In these uncertain times, many business owners and community members are considering crowdfunding as a way to make it through. It's important, however, that you are poised for success when you launch your campaign.
This webinar will go into everything you need to know to be successful, from choosing your platform, to gaining momentum, to acing your social media game, and more.
Transcript:
Thank you so much for joining me for everything you need to know about crowdfunding during COVID-19. To get started, I want to go over this little thought exercise. So in your head or on paper, answer the following question: In what ways does your business or project directly or indirectly benefit a larger community?
It should be made apparent as we go through these slides why I'm asking you this question. And please keep thinking of reasons why your business or project would benefit a community as we move forward. To introduce myself, my name is Becca and I am the Customer Success Manager for Honeycomb Credit. Essentially what I do is I coach Honeycomb clients on their campaigns, and to date I have advised 17 successful campaigns, which have raised almost half a million dollars in total. I'll be going more into what Honeycomb is in a moment, but for now, what you should know is that we crowdfund loans from $10,000 to $107,000; we connect two main street businesses with locally minded investors; and we're based in Pittsburgh and accessible in most of the US.
What is crowdfunding just to get started?
Crowdfunding, according to this really excellent definition, from dictionary.com is the activity or process of raising money from a large group of people, typically through a website as for a project or small business. This means that rather than going to a bank or a foundation, you are going to the community for your funds. So that being said, a crowdfunding campaign survives on community. Your business or project providing a benefit to the community, and in addition, your campaign is in itself a community between the contributors and those executing the project. So essentially, your campaign is allowing regular people to feel that they are part of something that is greater than themselves, while making a positive impact on those around them.
Community is the guiding tenant of a successful crowdfunding campaign. There are different types of crowdfunding and it's important to be familiar with all of them so that you can make an informed decision about what kind you want to do. We have donations, which means that people will be contributing money without expecting to see that money ever again. They might do it for nothing in return, or maybe they could get a perk like a water bottle or a T-shirt, but whatever that thing is, it does not represent the monetary value of the amount that they've contributed.
Then you'll have equity, which means that people will be investing money in exchange for a piece of the company so that they want to own a small piece of the company. And finally, debt is: people will invest money and they will expect to see that money back with a return, so a little bit of interest. In order to identify your platform, let's go over some examples of these different kinds of crowdfunding.
You might consider donations if you're a nonprofit or charity or maybe just an individual who wants to do something for your community. You wouldn't be generating cash flow, so you're not like a business per se. And you need to be able to play into the community welfare aspect extremely well because at the end of the day, you're asking people to part with their money and never see it again. So some examples of this that I've seen are a virtual tip jar for restaurant workers who are unable to work during the quarantine, free meals for medical staff, delivery services for the elderly, and many others. Some popular examples of platforms are GoFundMe, Kickstarter, Indiegogo, and many others.
Equity might be right for you if you're not yet generating cash flow, but you expect to generate a lot in the future; you would be raising more than $100,000, oftentimes in the millions; and, you're willing to give up some ownership of the company. This is important because when your network makes their investment, they are going to own a small piece, and their investments are usually over $1,000, oftentimes $5,000 or $10,000. Examples of companies that would do this would be startup tech companies or large social enterprises that have not yet unveiled their product. Some popular platforms: WeFunder, SeedInvest, Republic, as well as some others.
Last but not least, debt would be right for you if you're raising less than $200,000; if your business usually generates cash flow––so these would be your main street businesses like restaurants, bars, clothing stores, nail salons, anything of that sort.
So Kiva is a great option if you're looking to raise $10,000 or less; you can actually get a zero percent interest rate with them. And with Honeycomb, you would use if you were looking for $10,000 to $107,000, and your interest rate would be somewhere between five and 14% to your investors.
No matter which kind of crowdfunding you're doing or which platform you're using, there are some universal things to keep in mind. First, you must be 100% committed; you'll need at least four to seven hours per week. And if you're raising more money, you'll need more towards seven hours. And if you're raising less money, maybe more towards four. And you really need to keep your eyes on the prize. Even if you're looking for a minimum amount of 20,000, but the money you really want is 50,000, make sure you're always gunning for that $50,000. And lastly, any crowdfunding campaign is a form of marketing. So this is a really great way to connect with your community, or let people know about a project you're doing or just to put yourself out there.
There are three main components of a successful campaign that we'll be going into. Number one: a compelling community-centric story. Two is a campaign team. And three is a wide, persistent and coherent social reach.
When it comes to telling your story you'll be focusing on, you guessed it, community. So why does your business or your project benefit the community? And why does this business or project need this community in particular to be successful? Why does contributing to this campaign make someone a better community member?
And what will contributing to this campaign say about someone's identity? Remember, you're not begging for money. You are giving others the opportunity to be part of this community effort. Of course, your profile is a big part of telling your story. It's the first part of telling your story. So when it comes to your story––content. Crowdfunding platforms have their own guidelines. So make sure that you follow them as closely as possible, because the platforms are always refining their guidelines to set their campaigns up for the most success possible.
And when you're writing your content, be authentic. Speak from the heart; people really respond to authenticity. If you're doing this campaign because you'll have to shut your doors if you don't get your funding, then be honest about that. Be upfront.
Video: having a video is important, but it doesn't really matter actually how like professional that video looks. So even if your video is just you with a camera phone in your house, then just having that video will pique people's interest a lot more than if you don't have a video at all. It should be between 30 to 60 seconds and you should be explaining your business and your project. And what your funds will be used for. Finally, for photos, you should make most of them really people-centric with your employees, your customers, the people you interact with in the community, and lots of smiles to draw people in. And if you are planning to buy something with the funds that you're raising, make sure that you show those things so that people can get a visual of what they are essentially buying with their funds.
Your campaign team has three different kinds of people. Number one is the leader. So this would probably be you, the person of highest engagement throughout the campaign. You're the one who are responsible for the planning and managing of the campaign during its entire duration. And then you have Champions. These are three to five people who are close to you or your project in some way. Maybe they are a an employee or a close friend. And they will also be actively reaching out to their networks on behalf of the campaign. Finally, you have Amplifiers, who are people who have a personal connection either to the project or the business or the community. And they're not super involved on the day to day of the campaign, but what sets them apart is that they have access to large social networks. So if you need something to be shared on social media, or shouted out on Instagram, they're really great people to go to. So you need to find people who you can depend on to do that during the duration of your campaign. When it comes to your contributors, there's kind of four categories. In the middle of the concentric circles you see most committed investors. And then you have semi-committed, business network, and general community. It is a little bit difficult to put names on these different groups of people, because they can be kind of fluid. I'm sure you can think of a customer who might be one of your most committed supporters of your campaign, but a family member who probably doesn't care and might as well be in general community.
So, you can think of these circles as different groups of people at which point in the campaign they would be moved to contribute. So, this inner circle most committed investors, these are people who even if they see a campaign as zero percent or 1% funded, they believe in you and they believe in their project and and they will be inspired to contribute anyway. Next, you have your semi-committed investors, so people who might be moved to contribute at 20 to 40% funded, they know you personally there, they really love your business or your project, and they want to support you. But they do want to see kind of an endorsement from others before they're on board.
Next you have your business network or people who might contribute when you're at 60 to 80% funded. So these are people who are aware of you, they really like you. But they want to see that it's probably going to fund before they jump on board. And then finally, you have everyone else who might jump on when you're at least 80% funded because they want to be part of something cool and successful, but they probably won't jump on earlier.
It's really important that you reach out to these different groups of people in this order, so that you're not turning off anyone in your business network when you're only 3% funded. In other words, if one of those people sees it, and they see that it doesn't have much money yet, they won't be turned off and think, oh, this is a long shot, this is never gonna fund. You need to know your audience and know when to present the story at the right time.
It's also helpful before you launch to have a communications plan. So this basically details everything that you're going to say through which channel, who's going to do it, and why. So you'll notice that the date actually starts two days before the launch itself. And that's why the members of the campaign team. Hermione, Ron, Harry, Luna, Ginny, and Neville, are reaching out to their personal network to their most committed investors, that inner circle, to let them know that their campaign is launching in two days, and that they need them to invest or contribute on the very first day. This is a place where you can put your social media posts that you're planning or different emails. And it's really better to go into it overprepared than underprepared. So you'll never be at a loss of what to post on social media that day or what to send out as an email.
Something that's very, very important is momentum. So the first 48 hours are critical for your campaign success. In those 48 hours, you should get at least 30% of your goal, but minimum 10% of your goal. So those first 30% of contributions, you need to identify who they'll come from before you launch, because you need to make sure that these folks understand ahead of time that they should contribute in the first one to two days to ensure the success of the campaign. So you let them know ahead of time and then as soon as you launch you call them or text them and you let them know that it is time to contribute. And make sure you remind the strugglers before the 40 hours are up.
With that all being said, you need to be persistent throughout the course of your campaign. So, most people need three to four touch points to contribute. So it's very important to share the message often. When I say touch points, I mean, how many times this campaign is getting in front of their eyeballs, whether it is a direct email or a text or phone call, or if they're hearing it from another friend or if they're seeing it on social media or anything of that sort.
In terms of your social media content, you should be posting about the campaign at least four times a week, but you need to make sure to keep it interesting. You can't always make the same post asking for money over and over again, because people will get bored and tune you out. So some ideas of things that you can post would be spotlights of employees or team members, showcases of how you've benefited the community before, updates about your project or your business, and the other fun facts you might want to share with people or that might interest people, and contributor testimonials. These testimonials are one of my favorite aspects of a crowdfunding campaign for a variety of reasons. Number one, they show people that folks just like them have contributed and therefore they should, should, they should do it too. This also gives you an opportunity to really think about identify who you're targeting.
If you're really targeting young mothers, then you should get a young mother to contribute and then make one of these testimonials so that other people like her will see it and they will feel a sense of connection with her and also be moved to contribute. It's a really fun and positive piece of content. It's a way to celebrate your wins, and it's a fun way to engage with your contributors. And it also allows you to gain really valuable insight on why people are moved to contribute. As you can see, on the right, we have a number of testimonials for our Honeycomb campaigns, and we see all sorts of different reasons why they decided to invest in each of the campaigns.
Some hard and fast rules that you should take away: Momentum is key. Remember, 30% in the first 48 hours. Wait until you're at least 20% funded to go on to social media. Make sure that you thank your contributors as personally as possible.
I know on Honeycomb and I imagine on other platforms as well, there is the opportunity to contact the people who contribute and really take advantage of that. The added benefit of this is that if you are 90% funded towards the end and you need that extra push, then it's much easier to go back to those people if you've already maintained the relationship and thanked them before. And when you thank them, ask them to share with their networks as well.
Make sure you're persistent. Remember three to four touch points. And be sure to really believe in your project because if you believe in it, and if you imbue your campaign with that belief, then others will feed off of that and see it too.
A typical Honeycomb product is between $10,000 and $107,000. There's a 6% to 14% interest rate with a three to five year term, and our campaign lengths are typically 45 to 60 days. We have a super fast turnaround from application to term sheet of 24 hours or less. There are never any prepayment penalties, we do refinancing, and best of all, you get hands-on coaching from me.
We are offering some special relief loans during the COVID-19 crisis. So we have a couple of options. Number one is between $10,000 and $50,000, a 45 day payment free period, 3.75% interest rate over the initial six months interest-only payment periods with just a 5% interest rate over a three year fully amortizing period. And option two is very similar. It's up to $25,000 and instead of a 5% interest rate, this is a 7.5% interest rate. So if this is something you're in interested in, I encourage you to visit honeycombcredit.com/relief for more information and to see if you qualify.
I thank you so much for joining me, and I encourage you to reach out with any questions. Here's my email address: becca@honeycombcredit.com. And I look forward to hearing about you and your business.
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