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.
Inspired by @DanielleMorrill, at 9am PT (in about 50 min) I’m doing a big tweetstorm on #crowdfunding. Brace yourselves.
— Clay Hebert (@clayhebert) August 29, 2015
1/ People use the terms crowdfunding and crowdsourcing interchangably all the time, but they’re actually very different things — Clay Hebert (@clayhebert) August 29, 2015
2/ Crowdsourcing is the sourcing of ANYTHING from a crowd (ideas, info, design). #Crowdfunding is the sourcing of MONEY from a crowd.
— Clay Hebert (@clayhebert) August 29, 2015
3/ Across all types and globally, #crowdfunding grew 167% in 2014, expanding to $16.2B, up from $6.1 billion in 2013. — Clay Hebert (@clayhebert) August 29, 2015
3A/ In 2015, industry is set to more than double again, on way to $34.4 billion, surpassing venture capital. http://t.co/V3u1PPnbU1
— Clay Hebert (@clayhebert) August 29, 2015
4/ There are 4 very different types of #crowdfunding. 1. Rewards-based, 2. donation-based, 3. equity and 4. debt… — Clay Hebert (@clayhebert) August 29, 2015
5/ In type 1, rewards-based #crowdfunding, the backer gets a reward. A sweatshirt, a video, an app. Something tangible.
— Clay Hebert (@clayhebert) August 29, 2015
6/ Popular rewards-based crowdfunding platforms include @Kickstarter and @Indiegogo but there are many others. — Clay Hebert (@clayhebert) August 29, 2015
7/ In type 2, donation-based #crowdfunding, the donor typically doesn’t get anything except goodwill or a tax-deduction.
— Clay Hebert (@clayhebert) August 29, 2015
7a/ But even in donation-based #crowdfunding, smart creators come up w/ smart + valuable digital rewards to boost donations. — Clay Hebert (@clayhebert) August 29, 2015
8/ Popular donation-based #crowdfunding platforms include @GoFundMe and @Crowdrise but there are many others.
— Clay Hebert (@clayhebert) August 29, 2015
9/ Indiegogo does have a donation / personal #crowdfunding section called Indiegogo Life. https://t.co/qsHZuQYR5E (Like @GoFundMe.) — Clay Hebert (@clayhebert) August 29, 2015
10/ In type 3, equity #crowdfunding, investors invest money and get a (typically small) piece of equity of your company.
— Clay Hebert (@clayhebert) August 29, 2015
11/ Popular equity #crowdfunding platforms include @angellist and @crowdfunder but there are many others. — Clay Hebert (@clayhebert) August 29, 2015
12/ Type 4, debt #crowdfunding is more like a bank loan with interest, but instead of one bank, there are multiple lenders.
— Clay Hebert (@clayhebert) August 29, 2015
13/ The rest of this tweetstorm will focus on type #1, rewards-based #crowdfunding, like @Kickstarter and @Indiegogo. — Clay Hebert (@clayhebert) August 29, 2015
14/ Q) Is your idea a good fit for (rewards-based) #crowdfunding? (Hint: It’s not right for every project.)
— Clay Hebert (@clayhebert) August 29, 2015
15/ A) A good #crowdfunding project is 1. a creative project 2. with a beginning and an end 3. in which something new gets made + shared. — Clay Hebert (@clayhebert) August 29, 2015
16/ A2) I go more into “is your idea a good fit for crowdfunding?” here -> http://t.co/n9D9buUYiX
— Clay Hebert (@clayhebert) August 29, 2015
17/ It’s very important to define your REAL goal. More important than your funding goal, it’s the larger reason you’re doing the project. — Clay Hebert (@clayhebert) August 29, 2015
18/ I go into more detail on REAL crowdfunding goals in my @creativeLIVE video here -> http://t.co/mip2P9qzpG
— Clay Hebert (@clayhebert) August 29, 2015
19/ A lot of entrepreneurs ask me “Why do some terrible ideas get funded and some great ideas fail?” Well… — Clay Hebert (@clayhebert) August 29, 2015
20/ A1) Yes, a great idea matters. But so does marketing. #crowdfunding is not a MERITOCRACY, it’s a MARKETOCRACY
— Clay Hebert (@clayhebert) August 29, 2015
21/ A2) I expand on the #crowdfunding meritocracy / marketocracy here -> https://t.co/57w5jpDPxW — Clay Hebert (@clayhebert) August 29, 2015
22/ People often ask, “How did the crowdfunding industry come out of nowhere? What happened? What changed?”
— Clay Hebert (@clayhebert) August 29, 2015
23/ A) The concept is quite old. Mozart rocked some #crowdfunding. The pedestal of the Statue of Liberty was crowdfunded by Joe Pulitzer. — Clay Hebert (@clayhebert) August 29, 2015
23A/ A2) What’s changed is that the internet connects us all. I go into more depth here… http://t.co/txN0UrNOBm
— Clay Hebert (@clayhebert) August 29, 2015
24/ There are two very common reward levels everyone uses that you can (and should) get rid of. Never use these two… — Clay Hebert (@clayhebert) August 29, 2015
25/ 1) First, get rid of the $5-$10 “digital-high-five / digital thank you / we’ll love you forever and tweet your name”. Don’t do it.
— Clay Hebert (@clayhebert) August 29, 2015
26/ 1a) NOBODY wants that. Instead, give them something digital and awesome. What’s the MOST value that you can give for only $1? Do that. — Clay Hebert (@clayhebert) August 29, 2015
27/ Second, Unless you’re a T-shirt company or a celebrity, don’t offer a T-shirt reward level. The margins suck, but more importantly..
— Clay Hebert (@clayhebert) August 29, 2015
28/ 2a) Have you EVER worn a T-shirt for a band that you’ve never heard of? (Hint: You’re that band right now. Nobody wants your T-shirt.) — Clay Hebert (@clayhebert) August 29, 2015
29/ Because of the media + lack of education, misconceptions about #crowdfunding abound. Here are the three biggest I see over and over…
— Clay Hebert (@clayhebert) August 29, 2015
30/ 1) There is actually a crowd sitting around somewhere and waiting to fund your project. (There isn’t.) — Clay Hebert (@clayhebert) August 29, 2015
31/ 2) The crowdfunding platform (Kickstarter or Indiegogo) will bring the majority of your traffic and backers (They won’t.)
— Clay Hebert (@clayhebert) August 29, 2015
32/ 3) A few big press hits or a celebrity tweet will bring you lots of traffic and backers and fund your campaign. (Almost never happens.) — Clay Hebert (@clayhebert) August 29, 2015
33/ Another common question (that impacts conversion on your campaign), “How should I price my reward levels?”
— Clay Hebert (@clayhebert) August 29, 2015
34/ A) Price your levels “below MSRP”. Give backers a GREAT deal. Rewards-based crowdfunding is not fundraising. There is fulfillment risk. — Clay Hebert (@clayhebert) August 29, 2015
35/ There are 7 elements of a successful rewards-based #crowdfunding campaign…
— Clay Hebert (@clayhebert) August 29, 2015
36/ 1) A new and interesting creative project, 2) A well-defined customer avatar and market — Clay Hebert (@clayhebert) August 29, 2015
37/ 3) Permission to talk to them 4) A solid marketing plan 5) A great video
— Clay Hebert (@clayhebert) August 29, 2015
38/ 6) Great rewards at below market prices (“below MSRP”). — Clay Hebert (@clayhebert) August 29, 2015
39/ And finally, #7…Early and frequent communication and support
— Clay Hebert (@clayhebert) August 29, 2015
40/ There are TWO reasons any #crowdfunding project succeeds or fails. Those two reasons are: 1. Traffic and 2. Conversion … — Clay Hebert (@clayhebert) August 29, 2015
41/ 6 big things impact traffic…1. Permission (email list) 2. Social media 3. Social sharing 4. Paid traffic 5. Platform traffic 6. Press
— Clay Hebert (@clayhebert) August 29, 2015
42/ These things impact conversion: 1. Your product 2. The right people (quality traffic) 3. Your video + story 4. Rewards + pricing — Clay Hebert (@clayhebert) August 29, 2015
42a/ Things that impact conversion (cot’d): 5. Social proof 6. Press 7. Progress + Momentum 8. Design
— Clay Hebert (@clayhebert) August 29, 2015
43/ Notice that “perfect choice of platform” wasn’t one of those. People misunderstand the “Kickstarter vs. Indiegogo” question. — Clay Hebert (@clayhebert) August 29, 2015
43a/ The choice of platform matters, but it’s not the primary reason your project will get funded or not. Not even close.
— Clay Hebert (@clayhebert) August 29, 2015
44/ In #crowdfunding, think “bottom up” vs “top down”. Find 10 rabid fans. Then 100. Then 1,000. Then you’re done. No national press needed. — Clay Hebert (@clayhebert) August 29, 2015
45/ re: Your 1,000 True Fans, read the original post by the brilliant @kevin2kelly – http://t.co/a8PsoHO7aX #crowdfunding
— Clay Hebert (@clayhebert) August 29, 2015
46/ Set your funding goal as low as possible to fund the creation of your product, even if break-even. Do this for two reasons. — Clay Hebert (@clayhebert) August 29, 2015
47/ The crowd isn’t helping you hit your goal. They’re buying something. If it’s good, they’ll keep funding after you hit your goal.
— Clay Hebert (@clayhebert) August 29, 2015
47a/ Proof? Look at the biggest campaigns. Pebble 1 and 2. Coolest Cooler. Exploding Kittens. The backers were buying something. — Clay Hebert (@clayhebert) August 29, 2015
47b/ Hitting your goal quickly helps manufacture a good story for the press. “Project X was funded in 24 hours!” is a very common headline.
— Clay Hebert (@clayhebert) August 29, 2015
48/ There are two categories of #crowdfunding press. Flash press = big name outlets. New York Times, Wall Street Journal, WIRED, etc. — Clay Hebert (@clayhebert) August 29, 2015
49/ Flash press is good to use the logos and testimonials for social proof, but paradoxically, it doesn’t (usually) send traffic + backers.
— Clay Hebert (@clayhebert) August 29, 2015
50/ Because they reach more people, they are by definition, less targeted to your specific customer avatar / who will back your project. — Clay Hebert (@clayhebert) August 29, 2015
51/ The other category of crowdfunding press is what I call “cash press”. These are the smaller and more laser targeted outlets and blogs…
— Clay Hebert (@clayhebert) August 29, 2015
52/ Cash press, because it’s more targeted, can actually drive legit traffic and backers. — Clay Hebert (@clayhebert) August 29, 2015
53/ Cash press proof…Kittyo got big press from huge outlets but the one that drove actual traffic + backers = http://t.co/EdViytTWTR
— Clay Hebert (@clayhebert) August 29, 2015
54/ Great design increases conversion, because design imbues trust in quality. (See: Apple.) — Clay Hebert (@clayhebert) August 29, 2015
55/ OK, that’s an hour. Thanks for being here. I’m going to wrap this up. If you have any questions, @ or DM me.
— Clay Hebert (@clayhebert) August 29, 2015
What do you think about the tweetstorm format? Would you like to see more crowdfunding advice like this?
