In this blog, I'm continuing my conversation with Matt Barrie, CEO of Freelancer.com, the global workforce site. Here, he talks about how entrepreneurs can use Freelancer to begin or expand their business, or make them much more efficient.Read More »
5 Secrets to Unlock Crowd Funding
In this blog, I'm continuing my look at Crowdfunding site Indiegogo and getting inside advice from my interview with its CEO & co-founder Slava Rubin.
I've personally raised hundreds of millions of dollars in donations and sponsorships over the past 20 years. Raising money for your startup is never easy, but it's the lifeblood for making your dreams real. The first step is usually finding friends, family or others who share your passion and vision. That's why I'm so excited about crowd funding... It changes everything. It's accelerating the velocity of capital and making it easier than ever to launch passion-driven endeavors.
Let's continue in this blog with my interview with Slava Rubin, CEO and co-founder of Indiegogo. A quick look at the top three funded projects on his site tells a fascinating story of diversity. One project is based on making a dream come true, another is based on social justice and the third backs a very geeky (albeit cool) piece of hardware... and they all blew through their initial funding goals:
"Let's build a goddamn Tesla Museum" -- $1,370,511 (161 percent over goal)
"Let's give Karen -- the bus monitor -- a vacation" -- $702,384 (14,048 percent over goal)
"BugASalt" (A gun that shoots houseflies with salt!) -- $577,631 (3,851 percent over goal)
The one I found most fascinating is the second, "Let's give Karen -- the bus monitor -- a vacation." This particular Indiegogo campaign has actually had the site's greatest exposure and showed just how potent and unexpected crowd funding can be.
This challenge concerned a 68-year-old bus monitor named Karen Klein, who was verbally harassed by a group of middle-school students heading home from their school in Greece, a town in upstate New York. The kids who perpetuated the bullying took a video of their actions and uploaded it onto YouTube.
"The video turned back on them," said Rubin. "A good Samaritan named Max Sideroff, who saw the video, created a campaign on Indiegogo to raise $5,000 to send the verbally abused bus monitor on vacation." The campaign promo, which featured the YouTube video, said this: "She doesn't earn nearly enough ($15,506) to deal with some of the trash she is surrounded by. Let's give her something she will never forget, a vacation of a lifetime!"
"Within the next 72 hours, the campaign was funded in every state in America and in 82 countries," Rubin explained. "They proceeded to raise over $600,000 in just those 72 hours." At this point, the campaign has raised over $700,000. "The cool thing is not the money, but the reach."
And that reach is both egalitarian and enormous: Indiegogo is open to everyone. "There is no vetting, no curation, no gate, no judgment," Rubin said. "Everybody should have an opportunity."
This campaign for the bullied bus monitor took off immediately -- people responded viscerally to the video of the woman being verbally abused and took advantage of the chance to help her.
Other campaigns aren't as obviously potent. To separate good campaigns from ones that aren't as effective, Indiegogo has created its own ranking system, the Gogofactor. "It's our own proprietary index to allow campaigns to be measured against each other," Rubin explained. It weighs benchmarks such as funds raised, number of contributions, updates and comments, sharing and the quality of the pitch. The higher the Gogofactor, the better placement the campaign gets on the site and, of course, the better its chances at success.
"So what's your advice on the best way to raise money on your site," I asked my friend Slava. Here are the top five things he recommends to be most effective on Indiegogo:
- Have a good pitch and a video. Have a video as part of your campaign. "If you have a video you will get 114 percent more money than if you don't," Rubin said. The video should be engaging -- not selling or begging -- in which people speak about what they're trying to accomplish and what people can get in return. The Indiegogo site provides advice on crafting good pitches.
- Be proactive. With four or more people on your team, you'll raise up to 80 percent more money than simply with one person, advised Rubin. Offer constant campaign updates: let people know what's going on and how you're feeling. "You want to keep your campaign fresh," he added. "You don't want to create the campaign and walk away and hope for the best." In fact, "If you have an update every five days or less, you'll raise four times more money than if you do an update every 20 days," said Rubin. "An update is like a micro-blog, sometimes nothing more than 'Thanks, Jerry and Bob, for funding us,' or 'we found out we'll get the lease for the store we want to open.' That sort of update keeps it fresh." And it's transparent -- people can see who's behind the campaign.
- Find an audience that cares. In the beginning, your pitch won't attract attention, so it's important to get friends and family to help fund you. (The site offers help in social media integration, among many other tools.) When you begin to reach a benchmark of 20 percent, strangers will start funding you. And at the end of your campaign, there's often a spike as well. "Everyone wants to back a winner or help the campaign get to the finish line," Rubin said.
- Choose the length of your campaign carefully. On average, campaigns with targets will hit that target on day 36 of a 47-day campaign, Rubin said. A campaign can run from one to 120 days, although shorter is better. Around 40 days is ideal. Campaigns get a boost at the beginning when it's new and at the end as they reach their deadline. Campaigns that are too long never get the final boost.
- Campaigns should include perks. Some 93 percent of campaigns that have perks hit their targets. Perks can include a secret family recipe, a discount when the new business is open, a party or a dinner, advance DVDs or CDs of films or music, or limited editions of artwork. The Indiegogo website offers a host of ideas and approaches.
Indiegogo is only one of hundreds of crowd funding sites. When I asked Slava what he believes makes Indiegogo better than the others, he listed four main differentiators:
Easy entry: "We are totally open to any campaign from anywhere in the world, for any purpose. We don't pass any judgment," Rubin says.
Ranking system: The site's merit-driven formula Gogofactor shows that anyone with a good idea and a proactive approach can create traction.
Customer commitment and support: "Whether it's a great big campaign or a tiny one, everyone has an equal opportunity for education and support."
Flexible vs. Fixed Funding: Indiegogo offers flexible or fixed funding. Flexible funding allows you to keep all the money you raise, while in fixed funding you collect funds only if you meet your minimum goal.
In my next blog I'm going to outline Indiegogo's impact on jobs creation and its potential in the future of funding, even in the corporate world.
NOTE: Over the next year, I'm embarking on a BOLD mission -- to speak to top CEOs and entrepreneurs to find out their secrets to success. My last book Abundance, which hit No. 1 on Amazon, No. 2 on the New York Times and was at the top of Bill Gates' personal reading list, shows us the technologies that empower us to create a world of Abundance over the next 20 to 30 years. BOLD, my next book, will provide you with tools you can use to make your dreams come true and help you solve the world's grand challenges to create a world of Abundance. I'm going to write this book and share it with you every week through a series of blog posts. Each step of the way, I'll ask for your input and feedback. Top contributors will be credited within the book as a special "thank you," and all contributors will be recognized on the forthcoming BOLD book website. To ensure you never miss a message, sign up for my newsletter here.