The top five ingredients of a killer crowdfunding campaign
Entrepreneur Jian Goh shares the method behind his company’s crowdfunding campaign and how you could apply it to yours
For the right prospect, a crowdfunding campaign could be easier than trying to wrestle money from your bank manager, and you might not have to give up as much equity as going direct to a business angel.
But convincing a crowdfunding platform to list your business is no easy task.
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Part of their job is to protect investors from bad bets, so they must filter out ‘hit and hope’ companies that want the money but don’t have a good plan to make it grow.
Jian Goh is the co-founder and CEO of Quarter8, a business connecting British-made products directly with consumers in China via an online marketplace, which was recently listed on the Seedrs platform.
Goh says a strong performance takes a lot of preparation. So drawing from the Quarter8 experience, here are the five most important attributes of a crowdfunding campaign.
You might think the product or business plan is the biggest consideration for potential investors, but it’s the people running the business that make the first impression.
Investors want to know you have all the important areas of the business covered by competent people with plenty of experience in their role.
In Quarter8’s case, this means people with knowledge of the British and Chinese markets and experience in selling to consumers globally.
“We have a core team of three, all of whom have worked selling British brands in China,” says Goh. “But we have also hired expert consultants to improve the business in areas such as marketing and social media in China.”
The second most important aspect of your pitch is explaining the scope of the opportunity. You might have something truly remarkable, but if it doesn’t fit into a viable market investors won’t back you.
They will want to understand the level of demand for your product or service, including evidence of appetite in your core market. It also helps if you can show it solves a nagging problem that has been hitherto unaddressed.
As a start-up Quarter8 is yet to reach top speed, though its potential market – China – is gargantuan. UK online retail sales hit £52bn last year; but that’s tiny against China’s £443bn. What’s more, Chinese cross-border online sales are worth roughly £65bn – bigger than the UK’s entire e-commerce sector – having grown by 48% in 2015.
“From our work in China, we know there is a great appetite for British-made goods. Chinese tourists spend big abroad and they like the quality and heritage of products made here,” says Goh.
“But we also understand how hard it is for foreign businesses to access the Chinese market, because of the different language, culture and regulations. Not to mention things like a completely different set of social media sites to master (Editor’s note: Facebook, Twitter, Instagram, YouTube, and Google are banned). These are the problems we are addressing.”
Among the biggest sellers in China are pharmaceuticals. The country has a large black market and poor-quality – even dangerous – counterfeit products are a major problem. The UK’s stringent standards give Chinese consumers peace of mind.
Next comes the product itself. It’s likely that many of your potential investors will not be able to meet you in person, so they must base their decision to back you or not on how well you describe what your product is and how it works. Which brings us onto…
Almost all crowdfunding sites will ask you to produce a video detailing all of the above. This is your chance to connect with your audience and describe the opportunity, so you must wrap a powerful sales message inside a colourful story.
Although creating and producing your video will likely be one of the most expensive parts of your campaign, it’s important to get it right. Deliver key messages simply, use graphics to illustrate any data you refer to and get a professional editor to make the whole thing come alive.
This needn’t break the bank, says Goh: “The video is important, but with new technology it’s possible to create something of real quality without spending big. Many new smartphones shoot in 4K, for example, and you can buy a clip mic and a stand for £30.
“If you can’t do things like voiceovers and video production yourself, spend time researching freelancers who can do the job more cheaply than the big media agencies,” he recommends.
You rarely hear it said of crowdfunding campaigns, but never underestimate the importance of your own network. Many platforms give you a period of a week or two before your campaign goes live to start the ball rolling with investments from your friends, family, former colleagues and peers.
This is important for two reasons: one is obviously that it gets you nearer to your desired total, and the other is that investors look for opportunities with existing backing. The crowd is a proving ground for business, so the more people back you early, the more will want to pile in later on.
Crowdfunding sites often require a level of funding to take place before they will allow your pitch to go live. They want to see strong backing for your product from multiple sources as proof of its potential.
“It’s important to get momentum early,” says Goh. “We tapped into an extensive network to drum up interest through events, presentations, social media and PR. It’s an investment of time and money, but essential if you are going to succeed.”