for both product inventors and supporting users, it still takes agility and skill to succeed in a campaign.”
Houk works daily with clients who are “makers” and tells us that the top advancement she’s seen of late is “how these inventors and innovators progress from blueprint to finished product is in taking ideas directly to the online community for validation. This gives them the ability to use community feedback to shape their products. The low barrier to entry, the speed and ease of communication, and the wide range of channels through which we can reach out to all contributors in a campaign, combine to form a tight feedback loop that campaigners can tap into to flesh out, fund, and adapt their product or idea.”
So what is the current state of crowdfunding? Houk offers her three-point overview below:
1. Power to the crowd
This tight communication loop empowers smaller groups who usually don’t have a voice within large companies to be able to demonstrate the potential success of an idea or product. Take our client, Jibo, for example: Jibo Robot, one of the highest-funded technology campaigns on Indiegogo, came out of some of the best and brightest researchers from the MIT Social Robotics Lab. They then took their product directly to the masses and quickly found the buzz-worthy demand they needed to move forward. Jibo could then take their tidy sum of 4,800 pre-orders and $2.3 Million raised and raise another $25.3 million in a Series A round to build their business.
2. Build it together
Early-stage crowdfunding means makers can tailor their product to meet demand. There’s a discovery process that goes on when companies decide to crowdfund. Customers ask tons and tons of questions; often questions that makers have never considered before. For instance, the creators behind the SKULLY AR-1 Motorcycle Helmet have spent a long time discussing the feature sets that they believed would add the most value for potential customers. After the launch of their campaign, and the communication loop tightened, they suddenly had a large pool of motorcycle enthusiasts wanting to know about more features. Backers have a direct line of communication to the maker of the product and real input on feature sets. The SKULLY team released videos, diagrams, and performed demonstrations of other possible features, and got very valuable feedback on which features to focus on.
3. Naked in public
Many of these products fail, and when they do, they fail in a very public way. Products that fail early in their crowdfunding campaigns walk away without any funding and a very bad scorch on their egos. It is even worse if they fail AFTER receiving funding, which is the specter that hangs over any successful campaign. Communication has sped up, but not in lockstep with fulfillment, or the speed to produce and ship products. There is a time crunch within the company itself to live up to its promises.
Every crowdfunding team wants to meet their goal to launch their product. But not every crowdfunded product is able to launch. Angry investors are one thing; angry customers are another. There are innumerable campaigns that don’t launch simply by self-selection: campaigners who are remotely timid about fulfillment sometimes back out or pivot their product before coming to the spotlight. One of our clients even told me, “If I’m opening the kimono, I better look ripped.”
So what’s next? Four predictions for the future
So what will be the next advancements? How will funding be innovated in the future? In her own words below, Houk offers four predictions every brand must pay attention to:
- Building Trust – More new digital marketing firms like RainFactory are entering the space to help campaigners hone their vision, and build confidence in the product as well as the ability of the team to bring the product to life. Customers and backers are needy: constant feedback, profuse thanks, and social validation are an imperative.
- Streamlined Operations – New services are cropping up to offer accessible and affordable fulfillment systems for crowdfunding campaigns, such as BackerKit. Even the crowdfunding platform Tilt has begun to offer fulfillment services. I wouldn’t be surprised if more platforms began to do the same.
- Vocal Backers – Backers will become more comfortable with this “buy and wait” model, as long as the crowdfunding community of trust is maintained. There are even backers who feel compelled to defend the product against critics. On the other side of the same coin, backers will have better “lie detectors” to call out any crowdfunding schemes that look suspicious and vocally demand more answers.
- Simplified Legalities – The legal system will catch up. The hybrid donate-presale model will reach a level of maturity and there will be mutually agreed-upon sets of terms and conditions for launching and running a crowdfunding campaign. Kickstarter and Indiegogo are the biggest requirement enforcers right now and they will continue to be the leaders in this arena. Their Trust and Safety teams are some of the best I’ve ever worked with.
Okay, so there is actually a fifth prediction:
- Fostering Growth & Imagination – The technologies that are being created via this direct-to-consumer method are truly awe-inspiring. I am excited each day I get to go to work and help these people make products that have a meaningful impact. More exciting technologies are developed, more dreams come true, and more jobs are created: one campaign at a time.
Houk concludes, “Case in point: Go fund somebody today and you’ll have an extra skip in your step. I promise.”
Win over investors immediately with a great 1st impression
(FINANCE) First impressions are everything, and it’s no different when it comes to approaching investors. We have the tips to win them over.
Going in for your first pitch meeting with investors can be nerve-wracking – especially if you haven’t yet met these investors in person. Fortunately, if you land a solid first impression, you can set the right tone for the meeting, and make the rest of the presentation a little easier on yourself.
But why are first impressions so important, and how can you ensure you make one?
Let’s start with a recap of the benefits of a strong first impression:
- A reputation framework. Our brains are wired to make quick judgments about our surroundings. Accordingly, we tend to judge people based on our first interactions with them, with little opportunity to change those initial judgments later on. If you strike investors as a smart, likeable, and capable person early on, they’ll see your pitch deck in a whole new light.
- Memorability. First impressions stick with people. If yours stands out from the other entrepreneurs pitching these investors, they’ll be more likely to remember you, specifically, and therefore may be more likely to eventually fund your project.
- Personal confidence. If you know you’ve nailed the first impression, you’ll feel more confident, and as you already likely know, confidence makes you a better public speaker. You’ll speak more deliberately, more passionately, and with fewer mistakes.
So how can you make sure you land this impression?
- Arrive in a nice vehicle. Show up in a luxury vehicle, or at least one that’s been recently detailed, sends a message that you’re already successful. This isn’t a strict necessity, but it can speak volumes about what you’ve already achieved, and how you might look when you drive to meet your future clients.
- Dress for the occasion. Along similar lines, you’ll want to dress nicely. You don’t need to have ridiculously expensive clothes, but you should wear standard business attire that fits you properly and has no signs of wear. It’s also a good idea to get a haircut, shave, wear tasteful makeup, and make other small touches that improve your overall appearance.
- Smile. Smiling is contagious, and it instantly makes you more likable. Don’t force a grin (or else you’ll look like a robot), but do flash a genuine smile as often as appropriate during the first few minutes you meet your prospective investors.
- Use your investors’ names. When you speak to your investors, try to address them by name as often as possible. People love to hear the sound of their own names, so it might help you win their favor. As an added bonus, it will help you reinforce your association with their name and face, so you eliminate your risk of calling someone by the wrong name later on.
- Warm-up with something personal. It’s tempting to get down to business right away, especially because your investors’ time is limited, but in most cases, it’s better to warm up with something personal—even if it’s only a few lines of a conversation. Tell a funny joke you heard earlier in the day, or share an anecdote about how your morning has been going. It makes you seem more personable and charismatic.
- Find a common link. If you can, try to find something in common with each of your prospective investors. You might comment that you got your tie at the same place they did, or that you use the same type of pen. Look for subtle clues about their personalities, lifestyles, and hobbies, and forge a connection through those channels. People disproportionately like other people like them, so the more commonalities you can find with your prospective investors, the better.
- Watch your posture. Your posture says more about you than you might think. Keep your back straight with your shoulders back, and walk confidently with your hands out of your pockets. This is crucial for projecting confidence (and feeling it internally as well).
If you can land a great first impression, you’ll set the stage for a killer presentation—but don’t think you’re out of the woods yet. You still need to make sure you have a fantastic pitch deck in place, and enough knowledge on your startup idea to handle the toughest investor questions. If this is your first pitch, don’t worry – it does get easier – but the fundamentals are always going to be important.
Follow these 7 steps to get outstanding invoices paid to you ASAP
(FINANCE) For a freelancer, it’s more important than ever to bring up the issue of getting paid on time. Here are 7 tips to get your money.
For many, an awkward topic of conversation revolves around getting paid. Whether asking for a raise or asking to borrow money, people often feeling uncomfortable when talking money.
This is equally, or possibly even more so, true for freelancers who are solely in charge of their finances. Without a system of weekly direct deposit, freelancers have to work overtime to keep their earnings in order.
The issue with this is that clients also have a lot on their plates, and something as simple as a freelancer’s paycheck is common to fall through the cracks. This causes freelancers to have to work friendly reminders into their repertoire.
However, freelancers may not always be knowledgeable of the best ways to keep their finances in check (no pun intended). Below are seven ways to enhance payment methods.
- You have to be willing to make billing a priority. Due to the fact that money is awkward to talk about, as aforementioned, many let this fall by the wayside. The best way to do this is to keep up to date with your invoices and send them as soon as they are done. Making a calendar specific for billing can help with this idea.
- This second bit dates back to when we were young and learning our manners: it is crucial to be polite. Not only is it the right thing to do, but it also increases speed in payment. Using “please” and “thank you” in invoicing emails are said to get you paid 5% faster.
- It is best to try and keep a complicated concept like finance as simple as possible. Make sure you are creating specific due dates. This will help to signify importance of payment.
- Now that virtually anything can be done online, it would make sense to use electronic payment verses an old-school check. Accepting online payments will get a user paid, on average, eight days faster as opposed to a check.
- This is an important notion to keep in mind for any aspect of your business life: be professional. Invoices are often seen by many eyes so it is best to include your business’s logo on said invoice. This has been found to increase chances of being paid on time by 10%.
- Specificity is urged again in the form of transparency. Make sure you are giving detailed descriptions on each invoice so that anyone looking at it knows exactly what you are being paid for. By doing this, you are 15% more likely to be paid on time.
- While you may be invoicing month by month, try to avoid sending on the 30th or 31st. Being that everyone, generally, sends their invoices in on these dates, it takes 10 – 20% longer to be paid. With everyone sending it at the end of the month, it has a tendency to back up payroll.
The most important thing to remember is that while the topic of money may be awkward, it is your money. If you let a few invoices fall behind because you are uncomfortable reminding your client, this has a way of adding up. Be sure to keep on track with your finances to earn what you are working for.
What small business owners need to know about succession planning
(ENTREPRENEUR) We’ve all heard the phrase “You can’t take it with you,” but succession planning provides peace-of-mind when leaving behind personal assets.
Succession planning is a forward-looking strategy to ensure the “next in line” is prepped for what is to come. Within an organization, executives or management create a blueprint in hopes of a seamless transition of operations to “partners, future generations, or successor owners,” as Patrick Hicks, the Head of Legal at Trust & Will, states.
Succession planning can be useful in both professional and personal environments, including handing off entrepreneurial businesses or assets of any value. It’s important to create an Estate Plan for whom you plan to replace you in regard to property ownership.
Hicks says that, “Property rights are the cornerstone of modern society.” Property rights include the authority to determine how a resource is used or disposed of after death. This can include giving in a neighbor, a charity, or the most common choice, your family.
“Giving it all to family is typical but giving it all to non-relatives gets second looks. An estate plan is the manifestation of your wishes. It doesn’t matter if anyone else approves.”
It can come as a shock to hear if your assets are undesired by family- or even worse- if it comes as a surprise to them after a loved one’s death. Some choose not to communicate succession plans during one’s lifetime as it could damage familial relationships, but on the other hand, it could also provide a smoother transition. If an heir does not wish to take on the property, there is a chance for contest or litigation that could reduce the benefits of having a succession plan in the first place.
Another scenario is if your dependents do want a hand in property assets after death, but your wishes are to relinquish it elsewhere. Hicks says, “Typically, children do not have a right to claim their inheritance, unless some special rule applies.”
An example is if you leave behind a minor child or surviving spouse, where in that case, they may be entitled to receive support. This could include at least of share of property if no estate plan was in place. However, the necessary support can also be provided by the dearly departed through life insurance or another means.
“When it comes to estate planning, there are societal norms and bounds,” Hicks says, but ultimately, no matter the wishes, having a succession plan can provide peace-of-mind when thinking of the future.
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