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Crowd Funding

by Pete Mosley, craft&design Business Editor

Published: November 2013

A couple of issues back, I briefly touched on the concept of crowd funding as a way of raising money to drive creative projects forward. Since then, a number of successful crafts based crowd funding campaigns have come to my attention. It's clearly something that makers can benefit from. This article looks at the crowd funding in more depth, gives a few examples of how makers have used it in imaginative ways, and explains the funding process stage by stage.

What is it?

In essence, crowd funding is a process by which individuals pledge money to help a project move from idea to reality. As part of that, they can expect a reward for their investment. The reward usually corresponds in value to the amount of the pledge that was made. Unlike investment from a business angel, your backers are not buying a slice of your intellectual property, they are funding production. You keep the copyright.

The artist (or author, filmmaker or musician) decides a sum that they want to raise typically ranging from £100 for a small project up to £25000 for a big production. The key to setting the target is that the desired sum is realistic and the reward system is attractive enough to get the required level of support. Most of the crowd funding sites feature successful projects so that you can get an idea of how the successful campaigns have been structured. Remember – your rewards will have a cost, so you need to factor that into the amount you want to raise.

The person who sets up the campaign designs a series of rewards for the pledges - and these typically range from £1 to £350 or so, but they can range as high as £1750 - with a number of increments to allow people to 'buy in' at a level that they feel comfortable with.

The rewards can be virtual - an email 'hug and slice of cake' for a pledge of £1, through 'lunch with the artist' for £150, to a piece of bespoke commissioned top end jewellery for £1000 and up.

Most campaigns are run on an 'all or nothing basis', in other words if the target sum is not met in the allotted timescale - typically 30 or 60 days - then the campaign is abandoned and pledges are not collected. On the other hand, if your project is over-subscribed, most sites allow you to keep the extra.

The crowd funding sites let you set up a profile for your project for free and make their money from a charge of between 3 and 12.5% for processing donated monies. If you are successful, you must complete the project or repay any money that has been collected.

So, it's simple - Pitch your idea, make sure you've got your menu of rewards right, push the idea through your networks like billy-o and if it comes together you end up with pot of funding to realise your ambition and a load of very happy fans and followers. Or so the theory goes - but does it work?

Well, the good news is - yes it does! However, it's not an endeavour for the faint-hearted. And it's definitely not something to undertake if you are not comfortable in the world of social media.

Is it possible for someone like me to have success?

It depends on how strong and worthwhile the idea is, how clearly you pitch it and whether the rewards are attractive enough to your target audience. You need to show clearly how the money will be used, over what timescale and how and when your supporters will reap the benefits.

As a maker, you are in an ideal position to offer really imaginative rewards for even the smallest donations, and it’s the quality of both the idea and the rewards that really get people talking about your pitch.

Get the price points right – and test these on real people before you finalise them. Remember that you are part of the deal – offer chances for people to meet you, have lunch with or be taught by you. And have some quirky low priced pledges so people that don’t have a lot of money can still feel involved.

How to prepare

You need to be an effective storyteller – you will be the face of the campaign and the leader of the marketing machine. You’ll need a video – preferably with your face in it – and a strong stomach for hard graft online. You’ll need to be conversant with Facebook, Twitter, email, and have a blog to tell the story of how your campaign is developing. You need to get all this up and running in advance of launching the campaign.

Reaching your audience

If you already have an extensive following on Facebook and Twitter and/or a good email database, then you are off to a good start. You will also have to cultivate a group of people who will help you promote and advocate your campaign. Make a mind-map of all the contacts you have that might be able to help you in some way

In effect you’ll have to leverage other people’s followings too. Make sure you respond personally to those who support you – if you show thanks and loyalty to them they may well respond by giving you a helping hand by posting and tweeting.

Crowd funding success is dependent on you communicating with people tirelessly throughout. Keep sharing news, telling people about your progress – and once you have passed the half way stage, talking about the success of the campaign – people are always more likely to support what they perceive to be a winning proposition.

Plan ahead

Have a plan - a wall chart perhaps, that sets out how your charm offensive will unfold – when you are going to send out press releases, mail people, post on Facebook or Twitter, give talks, make calls. You’ll need to be seriously strategic if you are going to make it work.

Examples:

Jeweller Anna Clifton designed a new ring each day for a month, then set a £5500 goal using Kickstarter.com to raise funds to produce the new range. She actually raised £5585 - pledged by 70 backers who each spent between £1 and £1750.

Top tip from Anna: ‘I think my main advice would be to not be afraid to ask the opinion of a few trusted friends or colleagues before making your campaign live. I contacted someone who recently had a very successful campaign and he was able to offer me lots of extremely valuable advice. I also sent my draft campaign to several friends so that they could test out how everything worked from a user's point of view before I unleashed it on the rest of the world!’


Kate Pickering from Vanilla Ink Studios in Dundee raised £8115, having initially set a £6,800 goal to take a group of jewellery makers to the International Jewellery Show in London.

Top tip from Kate: ‘Plan, plan, plan, plan! Remember that your rewards cost money too.’  Kate also used Kickstarter and has documented the process on the Vanilla Ink blog at:  http://vanillainkstudios.co.uk/blog/kickassstarter

Mhairi Mackenzie, a Scottish maker, used  www.bloomvc.com to successfully raise £7500 to buy a laser cutter to help boost production of her Bonnie Bling range of fashion accessories.

Links:

If you are not yet familiar with the concept, it's probably worth taking some time out to look at a few crowd funding sites and see what's happening.

http://www.kickstarter.com
http://wefund.com
http://www.crowdingin.com
http://bloomvc.com
http://www.crowdfunder.co.uk
http://www.peoplefund.it/arts/
http://unbound.co.uk
http://www.sponsume.com
http://www.indiegogo.com
http://www.catwalkgenius.com

 
Ian W. Wallace Craft Insurance

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