This is a guest post by Tim Kridel of Digital Innovation Gazette
Crowdfunding has taken off as a financing vehicle for a variety of projects, from music albums to software. Websites such as Kickstarter and IndieGoGo bring the funding appeal to the Internet public, and they sometimes even offer rewards to people who pledge support.
Crowdfunding may sound like an apps-to-riches story. But executing a crowdfunding campaign isn’t as simple as it may sound. Here, Scott Steinberg, CEO of strategic consulting and product testing firm TechSavvy Global and co-author of The Crowdfunding Bible, explains why.
What do you see as the most dangerous misconceptions regarding crowdfunding?
Scott Steinberg: The most common mistake is that people expect crowdfunding to be very straightforward, very easy and right for any type of project. It takes a tremendous amount of effort to run a campaign – 30 to 45 days is standard. We call it a marathon, not a sprint.
Crowdfunding tends to work best for projects that are easily communicable visually and can be summed up in a sentence. For a crowdfunding campaign to be effective, you need to capture the viewer’s attention very quickly and provide a strong call to action. You need to create a sense of urgency around the campaign and get people to dip into their pockets then and there.
How should an app developer — or other funding seeker, for that matter — set the tone for his/her pitch? Is there such a thing as creating a video pitch that’s so professional it puts some potential investors off?
S.S. There is no hard and fast metric. You need to be both compelling and authentic. You don’t have to have a professional or polished video, but lighting and audio have to be of sufficient quality. Short, snappy and to the point is always good.
Also, keep in mind that someone needs to be the face of the movement. People need to be able to empathize with the individual in question. They are buying into you as much as the end concept. A lot of people are pitching concepts and ideas, but they are not putting out a lot of hard and fast business data. You are asking people to buy into your vision. You have to convince them why you are the right person for the job and, to that extent, you need to be believable and enthusiastic.
And you don’t have to sound like someone in an infomercial. Be yourself. What we are talking about is people connecting to people to bring an idea to life.
Should app developers have an alpha or beta version of their offering before launching a crowdfunding effort?
S.S. Certainly, crowdfunding campaigns can and have been successful pitching concepts and ideas. But whenever possible, you need to be able to show a tangible end product. You need to convince people you have the ability to pull off the idea you are trying to execute. You need to convince them of the project’s value and reassure them that their money is going to make a difference and the project is going to come to fruition. It’s one thing to ask someone to dip into their wallet for an idea that may or may not yet exist, but it’s another thing to say, “There is tangible, hard proof. You can see it running for yourself.”
Providing some reassurance that this is real will enhance your chances of success. It doesn’t have to be the finished product. It could be a minimum viable product, a sample. It doesn’t have to be super polished, but it absolutely, positively helps to have something to show.
You mention in The Crowdfunding Bible that crowdfunding lets people gauge consumer interest in, and test the validity of, new concepts. For a mobile app developer, does this also provide an opportunity for ongoing evaluation as the product evolves, and could a developer recruit investors for usability testing?
S.S. Fans provide the best focus group money can’t buy. You absolutely should, whenever possible, receive feedback and integrate it into the end result. You should get feedback on the apps and also on the surrounding marketing and messaging campaign.
In the software business, once upon a blue moon people would create a sample, mockup or vertical slice and either announce it online to gauge reaction, conduct a public beta, or take it to the press in an attempt to generate interest. And if it didn’t get enough interest — if it wasn’t good — they would never move forward with the product. I would fully expect that many app developers will create a prototype of a product and the rewards of these crowdfunding campaigns could include an opportunity to go hands-on with it. The app could be in beta while the campaign runs concurrently. You’re getting feedback as you go.
Does it seem feasible or useful to incorporate crowdfunding into an agile development method?
S.S. At the end of the day, there are many facets of the campaign that map to agile development methods. For crowdfunding, you want to have as much to show as possible in a very tight slice. You want to get your prototype up and running fast and then iterate.
Any tips for a small app developer looking to do marketing or promotion successfully and on the cheap?
S.S. Successful crowdfunding campaigns don’t necessarily have big advertising dollars. They use the lever of social media, they leverage communities and leverage traditional press channels as well.
Before you begin, you need to identify the key influencers. Those could be developers, community websites, press, Twitter personalities. Find out where they live online and how to reach them. Think about how you can activate all of them to rally to your cause. You will also need to have specific inflection points when you make key announcements on new features and special rewards. You should stockpile information and announcements.
App developers, even indies, play on a level playing field with the giants. Anyone can conduct a successful marketing and PR campaign. But plan ahead.
Looking at crowdfunding from a wider economic perspective, does it provide any checks against excess “irrational exuberance” and bad investments?
S.S. First and foremost, it is pretty Darwinian. The best ideas bubble up to the top and a bad idea is seldom going to make it through. Crowdfunding democratizes investment. You are taking a product and putting it out there in the court of public opinion. You will know pretty quickly how they voted.