Let’s face it; everyone struggles to secure funding. Money is tight for a lot of people and entrepreneurs are having to find creative new ways to secure the funding they need. Crowdfunding platforms are increasingly popular for those looking to use alternative options to secure finances outside of big banks.
Collecting funding from several interested investors through an online platform, crowdfunding creates a community-driven feel to funding, something which investors and entrepreneurs alike can appreciate. Platforms like Kickstarter are great for entrepreneurs to pitch their idea, engage an investor audience and get a business or product moving.
But what makes for a good campaign?
Many successful Kickstarter campaigns play on peoples nostalgia or the consumers’ insatiable thirst for quirky tech, but the market is so diverse it is hard to spot a trend in what finds success.
Luckily, there are some rules to help you tailor your pitch.
A combined research venture by Singapore Management University, HEC Paris, the University of Technology Sydney and INSEAD discovered that there is one faux pas to be made when creating a campaign: labelling your business/product as useful and novel.
The study of 50,310 Kickstarter projects found that the community does not view claims of product novelty and product usefulness as congruent. While the total amount pledged is boosted when a product is said to be useful (or alternatively, novel), claiming that it is both reduces the total amount pledged by 26 percent.
A difficult predicament to overcome if your product is both useful and novel, combining both adjectives means that the audience either see it as divisive or as an inflation of its actual benefits and qualities.
Humility is often touted as a rare quality in todays society, but those looking to start a Kickstarter campaign should ditch the humble-brag and be modest with their product.
“The higher level of uncertainty in the crowdfunding context drives backers to choose modest innovations and shy away from more extreme innovations,” said Cathy Yang, assistant professor of marketing at HEC Paris.
Honesty is normally the best policy with these types of ventures and, while you may have a novel product that is definitely useful, pitching it as such will put you at an immediate disadvantage in your campaign.
How to create the best pitch
So now you know how to avoid the novel mistake of creating a useful product, what should you do to find success?
The best thing you can do is deliver on your promise by making the scope of your campaign achievable and realistic to potential investors. You may feel that falsely inflating the benefits of your product or describing your product to be greater than it actually is is the best way to secure backers, but these investors are wily and will be realistic to what can be delivered.
Do your research and find out what campaigns succeeded and failed. Tailor your campaign to fall more in line with products that got backing. Nine times out of ten, these businesses will have humble, achievable goals that will engage and inspire their audience and garner backers.
