Should You Crowdfund Your Next Video Or Album?
You control everything, including costs, timing, delivery, creative vision and execution, marketing and customer interactions.
You keep your equity: Projects and businesses remain 100% yours.
You get to test and prove out the popularity of your model, using as little as a prototype or preproduction materials.
You may also be able to test elements of your product’s marketing approach and how well individual promotional aspects or overarching campaigns resonate with target consumers.
You can sometimes make much more than you ever intended, or asked for. Under traditional investment scenarios, entrepreneurs must typically supply detailed business plans and budgets that justify their funding requests, negotiate the transfer of ownership stakes, and haggle over the actual value of their enterprise. Some companies and projects may require multiple rounds of funding, each of which demands additional negotiations and compromises, with the added risk (and stress) of having to prove the validity and worth of your project at each step. With crowdfunding, if your product resonates strongly with your audience, you may well exceed your funding target. Successful campaigns have raised as much as 4x or even 8x their original funding goals.
Lucky or well-run crowdfunding projects can begin sourcing contributions with as little as a polished pitch – and may exceed funding goals many times over, without having to justify each additional dollar contributed. (Caveat: Such scenarios are not necessarily the norm, but happen often enough to take into consideration when debating which investment channels to use.) Unlike traditional investment ventures, which adhere closely to predefined game plans and budgets, some projects may even grow in feature set, scope and/or ambition with the extra money generated. One point to be aware of, however: As the market for pre-retailing your product develops, the bar will be raised as to what customers expect in terms of “sales materials” for crowdfunding efforts. You should always benchmark your project materials against those of similar campaigns in your chosen field or genre.
If at first you don’t succeed… Should you fail to meet your goal, you lose nothing (other than time and the occasional dent to your public image) and can try again, with an improved plan and presentation. Generally, if you fail to impress investors, you can consider yourself very lucky if they’ll give you a second chance. Bear in mind when considering rebooting campaigns, though: If you are targeting the same customers or audience, they may well remember your earlier campaign, and its failure may have negative consequences.
You can pre-sell your product or service, and depending on the costs associated with it, you may be able to get more than the actual retail value from backers who believe in your project. You’re also mitigating risk and earning capital that can be directly applied towards production and marketing costs at the same time.
An unexpected benefit of crowdfunding campaigns is that you will often receive very useful advice – and even tangible offers of assistance – from backers, who, after all, want you to succeed and will do everything they can to help you get there.
Your backers become your built-in marketing team and crew of brand evangelists, helping to promote your project to all their friends and contacts.