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Is Your Idea Right for Crowdfunding?

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Crowdfunding isn’t for everyone or every project.

And one of the simplest ways to fail in crowdfunding is launching a project that’s not a fit.

Yet there are so many different types of successful crowdfunding projects, from films to backpacks to drones to virtual-reality headsets.

So how do you know if your idea is right for crowdfunding?

This simple guide is designed to help you decide. It’s broken down into 5 parts:

  1. Understanding the different types of crowdfunding, and which is right for you
  2. Knowing the attributes of a good rewards-based crowdfunding project
  3. Learning the platform rules and guidelines
  4. Browsing and backing other projects
  5. Validating interest and demand

Let’s take each one, step-by-step:

1. Understanding the different types of crowdfunding, and which is right for you

There are five very different kinds of crowdfunding:

  1. Rewards-based crowdfunding: The first type of crowdfunding is rewards-based crowdfunding. It’s well named, because in rewards-based crowdfunding, backers contribute typically small amounts of money in exchange for some sort of reward. This reward is often, but not always, the item being produced, such as a watch, an album or a film.
  2. Donation-based crowdfunding: The second type of crowdfunding is donation-based crowdfunding. In donation-based crowdfunding, donors generally donate small amounts of money and often, there is no reward beyond the gratitude of the project creator and / or beneficiary (and possibly a tax deduction).
  3. Equity crowdfunding: The third type of crowdfunding is equity crowdfunding. In equity-crowdfunding, investors give larger amounts of money in exchange for a small piece of equity in the company itself.
  4. Debt crowdfunding: The fourth type of crowdfunding is debt crowdfunding. While lesser known, debt crowdfunding still makes up a large piece of the global crowdfunding industry. Unlike other forms of crowdfunding, debt crowdfunding is not an exchange for a reward or equity. The investors don’t get a reward and they don’t get a piece of equity in the company. Instead they make a loan with the expectation to get paid back the principal plus interest.
  5. Recurring crowdfunding: The last type of crowdfunding is recurring crowdfunding. Like debt crowdfunding, recurring crowdfunding is lesser known, but it’s perfect for certain kinds of creators. In recurring crowdfunding, patrons contribute a recurring amount of money, either on a specific time period (like every month) or every time the creator makes something new (a new song, a new album, a new video, etc.).

Giving rewards, like a watch, an album or a film, is very different than giving away equity in your company. Decide which type of crowdfunding you even want to consider for your idea.

(For the rest of this guide, I’m going to focus on rewards-based crowdfunding, using platforms like Kickstarter and Indiegogo.)

2. Knowing the attributes of a good rewards-based crowdfunding project

Good rewards-based crowdfunding projects are (almost always) a creative project, with a beginning and an end, in which something new gets made and shared with a tribe of people that you can identify and communicate with before you launch.

That’s a mouthful, so let’s break it down piece by piece:

Good rewards-based crowdfunding projects are almost always…

a creative project…

The definition of ‘creative project’ is pretty broad, but selling the surplus inventory in your warehouse doesn’t count. 

with a beginning and an end…

The creative project should have a beginning and an end. So this rules out most recurring services, like accounting services or dog walking. If you’re selling services you provide regularly, crowdfunding doesn’t make sense.

in which something new gets made and shared…

The point of rewards-based crowdfunding is to make and share something new.

with a tribe of people that you can identify and communicate with before you launch.

Just because your project is a good fit for rewards-based crowdfunding doesn’t mean that the platform (Kickstarter, Indiegogo or another) will magically bring you all the traffic and backers.

It won’t. The platform will bring you some traffic and backers (almost always enough to cover platform costs) but you need to find your tribe and bring them to the platform. This is the part that so many creators miss and is a main reason most crowdfunding projects fail.

Creators don’t identify and build permission with a tribe of people (who want the thing being crowdfunded) before they launch.

Crowdfunding projects get funded before they launch, not while they’re live.

We’ll touch on this more in Part 5.

3. Learning the platform rules and guidelines

Each platform publishes their rules and guidelines clearly and publicly. Familiarize yourself with the rules and guidelines of any platform you’re considering to make sure your project is allowed on that platform.

For example, Kickstarter’s rules don’t allow any item claiming to cure, treat, or prevent an illness or condition (whether via a device, app, book, nutritional supplement, or other means)….so if that’s what you’re launching, you’ll need to use Indiegogo or find another platform.

Check well before you launch. Platform rules and guidelines don’t change daily, but they do evolve over time. Indiegogo used to be solely for rewards-based crowdfunding, but now allows donation-based and even equity crowdfunding.

4. Browsing and backing other projects

If you were considering making a documentary film, you’d (hopefully) go watch some other documentaries to learn how they’re made. It’s the same with crowdfunding, yet I’m always amazed by how many people come to me that haven’t even browsed the Kickstarter and Indiegogo categories or backed any projects in their category.

Finding and backing other projects is a great way to really understand and get a feel for what kind of projects are good fit.

Both Kickstarter and Indiegogo have categories that are pretty specific. Kickstarter even has sub-categories. Your project will likely fit cleanly into one of those…and if it doesn’t, it may not be a good fit for crowdfunding.

Choose the right category for your project and then research (and back) other campaigns inside and outside your category.

5. Validating interest and demand for your idea

The final step is validating demand for your specific idea.

  • Even if your project has the attributes of a good rewards-based crowdfunding project…
  • Even if your project is technically allowed by the platform…
  • Even if you’ve browsed and backed other projects in your category…

It doesn’t mean your project will be successful.

To help ensure that, you need to validate interest and demand for your idea.

You do this by:

  1. finding the sub-tribes of people that care about what you’re building and
  2. building permission to talk to them about your idea and campaign

Often, the best way to start doing this is with a well-designed landing page. I break down how to build that here:

How to Build The Ultimate Landing Page (Before Your Launch Your Crowdfunding Campaign)

Summary

Hopefully this guide is useful in helping you decide whether your idea is right for crowdfunding.

To recap the five steps:

  1. Understand the different types of crowdfunding, and which is right for you
  2. Know the attributes of a good rewards-based crowdfunding project
  3. Learn the platform rules and guidelines. Not everything is allowed on each platform.
  4. Browse and back other projects inside and outside your category
  5. Validate interest and demand by finding the sub-tribes and building a landing page

 

Case Study: Crowdfunding Lessons From Minaal

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“That bag is your girlfriend.”

That’s what the Vietnamese waitress told Jimmy and Doug as she brought them their meal.

It wasn’t the first time she’d seen the prototype bag propped up in its own chair as my friends enjoyed their beers.

The bag had its own chair, because Doug and Jimmy were on a mission for even more feedback. They would proactively show it to travelers and locals and anyone who would stop to ask them what they thought.

MinnalBag_615

It’s that obsession over product quality and listening to feedback from other travelers that has helped Jimmy and Doug raise over $1 million through two wildly popular Kickstarter campaigns.

  • Two regular guys from New Zealand.
  • Two Kickstarter campaigns (just over two years apart).
  • Two products.
  • One new travel brand.
  • Over a million dollars raised.

In this video interview, Jimmy and Doug reveal how they turned their idea into Minaal, a popular bag company and how they’re turning Minaal from “just” a bag company into a true lifestyle and travel brand.

Before you watch the video, check out Minaal’s amazing second Kickstarter campaign.

It’s ending soon, and it’s your only chance to buy any of their products lower than full price. Even if you don’t need a travel bag, the 24-second intro to their campaign video is priceless.

In the video above, Jimmy and Doug of Minaal share their crowdfunding lessons…

  1. How they initially met and started Minaal and how it’s evolving from just a bag company to a true lifestyle brand
  2. How a road-trip adventure across the U.S. in a used van and sleeping in Walmart parking lots inspired the creation of Minaal
  3. Why the “lightbulb moment” for Minaal wasn’t a single moment, but actually years of frustration
  4. Why as entrepreneurs, we should be thankful for bad products
  5. How Jimmy and Doug discovered Kickstarter and decided to use crowdfunding to launch Minaal in 2013
  6. How two non-product designers (Jimmy says he could only draw stick figures) designed a functional prototype in a few short months
  7. You can hire out design, but you can’t hire out someone willing to care deeply about the product quality and usability
  8. Why Minaal was never a “hobby” and was designed as a serious, money-making project from day one
  9. How Jimmy and Doug see the future vision of Minaal and how they structured the business to achieve their personal entrepreneurial goals (and what’s next)
  10. How the passionate tribe they’ve built keep Doug and Jimmy going and the role that tribe played in the evolution of the product, the growth of the business and both Kickstarter campaigns
  11. How Jimmy and Doug found their future customers and then relentlessly ask questions and proactively listen to feedback
  12. The importance of having a working prototype and using it to gather in-person feedback
  13. How they prepared for the first campaign, including how they set their initial funding goal, including minimum order quantities, shipping costs and how much they would be willing to “top off” the campaign if they were short
  14. The critical importance of “scenario planning”, meaning running many different backer scenarios (both good and bad) before you launch
  15. Why most crowdfunding projects get fulfilled late (and how Minaal planned and prepared to deliver on-time)
  16. How Minaal structured their pre-launch marketing, including teasing images of the bag on social media
  17. How they overcame not having a large email list before launching their first campaign (only ~500-1000)
  18. The importance of focusing on a super specific customer avatar and laser-focus on your specific niche instead of aiming for mass appeal
  19. How building loads of personal relationships and being part of a community was more important to Minaal’s success than building a large email list
  20. The importance of a fast start for a Kickstarter campaign and how it can “snowball”
  21. How Minaal ignored the naysayers and ran a crowdfunding campaign with minimal frustration and angst
  22. The importance of frequent communication and updates, and why you should tell your backers exactly when you’ll post your next updates
  23. How Minaal’s first Kickstarter campaign solidified the creation of their passionate tribe
  24. How that tribe informed the product design process
  25. Why they weren’t sure their first campaign would work and how increased expectations made them just as nervous for their second campaign
  26. How they designed the video of their second campaign, balancing entertainment and humor while still highlighting their tribe and their product
  27. How they made a longer video (4:03) but kept it interesting, using each segment of the video to setup the next segment
  28. Why they focused on less press outreach and more on email marketing for their second campaign
  29. How they offered the best early-bird pricing to their existing audience, and offered a special launch notification only to newsletter subscribers
  30. Why traffic from niche publications (“cash press”) converts to backers much higher than big-name publications (“flash press”)
  31. Why they never discounts their products, except for pre-selling when they launch new units on Kickstarter
  32. The importance of finding your community, becoming a part of their story and making them a part of your story
  33. Why a crowdfunding campaign feels like a 400 meter sprint, but the finish line is really just the beginning
  34. Doug’s final tip: “Ask lots of questions and ask them as early as possible. Know that things can take a really long time. If you need to pause your campaign to get everything buttoned up, pause it. Don’t launch too soon.”
  35. Jimmy’s final tip: “Remove your ego from your design feedback process. Don’t lead people with what you think…ask them what they think. Don’t explain away their feedback. Sponge up every single bit and process it later.”
Did you enjoy the interview? Let me know in the comments below.
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Crowdfunding advice in 55 tweets

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On August 23rd, Silicon Valley entrepreneur Danielle Morrill strung together 51 useful tweets for founders hoping to raising money in Silicon Valley.

This kind of multi-tweet, semi-structured stream of consciousness is called a “Tweetstorm” and Danielle’s was packed with advice and fun to read.

Inspired by Danielle’s advice for those hoping to raise venture capital, six days later on August 29th, I did my own tweetstorm of crowdfunding advice for people hoping to learn more about crowdfunding and raise money for their project.

It’s not meant to be a comprehensive how-to on crowdfunding (if you’re interested in that, attend this free crowdfunding mini-class) but I tried to address the questions I hear often and some common misconceptions about crowdfunding.

You can read each of my 55 tweets, in order, below.

 

What do you think about the tweetstorm format? Would you like to see more crowdfunding advice like this?

Zuddah Coconut Oil

Crowdfunding lessons from a six-time creator

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Many creators are still planning and considering how to launch their first campaign.

Some already have one under their belt. Ambitious creators have done two campaigns.

Tyson Adams just launched his sixth. This time, for Zuddah Coconut Oil, his latest venture.

Because Tyson has done this before, his campaign is already 50% funded in just a few days.

I’ve known Tyson for years and we’ve collaborated on multiple projects, so this time, we thought it would be fun to bring you behind the scenes of a successful crowdfunding campaign.

So each week of his campaign, I’m going to interview Tyson live and we’re going to pull back the curtain and teach you the exact crowdfunding lessons you can use for your own campaign.

We just recorded the first of four interviews.

In Part 1 of 4, Tyson and I chat about:

• How Tyson started crowdfunding (1:50)
• How to craft quality, high-value rewards (3:02)
• How to make your brand sticky via crowdfunding (4:20)
• How Tyson fell in love with coconut oil (and then became a expert) (5:40)
• How to validate or invalidate other people’s advice (11:00)
• Why Tyson chose crowdfunding for a product he’s going to sell on Amazon (17:00)
• Tyson’s unique pre-launch marketing and branding plan (18:25)
• How Tyson chose the design and branding for Zuddah’s packaging (20:30)
• The importance of a specific customer avatar (22:00)
• How Tyson developed, planned and created his Zuddah Indiegogo campaign video (23:50)
• How to grab the viewer’s attention with your video (25:00)
• A great example of a crowdfunding video you can learn from (and mimic for your own campaign) (26:05)
• The importance of pricing your reward levels “below MSRP” (27:20)
• Why you need an impactful campaign headline that can stand on its own (28:45)
• One of the most common crowdfunding mistakes (and how to avoid it) (29:15)
• One part of your crowdfunding campaign page that you can edit after you go live (31:15)
• Why your campaign needs a “no-brainer” reward level (32:15)

You can watch the video below. If you can’t see the video, click here.

I’ll be talking more about Tyson’s campaign and answering your crowdfunding questions live at my next crowdfunding mini-course. The online mini-course is free and it’s live but seats are limited, so signup today.

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How long should my crowdfunding campaign run?

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This is the twelfth post in our 30 Day Ask Clay Crowdfunding Q&A.

I’m answering a new question every day in June.

Submit your question by going to CrowdfundingHacks.com/AskClay, where you can see all of the questions and all of my answers.

Full Transcript

Hey everyone…this is Clay Hebert from CrowdfundingHacks.com…and today’s question is…

How long should my crowdfunding campaign run?

This is a great question and definitely one that’s on the mind of everyone doing a crowdfunding campaign.

The answer is extremely simple.

“Your project should last 30 days.”

This gives you enough time to execute the plan, not get fatigued and stay sane.

It’s also a short enough duration to maintain urgency for the backers.

Now this isn’t just my opinion or common sense, Kickstarter has published data that 30-days is the sweet spot for crowdfunding campaigns.

Now there are some exceptions, if you’re going to be on the road the last few days of the campaign, it’s fine to extend it a day or two or even three or four, but don’t run a 60-day campaign because that’s too long, people are going to lose interest and there’s not enough urgency for the backers. It’s OK if it’s not exactly 30 but 30 days should be the target duration for your campaign.

As always, you can submit your question or see all of the crowdfunding questions and my answers at http://crowdfundinghacks.com/AskClay

End Transcript

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Why do crowdfunding projects succeed or fail?

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This is the eleventh post in our 30 Day Ask Clay Crowdfunding Q&A.

I’m answering a new question every day in June.

Submit your question by going to CrowdfundingHacks.com/AskClay, where you can see all of the questions and all of my answers.

Full Transcript

Hey everyone…this is Clay Hebert from CrowdfundingHacks.com…and today’s question is…

Why do crowdfunding projects succeed or fail?

This is obviously a great question and one that’s on the mind of everyone doing a crowdfunding campaign.

Well, there are really only two reasons any crowdfunding project succeeds or fails. Yes, it’s really only two reasons.

  1. Traffic and
  2. Conversion

Traffic is simply how many people visit your page. I have yet to see anyone successfully back a crowdfunding campaign without first seeing it.

Conversion is the percentage of those people who back your project and actually pay you.

Another way to think about this that’s a little easier to remember and a little more mnemonic is “Play” and “Pay”.

Play is how many people “play” your video.

Pay is how many people pay, or back the project.

What impacts traffic? What impacts conversion?

There are essentially seven things that impact traffic and seven things that impact conversion.

The 7 things that impact traffic are:

  1. The permission asset (often an email list) that you build before you launch your campaign
  2. Social media
  3. Social sharing
  4. Organic traffic
  5. Paid traffic
  6. Platform traffic
  7. Press (listed last for a reason)

The 7 things that impact conversion are:

  1. Your product
  2. Marketing to the right people
  3. Your story (told via your video)
  4. Your rewards and pricing (and their relative value)
  5. Social proof
  6. Press
  7. Progress + momentum

The traffic fallacy

I’ve seen projects succeed or fail because of every single combination of traffic and conversion, but I want to explain one of the biggest mistakes I see creators make.

Most creators think they need more traffic. They’re wrong.

Most creators need better conversion.

Let’s look at a simple example

Let’s say your campaign has a funding goal of $30,000.

If your average contribution per backer is $30 and your campaign converts at 10%, meaning 10 out of every 100 people who view your campaign, actually back your campaign, you only need 10,000 total views of your campaign. The math is pretty simple…

10,000 views * 10% conversion = 1,000 backers at an average of $30 per backer = $30,000

Now let’s say everything else is the same, but your campaign only converts at 2%, meaning 2 out of every 100 people who view your campaign, actually back it. Now, you need 50,000 views of your campaign. Again, the math is…

50,000 views * 2% conversion = 1,000 backers at an average of $30 per backer = $30,000

So the lesson is, if your campaign converts well, say at 10% vs. 2%, you need a lot less traffic.

More traffic with poor conversion is like water through a sieve.

And it’s much easier to pull the levers to optimize the elements that impact conversion (ideally before you launch) than it is to scramble to get more traffic.

As always, you can submit your question or see all of the crowdfunding questions and my answers at http://crowdfundinghacks.com/AskClay

End Transcript

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What are the characteristics of a successful crowdfunding campaign?

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This is the tenth post in our 30 Day Ask Clay Crowdfunding Q&A.

I’m answering a new question every day in June.

Submit your question by going to CrowdfundingHacks.com/AskClay, where you can see all of the questions and all of my answers.

Full Transcript

Hey everyone…this is Clay Hebert from CrowdfundingHacks.com…and today’s question is…

What are the characteristics of a successful crowdfunding campaign?

I’ve helped almost 150 crowdfunding campaigns and while each one is different, there are seven key characteristics that I see across most successful campaigns.

I’ll explain each below.

1. A new and interesting creative project

Crowdfunding is the coolest store on the internet. It’s not the place for moving old inventory or selling accounting services. When marketed correctly, new and innovative projects do well. This isn’t Amazon. Backers are willing to wait for months for early access or one of the first units of a cool, new thing.

2. A well-defined customer avatar and market

If you think your product is for everybody, it’s for nobody. Start over and define your ideal customer. If you only had one unit of your product, who would be the perfect person on earth to buy it? That person is your ideal backer. Start there.

3. Permission to talk to them

Lee Miller, the creator of Kittyo started with zero emails and built a list of 13,000 cat lovers in six months. When he launched, he was instantly funded, 200% funded on the first day and ended up raising over $270,000…all because he put in the work before he launched to find and gain permission to market to the right people.

4. A solid marketing plan

Good crowdfunding is good marketing. You probably need less than 1,000 backers to completely fund your project, but you need to develop a marketing plan to reach those people before you launch. Don’t launch and then scramble around trying to find them. That’s how most projects fail.

5. A great video that tells your interesting story

A great video is your chance to tell your story to the world. Big companies spend billions of dollars to try to get us to watch a 30-second soap commercial or 8 seconds of pre-roll on YouTube. But if you can get someone to click on your campaign link and play your video, you can have 2-3 minutes of their attention. That’s priceless. Don’t waste it.

6. Great rewards at below market prices

As we explained in the last lesson, you should price your reward levels “below MSRP”.

7. Early and frequent communication and support

As we discussed earlier in this series, backers are taking an early risk on you, so early and frequent communication is key to keep the in the loop on your team’s progress.

So to recap…

The seven elements of a successful crowdfunding campaign are:

  1. A new and interesting creative project
  2. A well-defined customer avatar and market
  3. Permission to talk to them
  4. A solid marketing plan
  5. A great video
  6. Great rewards at below market prices
  7. Early and frequent communication and support

As always, you can submit your question or see all of the crowdfunding questions and my answers at http://crowdfundinghacks.com/AskClay

End Transcript

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How should I price my crowdfunding reward levels?

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This is the ninth post in our 30 Day Ask Clay Crowdfunding Q&A.

I’m answering a new question every day in June.

Submit your question by going to CrowdfundingHacks.com/AskClay, where you can see all of the questions and all of my answers.

Full Transcript

Hey everyone…this is Clay Hebert from CrowdfundingHacks.com…and today’s question is…

How should I price my reward levels?

This is a great question and something a lot of creators get wrong.

Before I explain the answer, I want to explain why so many creators get this wrong.

People conflate crowdfunding with fundraising and charge higher than MSRP. That’s a mistake.

I’ll explain…

In charitable fundraising, let’s say a fundraising gala for your favorite charity, the whole point is to overpay for what you’re getting. The chicken dinner doesn’t cost $100 per plate.

The price of the chicken dinner is “above MSRP” or “manufacturer’s suggested retail price”.

You put on a tuxedo or a cocktail dress and intentionally overpay to support the cause.

That’s fine for fundraising but rewards-based crowdfunding is not fundraising.

That’s the mistake that most crowdfunding creators make. They price their reward levels “above MSRP”, just like the chicken dinner at the charity gala.

When you see a new author charge $15 or $20 for the digital version of their book, that’s “above MSRP”. Anyone can get almost any book they want on Kindle for $9.99. Amazon has trained us that MSRP for a digital book is $9.99 and I can even get Malcolm Gladwell’s book for $12.99, so why would I pay $20 for a stranger’s book?

In rewards-based crowdfunding, you want to price your rewards “below MSRP” for one big reason:

Price your rewards below MSRP to account for fulfillment risk.

When someone orders something from Amazon or Zappos (or if they walk into a local store) there is essentially zero fulfillment risk. They’ll get exactly what they paid for, either immediately or in the case of Zappos or Amazon, with free one or two-day shipping. No risk.

In crowdfunding, there are a lot of elements of fulfillment risk…

  • The product may not be complete yet.
  • It may not arrive anytime soon.
  • It may not arrive by the promised fulfillment date.
  • It may not arrive at all.
  • When it does arrive, it may not be what they had expected or hoped for.

Your backers are the people who are willing to pay you cash today for the promise of you and your team fulfilling what you promise at some point in the future. They’re not just backers, they’re your first, best customers.

These backers are taking a chance on you creating and successfully fulfilling your new thing. They’re giving you their hard-earned money on a promise and trusting in you weeks or months before your product even exists. For that, they deserve a discount.

So to recap…

Rewards-based crowdfunding is not charitable fundraising.

Because early backers are paying you now for basically a promise of production or delivery at some point in the future, you should price your rewards “below MSRP” to compensate for that fulfillment risk.

As always, you can submit your question or see all of the crowdfunding questions and my answers at http://crowdfundinghacks.com/AskClay

End Transcript

crowdfunding, ask clay

Can I offer marketing (or other) services as a crowdfunding reward?

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This is the eighth post in our 30 Day Ask Clay Crowdfunding Q&A.

I’m answering a new question every day in June.

Submit your question by going to CrowdfundingHacks.com/AskClay, where you can see all of the questions and all of my answers.

Full Transcript

 

Hey everyone…this is Clay Hebert from CrowdfundingHacks.com…and today’s question is…

Can I offer marketing (or other) services as a crowdfunding reward?

Great question. The answer is, yes, you can offer marketing services as a reward on Kickstarter or Indiegogo.

But, if you remember from Episode 3, “How do I know if my idea is a good fit for crowdfunding?”, a great crowdfunding idea is a creative project, with a beginning and an end, in which something new gets created and shared.”

So, I want to walk you through two examples of offering services as rewards on crowdfunding.

Scenario #1:

Let’s say you run a marketing agency and your existing business offers marketing services. If that’s the primary crowdfunding perk you’re offering…an existing service that your business provides…then there’s really not a creative project where something new gets created.

If an ad agency just tried to sell some billable hours via crowdfunding, then no, that would not work well.

Scenario #2:

Now, let’s say your marketing agency wants to raise money via crowdfunding to launch a new app. Maybe one of the perks is the app itself, one of the perks is a lifetime pro version of the app, and maybe one of the perks is a full-day session where the backer can sit with your team and learn how to build and market their app.

That’s also offering marketing services as a reward but in this case, it’s a higher level reward and it’s not the main reward.

To use another quick example…let’s say you’re a personal trainer.

If you just want to use crowdfunding platform to just sell hours of personal training with you, that doesn’t make sense. Again, there’s nothing new being created and shared and crowdfunding platforms are not good ways to just sell existing service-based businesses.

But let’s say you own one gym and you want to raise money via crowdfunding to open a second location. If that was the case, and one of the many reward levels was personal training sessions (ideally, discounted from the full retail price), then that could make a lot of sense.

So to recap…

Yes, you can offer services as reward levels but they should be part of a larger creative project, not just selling existing hours or services. Something new should be being created.

As always, you can submit your question or see all of the crowdfunding questions and my answers at http://crowdfundinghacks.com/AskClay

End Transcript

crowdfunding, ask clay

How big is the crowdfunding industry?

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This is the seventh post in our 30 Day Ask Clay Crowdfunding Q&A.

I’m answering a new question every day in June.

Submit your question by going to CrowdfundingHacks.com/AskClay, where you can see all of the questions and all of my answers.

Full Transcript

Hey everyone…this is Clay Hebert from CrowdfundingHacks.com…and today’s question is…

How big is the crowdfunding industry?

Well, just a couple months ago, in April of 2015, the folks over at Massolution released their 2015 – Crowdfunding Industry Report…a report on the global state of crowdfunding…

Here are some of the key stats from that report. Keep in mind, these stats are global and cover every type of crowdfunding (rewards-based, donation-based, equity and debt).

  • Global crowdfunding grew again in 2014, expanding by 167 percent to reach $16.2 billion raised, which is up from $6.1 billion in 2013.
  • In 2015, the industry is set to more than double once again, on its way to raising $34.4 billion.
  • The strong growth in 2014 was due in part to the rise of Asia as a major crowdfunding region. Asian crowdfunding volumes grew by 320 percent, to $3.4 billion raised. That puts the region slightly ahead of Europe ($3.26 billion) as the second-biggest region by crowdfunding volume. North America continued to lead the world in crowdfunding volumes, growing by 145 percent and raising a total of $9.46 billion.

The Massolution research team collected information on 1250 active crowdfunding platforms across the world.

In the second episode of this series, we talked about the four different types of crowdfunding, including rewards-based, donation-based, equity and debt. While rewards- and equity-based campaigns typically get the most headlines, it’s lending-based crowdfunding that’s dominating the industry: in 2014, it raised $11.08 billion dollars.

As far as categories, business and entrepreneurship remained as the most popular crowdfunding category, collecting $6.7 billion in 2014, which represents 41.3 percent of total crowdfunding volume.

Social causes ($3.06 billion), films and performing arts ($1.97), real estate ($1.01 billion), and music and recording arts ($736 million) rounded out the top five categories.

Now those are global numbers, across all of the different types of crowdfunding.

If you want specific platform numbers, some platforms provide those and some don’t.

For example, on Kickstarter, as of today, June 7th, 2015, the platform has had 86,504 successful projects and $1,757,899,300 total dollars pledged to Kickstarter projects.

For Kickstarter, all of their stats can be found at

http://kickstarter.com/help/stats

Indiegogo doesn’t publish their stats publicly.

As always, you can submit your question or see all of the crowdfunding questions and my answers at http://crowdfundinghacks.com/AskClay

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