Fail Fast or Win Big

The Start-Up Plan for Starting Now

 Fail Fast or Win Big

Author: Bernhard Schroeder
Pub Date: February 2015
Print Edition: $21.95
Print ISBN: 9780814434789
Page Count: 208
Format: Hardback
e-Book ISBN: 9780814434796

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Crowdfunding for Start-up Success

Pointers on Choosing a Platform and Launching a Winning Campaign

“Crowdfunding is having a dramatic impact on entrepreneurship,” Bernhard Schroeder, Director of Programs at the prestigious Lavin Entrepreneurship Center, declares. Leveraging the Internet to secure lots of small investments, crowdfunding gives aspiring entrepreneurs a debt-free way to fund their dream venture—and much more. Done right, a crowdfunding campaign effectively markets a start-up’s mission, generates excitement and valuable feedback, and builds a loyal customer base. In his new book, FAIL FAST OR WIN BIG (AMACOM; February 2015), Schroeder spotlights two types of crowdfunding—reward and equity—and shares his top crowdfunding campaign tips:

For Reward Campaigns

How it works: Individuals contribute money to a venture or project in exchange for a reward, whether a freebie or discount, product pre-ordering, or an exclusive gift.

Platforms to explore: IndieGogo, RocketHub, Peerbackers, Kickstarter.

Campaign tips:

Give people a great story. If you are going to raise funds for a product or service you are passionate about, then put some passion—and a bit of personality—into telling your story. Give them an “emotional” reason to support you.

Set your funding goal carefully. Some small start-ups set reasonable goals— $10,000 to $40,000, what they need to test the new product or service—and achieve them. Others go for $75,000, raise only $40,000, and (since you typically have to hit or pass your goal to receive the funds) wind up with nothing.

Create a great video. Videos capture contributions by creating an emotional connection. Don’t be an amateur and use your iPhone or webcam. Find someone qualified, a film student or freelancer, and create a compelling video with creativity and heart.

Design a set of rewards that make sense. Scores of reward levels tends to confuse a crowd and complicate funding efforts. Simplify to 10 or fewer rewards that are easy to understand and, more important, that you can actually reward.

View your email campaign as critical. Take the time to craft a strong set of emails (at least five ahead of time) that will simply but powerfully tell your story. Provide links to your crowdfunding project and your video. Provide updates on how the project is doing. Also, research and identify blogs, websites, LinkedIn groups, and other social media platforms where you can spread the word online.

Backers are supporters. Once you have people funding your project, keep them engaged. Weekly updates, maybe behind-the-scenes photos or videos of the product development—anything to make them feel special and eager to spread the word to other potential backers in their own networks.

For Equity Campaigns

How it works: Individual investors network and pool their money to support entrepreneurs by providing start-up capital in the form of equity.

Platforms to explore: OurCrowd, Grow Venture Community, Micro Ventures, Angel List, Circle Up.

Campaign tips:

Pinpoint your lead investor. If you focus on cultivating a lead investor others will respect and trust, the investing crowd will follow. Move on to lesser-known and less-credentialed investors only after you have your lead investor locked up.

Protect your equity. Just because you’re new to the process doesn’t mean you have to comply with unfair requests. For example, some investors may ask for board seats. Unless the investor is highly strategic or invests more than 50 percent of your target amount, think long and hard before agreeing.

Manage your leads and time wisely. Prioritize your time and focus on long-term strategic investors who have industry or marketplace connections. Avoid investors who are more concerned about near-term profitability than building a brand and capturing market share quickly.

Communicate. Investors don’t like to be kept in the dark. Send them frequent updates about investments, major endorsements, positive public relations, and potential news on product concepts. Use the platform’s automated tools, but also send personal emails with more details to smaller groups and to specific investors.

Build trust and confidence. Hone your people-facing and speaking skills to build rapport with investors. Investors have to believe in you, and that’s directly reflected to how much you believe in yourself and your company’s potential. Good investors can smell uncertainty and hesitance, so don’t try to fool them. Be sincere, honest, and passionate.

Adapted from FAIL FAST OR WIN BIG: The Start-Up Plan for Starting Now by Bernhard Schroeder (AMACOM; February 2015; $21.95 Hardcover; ISBN: 978-0-8144-3478-9; eBook ISBN: 978-0-8144-3479-6).

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