Building credibility for your crowdfunding pitch
What makes a great crowdfunding pitch?
“A great business idea and a great team offers equity holders a great potential return on equity. This appeal is what gets business angels investing”. Darren Westlake of CrowdCube
Ideas are 10 a penny but a good team is hard to find. VCs invest in a team not ideas. Josh Breinlinger a VC explains the process “every time we receive a pitch as a VC group, we’ll try to convene immediately after for a very quick discussion. Most of that discussion is about the team…its about whether we like or dislike the founder.” Another VC, Carlos Eduardo, explains it simply “no amount of awesome ideas will ever overcome a fundamentally flawed management team.”
Why? A team is flexible, strong, adapts, comes up with new ideas and grasps opportunities.
Sites like Kickstarter, and IndieGoGo say that donors are responsible for determining the credibility of fundraising campaigns, “Backers ultimately decide the validity and worthiness of a project by whether they decide to fund it.”
How do you project credibility so that people trust you?
Turn the question around How would you judge the credibility of a team?
Always think from the donor’s/investor’s point of view.
Credibility comes from the root word “credo,” which means “I believe.” We are constantly making assessments about the credibility of people, products and business every day.
Campaigns can fail if you don’t have a reputation with the right audience. But you start with the people who know you well – your close social networks. If they don’t believe in you then why should anyone else? Advice to donors concerned about potential fraud is to look carefully at projects that do not have any money pledged to them. So launch with financial proof of your credibility – 10-20% pledged before you let everyone else know about your project.
Credibility – you are who you say you are
Have a photo or two of you and your team. Highlight any online reference to your work. Give details of membership of trade bodies or relevant qualifications.
“What I remember I did before donating was checking if the creator has any history of other similar projects on Kickstarter. Another one is if the creator provides any kind of reference, I mean websites or comments”.(Kickstarter donor) Referenced in Giovanna Schettini, Crowdfunding: the democratisation of cultural funding (unpublished MSc thesis King’s College London, 2012)
People are more likely to trust those within their social networks. Trust is built through social capital. So make sure your campaign is inked to, and supported by established social media e.g. Facebook (showing likes and activity) Twitter (with followers), LinkedIn (with connections).
“You can’t use Kickstarter to build audience, you need to have some followers before launching the project. You must have already a Facebook page, twitter followers and a mailing list before start”. (donor, Schettini above op.cit.)
Make sure that there is plenty of interaction between you and your donors on your campaign page once you launch. This builds trust as people new to the campaign can see updates and how you communicate with existing donors. Projects are then live and realistic.
“I don’t think I would be the first one to contribute for a project if I didn’t know the person. I would wait for other people to contribute so I could analyse some of the comments or updates but If I knew the person I would contribute without hesitation”. (donor, Schettini above op.cit.)
Credibility – that you can undertake the task
Show previous work, endorsements and awards. Give your history showing how you have developed ideas and undertaken similar tasks. Celebrate each member of the team and partnerships you have. Link to pictures, videos – any demonstrative material that shows your capabilities.
In addition for the non-profit/social business – profile your credibility with the community.
It may not be wise, unlike when writing funding bids, for a non-profit campaign to say how much money you have from other sources. Potential donors may ask what will be the impact of their donation. Show that this project will not happen and make a buzz about that.
For equity – detailing other funders, awards, seed money and endorsements will strengthen your credibility. If others have invested in you – then you must be OK.