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Some secrets about Crowdfunding

Here's an interview I recently delivered to David Pilco, a designer, consultant, and podcaster who I have known for a long time.

The interview was entirely made in Italian, so here you can find a transcripted version of the highlights in English - for those who can't understand Italian (yet 😊).


What is crowdfunding?

Crowdfunding is a method of fundraising that has existed for about twenty years.

Thanks to the internet, people with a business idea, a product, or a company can raise small amounts of money from a long list of people around the world instead of a big amount of money from a single investor.

There are two main types of crowdfunding:

  1. One is called "Equity crowdfunding." A person who owns a company gives small shares in exchange for money.

  2. The other type is "Reward-based crowdfunding." The founder says, "I have a product but haven't finished it yet. I'll charge you 40–50% of the final price, so you're financing the steps I need to finalize the product. And then I will deliver it to you before anyone else."

Before hiring a crowdfunding consultant for our campaign, what questions might we ask to understand if they are good?

Here’s what you should ask:

"How are you going to build a community around my product?"

It does not mean how you gather so many emails, but: how do you activate a conversation with these people?

This is the key point.

Putting together 10,000 emails is relatively easy. The hard part is to put together 500 that can't wait for your product to come out. It’s a dynamic where a set of people have already decided to buy your product before it comes out.

The real work of a Crowdfunder is establishing this communication, engagement, and interactions.

What are your tips for someone who wants to start from scratch and do your job?

Crowdfunding is nothing more than a niche in the large world of digital marketing. So, if someone wishes to enter this world, they should:

  • Begin by learning how marketing works in a broader sense.

  • Learn how to clearly communicate a product's unique features through copywriting and visuals.

  • Get familiar with the online advertising tools used over the last 10-15 years.

  • Learn how to deal with PR agencies and the world of Press and Influencers in general.

  • Get all the tools to run social engagement campaigns like referrals, reward programs, giveaways, etc.

Last, they should understand how product development and manufacturing work.

The fundamental concepts to know are:

  • How a product is prototyped.

  • How a product is produced.

  • How the scale of manufacturing impacts your costs.

  • What is the right multiplier between COGS (Cost of Good Sold) and your Average Price on Kickstarter.

  • How to handle the logistics for the delivery of a mass-produced product worldwide.

How do you launch a product?

When I think of launching a new product through crowdfunding, I always divide the strategy into three phases:

  • Pre-campaign: around 90 days.

  • Campaign: around 30 days.

  • Post-campaign: no time limit.

The pre-campaign is the most important part because the community is created around the product. Moment zero, when pre-campaign starts, is when visual contents are ready.

We start running ads (paid Media), PR (Press and influencers), and Social Engagement through that content.

Once enough people are in our community, we announce the launch date, usually two or three weeks before.

At that point, it's live-campaign time: everyone connects, and we give them a reason to join when we launch and sell the products quickly.

This means that the goal is reached fast, and you get a lot of organic visibility from Kickstarter.

Once the campaign is over, we enter into post-campaign: we usually transition to Indiegogo InDemand or an e-commerce platform.

What are the key rules of crowdfunding?

  1. The right time to do crowdfunding is when you have a prototype; whether it's a physical or software product, you need samples that people can see and test.

  2. A solid pre-campaign is always around 12 weeks: three months from the moment visual content is generated.

  3. The average PRICE on Kickstarter should be 3X the cost of manufacturing the product. For example, if the cost to make your product is $10, it should be on Kickstarter at $30 (or more).

  4. Your advertising budget to finance your pre-campaign should be about 10% of your funding goal. So, if you want to raise $100,000, you will need about $10,000 to invest in advertising to create the community.

  5. On Kickstarter, you offer discounts on your retail price. The discount must be around 30–40% off the retail price. In fact:

This is the best way to succeed with a financially sustainable crowdfunding campaign.


Enjoy the readable translated version of the interview on YouTube:⤵️


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