Nov. 16, 2020

How does reward-based crowdfunding work and who should try it? By Stefanie Yu.

How does reward-based crowdfunding work and who should try it? By Stefanie Yu.

Stefanie Yu, Partnerships, Strategic Lead at IndiegoGo talks about reward-based crowdfunding and what kind of startup should try to pursue it. We talked about the major steps founders should take while preparing for it and the major mistakes founders make while raising money through this source.

Links mentioned in the episode: 


Transcript

And today's a guest speaker who have Stephanie use strategic partnership, lead ad, indigo go 1 of the largest crowdfunding platforms in the United States. And because of that, we're going to talk today about.

Crowd funding, and specifically we'll talk about figuring out if crowdfunding is a good fit for your specific or not how to choose the right platform to do this.

Trying to campaign and also comparing.

Reward based wages and equity crowd finding. So Stephanie, let's kick it out by you giving us some background on yourself and on indiego for those who don't know it yet.

Thank you sure Thank you for. Having me. So, I'm Stephanie. I'm the strategic partnership Lee here in Indigo go a little bit background about myself. I grew up in a entrepreneur.

Our family my dad is entrepreneur, so I feel like I've been always talking about it. Listening to it and now I'm doing this as my daily job. I'm very happy about it a little bit about my role here.

Right now I'm working on partnerships prior to that. I was this challenges, which means I work with

entrepreneurs and companies, small medium or even Fortune 500.

Companies to work on their company campaigns,

I coach them how to do company and being the challenges along with their team,

or their marketing agency to help them successfully fundraise on their platform for those people who don't know about Indiegogo or reward based company.

We're 1 of the world's largest crowdfunding platform, and we have with help.

Many entrepreneurs and companies raise more than 2 billing US dollars now and we have 18M monthly unique visitors,

and our audience are a group of passionate backers for early adapters,

and always looking for the coach training new products.

So, if you fit into that category, I would absolutely recommend you to take a look at our website.

Right. I'll make sure to leave a link to Indiegogo angel description this episode. So anyone can check it out or just Google. I mean, it's going to show up real quick.

So, let's start simple with a simple question who should do reward based crowdfunding and can you just define real quick reward based crowdfunding?

Yeah, sure.

Long story short I feel like, you know, as long as you have a product using your products cool then you should do it or, you know, of course, if you need money, you don't have like a bank behind you backing you.

Then you should definitely try crowdfunding and to be more specific reward base, which means,

you actually bring to the table with a product a different Dan go fund me which more people are familiar with you have a social cause you're raising money for your pads your family members,

so people come to our platform because they invest in your product.

It could be a prototype. It could be a product already already in production it's already shipping and you kind of selling your idea and your product to the world.

And people are sponsoring you,
they're donating to your dream to your project to your product,
and you're going to shift your product to the users,
which we call backers once you rich your goal was,
you can bring the product to live with that money.
So that's the biggest difference.
And I think on the website, we have different stages when it comes to making a product happen, we're

making an idea happen. You know, there's product type, there's production, there's shipping.

So, if you have a product type, and you haven't truly gone into the production stage, you can still launch a crowdfunding campaign.

And that's actually a great time to launch company campaigns to bring your idea to the platform to the world. And let people know that exists. And you need money to bring that idea to the world, your reality.

Or, you know, you actually have a product, and sometimes for small medium companies they want to use crowdfunding as their way to break into the market to launch during new product.

They also launch a crowdfunding campaign to raise more funds, get more users. So, I think it depends, but we.

The door, it's open, and we welcome all stages of products to launch a crowdfunding campaign with us to raise money to enter new market or to validate products.

Right so quick question about raising my I think, in my opinion, I've interviewed a few people who have gone through both a reward based crowdfunding and equity crowdfunding equity profile seems like a better option for actual fun reasons.

So, like, if you're in need of.

Actual cash, that's the better option. But question is how much should a founder of a startup expect to spend on a word based crowdfunding campaign.

Good question, I would say it depends.

So when it comes through crowdfunding campaign many people has this I would say, like, this mistake that they would think, well, I have a great product and as long as I put that can put that campaign up.

Put that product on the website people are going to see and they're going to love it. Well, most of the time founders always their children. So they love their products. But it's like any campaigns like any day that you put on the website.

You need to do you do marketing? You do.

Potentially running some ads, and you need to have really great assets to support your storytelling. So I was saying, you know, if we see different cases, we see founders who have a small team, and they do it.

Themselves,

so they have their photographer friends,

they have their copy friends,

they have,

their friends can take care of customer service and community building,

and they kind of boost job that way and there's also more mature founders who will work with full service agencies or work with photographers professional designers,

and to create a really beautiful crowdfunding campaign.

So we see it. It's a wide range of options so truly depends on. What's your goal? How ready you are? And it also depends on your situation and how do you want to approach your target audience?

So, it depends.

Right. So I remember early in my career, I've actually tried to do in Diego that didn't go. Well, I wasn't even accepted, but that's a whole different story.

My major questions here is what's the major mistake that founders do who actually get listed on Indiegogo so,

is it to my self reliance and then in the mail of campaign,

they realize they don't understand what's going on and the clearly fail or is it maybe overspending on those agencies,

so what do you see being the major mistake that the founders make while. During this award based crowdfunding. Mm.

I think I do see a lot of different mistakes, but if I'm gonna say something like the, the biggest mistake, I think it's not really talking to your potential customers or not really understanding.

You know, who you're selling your dream, selling your product to always be it quite often. Especially when it comes to founders entrepreneurs, because they own the product and they're so passionate about their product.

They they dig into this rabbit hole about how great my product is listed out all the tech. The tacky things and the functions and the features,
but they don't realize that they're actually it's like,
any type of way of raising money,

you're pitching your idea,

you're actually selling it to the people to put money on your idea on your project.

So,

storytelling,

it's always important and I think sometimes backers,

they're just very obsessed with their product and they kind of don't pay too much attention into the storytelling part and they don't know who is their target audience.

So they're not actually talking to their potential customers. So, I feel like for that, it also goes with what do you need to do to have a great pitch? Right?

And I think this is what your process also covers and that's a big topic. So, when it comes through crowdfunding campaign, there's the page, the video, the photographs and the copy.

Are you, are you selling idea selling a product? Are you truly letting your customer to buy in your dream? Especially this is different than E commerce. It's different than.

Selling a product online, sometimes do you have a product type you don't even have the actual product, so truly you're convincing people to to, to purchase for something that they don't have in the current moment.

So you have to really work really hard to understand the product market to understand who are your target audience to customers and truly talk to your customers with the great storytelling. I feel like this is the biggest mistake.

I usually see when it comes to company campaigns. Right actually, a fun fact pops into my head while ago.

I interviewed 1 marker and she said that she saw 1 founder actually paying for an agency, and they were seeing clicks and all that and no, 1 was contributing at all and they look deeper into metrics.

And turned out that marketing agency was running campaigns for, like, 5 year old kids, just to get clicks. I know, though. It's just epic story. Yeah, that's terrible. And I think that's also 1 thing.

It's very important, because I think if you search crowdfunding campaign, if you search, how many can be agencies you can see many of those, but we always recommend. No, you have to be selective.

You have to truly talk to them and you of course, when it comes to selecting agency, you need to make sure that you're talking and working with the right people. So that's very important. Yup. Yup. Yup. Things to learn from others.

So, here, let's talk about another mistake that heard on my podcast as well. That was from a founder who was doing equity crowd find though, but she said was basically, I wish prior to storing this crowdfunding campaign, I.

Builds a bigger audience and my social media. What do you think are the major steps that found your need to has to take basically prior to this equity crowdfunding campaign? Actually, not equity award based crowdfunding campaign.

I think it's absolutely re, building your here what we call when it comes to kind of running campaigns, especially here in Indigo we call it beauty your community right? So similar to equity. Crowdfunding.

You're pitching your dream, you're pitching a project, you're pitching something that probably not in the market yet so you really need to find early adapters to your idea to your project, who truly support the users.

So your community, it's really, really important and I guess this is also very common mistake that we see. It's like, okay, the product's ready. We just have all these pictures and videos. Let's launch it.

And then it's like, wait why no one's visiting our page. Why the number is not going up and that's because you obviously don't you didn't spend time on the community viewing part.

So, usually we recommend 2, 3 months to collect email addresses to be or community to interact with your backers, early adapters of your project, or campaign on social media.

Truly talk to them and truly understand and kept him engaged, kept them excited about it. And there's a very, very important step actually.

And if you don't do that, you just launch a campaign, it's, it's really rare that we see campaigns become successful. We, that that important step. So, I think, you know, always be genuine.

Always be engaging your engaged with your potential customers, the backers, and there's so many

channels that you can use right now there's Facebook groups.

There's Instagram there's rabid and also there's this if you already set up your campaign, you have, we call it Pre launch page.

You set up Pre launch page Indigo, and you start collecting all those emails, and you can start building up your email marketing campaign.

You can start communicating talking to your back her community through emails and that's a great way to keep everyone posted about your progress while you're doing it. How you're doing it and that's the key to conversion.

So, I think when you launch the actual product, it's like, oh, 24 hours, we're going to launch this.

And as the early adapters as the early supporters, you can get this early bird prize for getting this object for getting this product. We're going to.

Thank you for your support and that kind of close the loop and you can see a quick momentum boot up within a few hours or a few days after you launch your campaign. I believe that's absolutely right.

Right, right so, before we move on to the next question, I was actually I went to go backwards.

And ask again about the specific numbers that founders expect to see. So, let's say I'm trying to raise 100000 dollars for.

For a new phone case, let's say, and then your phone case, I'm trying to raise 100000 dollars.

How much can I expect to spend to raise this 100000 dollars? If I don't have anything at all at this stage in terms of, you know, marketing materials, email, lists, community building nothing.

Let me.

This is the yeah,

let me let me see,

how can I approach this question so I think 1st of all I even I would question I would question you because you just told me that your goal it's a 100.

It's a 100 K, right for the phone case. And then my question would be like, why do you need 100? K.

You know, like, what's your picture? What's your picked? Why you need this money? Because what we see quite often it's that campaigners or the creator is founders, they don't set up their goal realistically.

So we actually recommend setting your goal to the small as the man. You need to complete your project.

And fulfill perks so this help you campaign to build momentum faster. So it can be, you know, I believe you don't need 100 K to make this phone case happen. But I just want to point it out. Setting your goal.

It's also very, very important to create a successful crowdfunding campaign. Now it goes back to how machine is been.

So I've actually just got a crushing yesterday from a partner that we work with. He's like, hey, Stephanie, we got this quotes from different agencies to do the dues for company campaigns.

Some people are quoting us, like, 2000 US dollars, and some agencies are quoting us 30. K, which 1 should we go after our 2001 scans? She would trust them.

I would always say, again, it's just selecting your your personal items. You can go with a luxury brand you can go with the cheapest option that Amazon.

I've always say, go check the work that the agency, the person to them that's for and then you can make this assumption whether you can work with them, or whether it prizes reasonable.

And if they have experience dealing with your specific type of products. So, Ashley from 2000 to 30 K, it's all reasonable and different agencies charge.

Differently, um, and also, you know, different regions if you, you know, high, it's definitely going to.

The price is definitely going to be higher here and it's like, valid compared to the United States. So it's really hard for us to give you a specific price.

But we would definitely say, no, you need to scope for that. And I think you need to also consider that part of a part of your goal as well.

Like, let's say, if you're raising, if you're trying to raise, let's say 50 K, and understand how much you're actually going to spend on know creating the visual assets. And how much what's your margin?

Basically, how much you need to spend before you launch a campaign and can make your.

Campaign and project go life, right? And also, I think 1 important thing is the community community booting part, because you're building your email list.

So most of time you need to utilize commercial like, ads tools right? Facebook ads Google ads to get this leads. So you need to actually allocate a certain amount of money to spend on.

And that means that, you know, some people are like, how, how much is enough right? It's really hard to tell we see cases that people spend, like, 10%, 15% of their total fund raise money on ads.

And we also see people that, you know, they use this type of viral marketing influencer marketing don't spend that much on ads and they get the great result because all the influencers are talking about their product, or the PR pieces are everywhere.

So, I would say it truly depends. I hope I hope this answer actually answers your question. Hopefully,
but it did,
not really,

but it kind of did is just you can really tell it's Super individual as always in the startup world,

so just calculate your costs prior to starting it figure out if it's even worth it and then do it.

So, now we've touched on to the feelers that you see, founders making while doing.

Reward base crowd findings now let's talk about great moves. So, what do you think when you think about, you know, greed crowdfunding campaign what comes into your mind?

I think a couple of things 1, um, they.

They, they do a really good pitch, and that's really important. So, I was actually talking to, you know, 1 of the CO, founders of May X, which is the, you know, the.

The highest fund raise can be ever on Indigo, so they raise 70M US dollars or 71717 1 mailing US dollars on indigo in a couple of months. Right?

And it's very interesting. So, when you think of, like.

You know, most of time you'd be like, yeah, you should get an E Vite because you're riding a bike why don't you get an E or the common way of thinking?

Why not why not Blake that's your card bike biking can make you healthier, you know, go exercise. I think this is a common angle is that people would pitch, but.

If you look at their campaign page and then strongly encourage any founders or creators who's listening to this podcast to look at their page.

This is not what they're pitching. They're pitching actually a lifestyle, right? They're pitching.

When you're writing their bike, you feel free, you feel the really comfortable filling, and you enjoy yourself. So they're pitching what they're pitching happiness and joy. So I think this is something.

You know, it goes back to what it's marketing right? And it goes back to what are you pitching your your pitch? So, their pitch is, you know, okay. Get our bike and you can't enjoy what you see in the media. What you see in the picture here.

And they did.
Successfully in terms of telling the story. So I feel like storytelling.

It's really, really important and also a lot of very tacky products, you know, those things that you can't tell what's cool about it, but you actually need to look at the specs of the product. It's all good.

This is faster, stronger and cheaper, but sometimes backwards. They don't have so much time to read through all the lines and they just, they want to catch a story. They want the visual to catch your eyes.

So, I think that goes back to whoever you're talking to, right? And who are you trying to sell your product salary idea and always storytelling great storytelling and the assets to support that we always say that and also.

What's important it's also community building customer service, so I would also go back to all these successful campaigns. And if you check a few campaigns on Indigo, go the campaigns that race.

Millions of dollars you can see they post updates very frequently and they're always talking to their customers so it's not like, okay. Leave your money.

And then we would just let you go, but instead they're doing live your money and then go with us. Know.

You're you joined to join me for this whole entrepreneurship thing, and we will go with you and we'll keep updating you what's going on where the money goes. And I think this is very important. And these are definitely the great moves.

Right, that's true. Just keep in touch and by the way, I'll make sure to leave all the links that you Stephanie mentioned in the description of the sub. So so if anyone curious to see take a closer, look at those definitely make sure to check the description.

So, here, we're moving on to 2, last questions of today's episode. 1st, 1 is going to be, does crowd funding work during the dynamic world.

So, have you seen the spike in the number of self applicants to indigo specifically or maybe you've seen lower success rates of equity.

Keep pulling equity rewards crowd, find campaigns or any size that is working or not working during cobit.

Good question when did it start? I think.

February March, maybe here in the United States. Yeah. So we actually see our traffic overall has been increasing and it's being increasing double digits doing covet time.

So we're very, very fortunate that our businesses are not impacted by cobit. And instead the daily fundraised were up double digits as well compared to last year.

The 2nd, half of last year the 2nd, half of February March when kobe's last year when there's no. cobit. So, actually, it's a, it's a time for motivation is a time for.

Launching campaigns,

because people now everyone's working from home and they do spend more time browsing a admit or not and you spend more time on your screen and crowdfunding campaign to something that,

um,
what we see it's actually.

For a small medium business, or for creators and founders who deliver products, supply chain, something very crucial, and important to them. And we all know that the largest the largest is got heavily impacted.

Especially when it just started. Even now, when it comes to shipping your products, or producing your products, because even those gigantic companies, even Apple wasn't impacted by depth, but didn't crowdfunding campaign.

So you don't have that pressure of delivering your products and the next day, or in 1 week, you were actually pitching your idea or projects when it's still not ready for shipment yet.

So, it gives founders and creators enough time and a buffer to work on their product to bring down the cause of the logistics and to truly work on the product and work on connecting with their backers and communities.

And also, I think people's interest kind of shifted. We all see this from the consumer behavior doing cobit.

So we've been seeing outdoor products are doing really well, because obviously people, social distance and you can't go to bars and restaurants. So you decided you're going to do a bike, right?

Or you're doing your spare time and we also see.

Productivity products right anything boost your productivity help you to work better. Make your home more beautiful.

All this type of creative innovative products has been doing really well on our platform as well. So,

yeah, I think 2020 it's a.

I guess we all agree it's aware year, but when it comes to crowdfunding, it's actually know we've been seeing.

More fundraised and more. Traffic is definitely a great time to do it. If you're still considering it.

Nice. That's that's great. New alternative sources are appearing so that's cool. If you don't know much about word base crowd. Fine definitely make sure to check out indigo.

So here, we're moving on to the call to action of today's episode. So, Stephanie, what's the 1 thing you want to do? As soon as the episode is over?

Okay, so I would say if you are a founder or a creator that you have your product, and that that thoughts into the category of tag design innovation, and you have idea, you want to build something.

I strongly strongly encourage you to go to our platform.

And to start a campaign, so this is the call to action and start building your community start thinking about this is a great way to raise funds, besides other, traditional ways of raising funds.

So it's different debt, raising family funds. Rounds is different.

Dem, pitching and try to get your 1st goal, you are getting users, you're getting customers to put money on your idea project and that validates your product.

The validates your idea and to help you to grow your business. Now, when you have nothing. So, I think definitely check out the platform and start doing it now.

Absolutely, yeah, and as I mentioned, I'll leave links in the description of this episode. So my call to action has usually go to the description check out the links. I'm going to leave there. I'll leave a few links to the.

Crowdfunding campaigns that Stephanie mentioned so if you want to see success, definitely check it out and enjoy it and as usually have a good.