Thousands of business owners have turned to Kickstarter, an online fundraising site, to help raise capital for new ventures. Raising capital for your business isn’t easy, which is why so many entrepreneurs are attracted to Kickstarter. If you’ve got an idea, you can create a page on Kickstarter, highlight your project, and ask backers to support the idea financially. The site so far has raised $988 million for more than 56,000 projects.
While an online campaign may seem like an easy way to dig up grassroots funding, it’s not as easy as just setting up a site and collecting money. For starters, raising money on Kickstarter is an all-or-nothing situation. You have to set a fundraising goal and you only get the money if you hit it. If you miss the mark, you don’t get a dollar.
So although 56,000 projects have hit their fundraising goal, 73,000 projects have come up short and raised nothing, according to Kickstarter statistics.
Ryan Ausanka-Crues had one of those “lackluster” campaigns. His company, Palomino Labs, turned to Kickstarter to fund a digital board game called Rumrunners. He was trying to raise $50,000 within one month to fund the design of the game. After 20 days, the campaign wasn’t getting the interest or dollars it needed, so Ausanka-Crues canceled it.
“The biggest thing that hurt us was that we banked on organic discovery propelling the campaign to success,” Ausanka-Crues says. “We tried to fuel pledges through an advertising campaign on Facebook, Board Game Geek, and Reddit. We did press outreach too.” In the end, it wasn’t enough.
In hindsight, Ausanka-Crues says there are a lot of things he would do differently, given a second chance. He offers these lessons to other entrepreneurs who are intrigued by Kickstarter as a fundraising tool:
You can’t expect people to stumble on your project when they’re surfing on Kickstarter; you have to do a little marketing beforehand. Having a following in place before you launch a project is crucial, Ausanka-Crues says.
“Kickstarter is a great funding platform, but a terrible place to create a community,” Ausanka-Crues says. “Get your Facebook and Twitter pages up and running—and active—before launching your Kickstarter campaign. Find where your market lives, and go talk to them. Involve them in the process before the Kickstarter starts. To be successful, you need an existing customer base that you can tap on day one.”
Know that day one of the campaign is vital
To be successful, Ausanka-Crues says you should reach at least 10 percent of your goal on your first day. Early funding will also increase your chances of becoming a “staff pick” on the site, which gives you more exposure.
Optimize your project image
You need a polished look when you launch your project. Don’t settle for subpar graphics or skimp on the explanation of your project. You need to present “the whole package” to grab attention and show backers your professional side.
Ausanka-Crues says his company fell short in the graphics department.
“When we took an objective look at our campaign’s logo a couple of days into the campaign, we realized that it was extremely dull compared to the images of the more successful projects that were live around the same time,” he says.
Budget time for managing the campaign
You can’t “set it and forget it” with a Kickstarter campaign. It takes time to manage the campaign, so don’t forget to pencil in time to respond to comments, thank backers, monitor social media, and handle press.
“Managing the campaign is a full-time job,” Ausanka-Crues says. “Be prepared for that.”
Justify your goal
Most successfully-funded projects ask for less than $10,000, according to Kickstarter statistics.
Ausanka-Crues asked for $50,000, which was difficult to justify to backers.
“People looked at our goal and felt like we were asking for too much because there were no expenses for purchasing physical goods,” he says. “Since virtually all of the cost to make Rumrunners is software development time and ongoing monthly fees for hosting, our budget was difficult to satisfactorily explain to some board gamers.”
While Rumrunners didn’t generate the funding it had hoped for, it’s not the end for the digital game. Ausanka-Crues says his staff is redirecting efforts to generate more buzz about the game and look for alternative means of funding.