Advice — How to raise money for that project: A guide to successful crowdfunding
You’ve had the lightbulb moment, come up with a knockout idea, and want to share it with the world. But what if you simply can’t afford to make to make it a reality? Luckily, today crowdfunding offers a way to get financial support for creative projects – if done well. To get some essential pointers on making convincing and effective campaigns, we spoke to Kelly Angood, a designer and London-based communications consultant for New York-based creative agency, Vann Alexandra.
An illustration graduate from Brighton University, over the past decade Kelly has launched five successful Kickstarter campaigns of her own, and in 2013, founded Pop-Up Pinhole Co., a range of build-it-yourself analogue pinhole camera kits. If that wasn't impressive enough, she’s also helped to raise over $4million for campaigners on Indiegogo, and on the side, runs Fruit Stickers – an Instagram account archiving vibrant, colourful stickers fruit and vegetable stickers from across the globe. Whether you have a new must-have product on your hands, or looking for pointers on raising money for a degree show or exhibition, Kelly’s advice has you set for success.
Ideas, projects and products are creative currency
Creative people dream big, but executing visions can be a daunting hurdle. One of the biggest barriers to entry is actually getting the funding needed to get projects off the ground.
Luckily, raising funds has become more democratic in the past 15 years, with the rise of crowdfunding platforms like Kickstarter and Indiegogo. These have sidestepped the gatekeepers to traditional finance methods that usually keep people at arm’s length of realising their ideas. Instead, the crowd decides which ideas deserve to become a reality. And if the crowd likes, and believes, in a project they will fund it.
While many people associate crowdfunding with huge multi-million dollar projects, there’s lots of room for smaller, creative projects. It’s worth remembering that these platforms originally started out as a way to help creators launch smaller, more intimate ideas into the world.
“While many associate crowdfunding with huge multi-million dollar projects, there’s lots of room for smaller, creative projects.”
But if you don’t feel like the main players like Kickstarter or Indiegogo are a fit, a smaller platform might work for you, for example:
Set up by London-based Oscar Lhermitte, this is a recently launched Kickstarter concept. It’s nine, simple rules to get an idea out of your notebook and into the real world.
This can also be a great platform for illustrators, designers and artists. It allows you to collect monthly income from your fan base, who subscribe to different levels of support.
This platform allows creatives to launch limited edition runs of t-shirts without any of the associated upfront costs – they handle all of the production and shipping and give you a fair share of the profit.
If you have a project or idea to make a local place better, SpaceHive’s partners (usually funds or councils) match the funding you bring to the campaign yourself.
It’s also worth looking into alternative options such as grants, and even business loans. If you’re under 30, the Prince’s Trust offer grants; and for heavily arts-based projects you could consider applying for Arts Council funding.
But when it comes to crowdfunding, I’ve discovered a few tricks to running a successful campaign over the years. In my experience, crowdfunding works best when there’s a unique idea that has an active and engaged community around it. Generally, if your idea is too similar to something that’s already on the market, success is harder to come by.
I’ve also seen more consistent success when people try and crowdfund physical products, rather than things like digital apps, physical spaces, and events. But, of course, there are exceptions. Here are some of my tips to running a successful fundraising campaign...
Crowdfunding can garner more success for physical products: In 2013 Kelly founded Pop-Up Pinhole Co., build-it-yourself analogue pinhole camera kits
Tips to Running a Successful Fundraising Campaign
Engage your community
Whether you are considering funding a physical product, or event such as a degree show or exhibition, one of the key factors of success is building an engaged community around what you are doing. They will be the first people to back your campaign and help you build the momentum you need to have a success on your hands.
Generally friends, family, and fans of your project will account for the first 30% of your funding goal. After that, platforms can bring between 5–20%, and the rest is likely to come from a wider audience, who might find your project through press or social media mentions.
Crowdfunding is essentially marketing for this century, just with an injection of cash. But it can offer so much more than just money. It allows you to engage directly with consumers and see how your idea is received. It’s an opportunity to get insight and feedback on your project, learning more about what your consumer wants and who they are. It can also generate publicity and expand your audience.
“Build a community. They will be the first people to back your campaign and help you build the momentum you need.”
Make your project visually appealing
It’s important to have strong visuals on your campaign page. So evaluate your project’s brand identity before your crowdfunding campaign. Is it effective, established, clear, cohesive, and professional?
From your main image and project logo to your video title cards, your images and graphics should tell the project story and show the product. Consider making a video; projects with videos succeed at a much higher rate than those without, and it’s by far the best way to get a feel for the emotions, motivations and character of a project. Whether it’s super-high production, or more homemade, tell us who you are and the story behind your project: Where’d you get the idea? What stage is it at now? Ask for people’s support, explaining why you need it and what you’ll do with their money. Then talk about how amazing your rewards are, and be sure to thank everyone! Also, don’t be afraid to have fun and have a sense of humour.
Don’t be shy of putting your face in front of the camera and letting people see who they’re giving money to. I’d also recommend making your video no longer than three minutes, and try to grab your viewer’s attention in the first 30 seconds. And don’t put any copyrighted music in your video without permission!
“Projects with videos succeed at a much higher rate than those without; it’s the best way to get a feel for the character of a project.”
Consider your financials and cost of production
Not being able to deliver your product or rewards, or losing money doing it, is a nightmare scenario no creator ever wants to find themselves in. So you have to be on it when it comes to budgeting. When you sit down to assess your costs, here are some things to consider.
Make a budget spreadsheet:
Do this early on and continue to update it as you plan. It’s crucial to account for every item or service required to prepare, execute, and complete your campaign, especially the post-campaign costs of rewards fulfilment.
Calculate all production costs:
This includes the production of your product, campaign, and production and shopping costs for rewards. Whichever platform you use costs and fees are usually transparent and upfront, so make sure to add these in, too. (For Kickstarter and Indiegogo, this will be about 8.5%).
Add a 20% buffer:
Extra production costs and unexpected expenses invariably come up. It’s bound to happen. But, if you do end up with funds spare, you should consider using the money towards building your brand, and business, or improving your product. Add these costs up, and you’ll arrive at the amount you should set as your goal.
Be vigilant of shipping costs:
It’s one of the easiest ways to lose money on a crowdfunding campaign. I’d recommend working with a fulfilment partner who will handle the delivery of our rewards. A quick google of ‘fulfilment houses’ or ‘Kickstarter fulfilment’ will lead you to companies that specialise in this field.
“Always consider your crowdfunding campaign as income whether you’re a freelance sole trader or set up as a company.”
Don’t forget about taxes
Money made in a crowdfunding campaign is considered income, and that means it’s taxable. If you raises money through crowdfunding, and are giving your backers goods or services in return, the money is considered taxable income for both direct (income or corporation) tax and indirect (VAT) tax. While the donation may be completely voluntary and might not be to gain whatever’s offered in return, the law says that if a trader receives a voluntary donation towards their business expenses, it’s a taxable receipt of trade.
If the donation results in an exchange of goods or services – even as a ‘gift’ – the position is even clearer. The trader has received money and then gives the payer its services or some of its trading stock. This is a trading transaction. Always consider your crowdfunding campaign as income whether you’re a freelance sole trader or set up as a company. Get advice from an accountant if you need to.