How to crowdfund your start-up
The Bicycle Academy's Andrew Denham explains how he raised £40,000 in five days – and shares his secrets for success
I raised £40,000 in five and a half days but, in truth, the campaign took me almost a year, as I courted what would become my customer base for 11 months priAor to launching the actual crowdfunding pitch. Here’s a round-up of the most valuable lessons I learned…
Tell a compelling story that others can write along the way
When I first came up with the idea for The Bicycle Academy I didn’t really think of it as a business, it was just something that I wished existed. From the very beginning I painted quite an ambitious picture of what it might be, then I documented what I was doing, telling the story as I went along. Over time the project picked up more followers, many of whom got in touch to see how they could help. People liked what I was doing and wanted to be a part of it.
Do the legwork before you launch
The crowdfunding campaign was the last push after trying really hard to make sure that people knew about The Bicycle Academy. From the very start I wrote a project blog, kept Twitter and Facebook accounts and created teaser videos. You need to do as much as you can to get your message out there and then you need to keep on updating people. I made sure that there was a build up towards the first day of crowdfunding, so that potential backers knew how important their effort was and how exciting it would be if we succeeded.
Hit the ground running
Some projects try to crowdfund far too soon, with little or no build up. By the time they get publicity for their campaign, it’s likely that very few people will have already backed the project, so the people who would have otherwise been convinced think that they’re in the minority and don’t back it either. People’s opinion of any project will be based at least in part by how well it’s been received by others, so if a lot of time has gone by with little or no money raised, then it will be seen as a vote of no confidence. I can’t emphasise enough how important it is to do a lot of legwork beforehand, so you have a base of people ready and willing to back your project as soon as you launch.
Know your customer
The Bicycle Academy project was covered in papers, magazines and on the radio but, in particular, I ensured that the project was covered on most of the cycling websites and magazines in the UK. I knew this would be crucial. Getting mentioned on the right blog can have a far bigger effect than getting onto a nationally-recognised but otherwise irrelevant website. You need to focus your efforts to reach the people who are most likely to back your project.
It really is all or nothing
Most crowdfunding platforms use an all or nothing model, meaning that money is only taken from backers if the project reaches its funding goal before the end of the campaign. This is great because it means that either the project achieves its goal and backers get their rewards or backers keep their money and the project has to try another way to reach its goal. Either way, no-one loses. With that in mind it’s really important to set a meaningful and realistic funding goal, set it too high and you may never reach it – set it too low and you won’t create enough excitement or benefit that much once funded.
Be prepared to work hard
It’s important to understand that crowdfunding isn’t a shortcut to success, nor an easy ride – it takes hard work. During the campaign you need to answer every email, direct message, comment and tweet and you must take every phone call. But it’s not just a matter of responding to communications; you need to be prepared to keep promoting the project to all your contacts, on your social media accounts and in the media too. I can’t overstate just how much time it will take to do that.
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Be open and honest
People will want to know a lot about you and your business so you need to be prepared to talk about things that you would normally keep to yourself – something that doesn’t suit everyone or every business.
Unless you have a pre-existing reputation as a successful entrepreneur, you must expect people to want to know more about you and your story. Tell them why you’re doing it, what you’ve done before, what you’re good at and what you’re not. Tell them what you’re scared about doing and what you’re looking forward to. It’s important to remember that in many cases your backers will help out by providing their time or expertise so don’t be shy – let them know how they can help.
While you’ll create a lot of excitement by claiming to offer the best rewards since sliced bread and promising to get them to backers within a day of being funded, you’ll also be setting yourself up for a big fall. Sure, it may get publicity and you may even attract some additional backers, but ultimately you’ll end up letting everyone down when you fall short of their expectations. Remember that it takes time, money and a lot of effort to process all the rewards so it’s really important to be realistic about what you can achieve.
It’s not all about the money
Crowdfunding can be a great way to fund a start-up, but it’s all the other benefits that really make it an exciting prospect for your project. A successful crowdfunding campaign will generate far more than just money; The Bicycle Academy has received a great deal of publicity, a year of pre-orders, a healthy waiting list, over 400 hours of volunteered time, and nearly 200 ‘evangelist’ backers who each have a real connection with the company and care about its future.
Andrew Denham is the founder of The Bicycle Academy, a Frome-based workshop offering four-day courses in bicycle frame construction – with the first bike generated from each student sent to someone who needs it in Africa. He raised £40,000 seed capital through the reward-based crowdfunding platform Peoplefund.it in November 2011 – offering people who invested £500 or more one of the first places on The Academy courses, which start in spring 2012.
Image L-R: Hugh Fearnley-Whittingstall, owner of Peoplefund.it, presents Andrew Denham with his crowdfunding cheque