Funding Lessons from a Successful Kickstarter Campaign
By Audrey Watters / January 5, 2011 11:37 AM /
like Kickstarter and IndieGoGO
interesting, and in many cases, quite viable way of financing your project. A number of individuals and companies have been able to raise pretty substantial amounts of money through these services, going well beyond what they initially set as their funding targets.
Most notably of late, was the success of Lunatik/TikTok iPod Nano wristwatch, which set the record for the most money raised via Kickstarter to-date: almost $950,000 from over 13,000 backers. Not too shabby considering Scott Wilson and his MINIMAL design studio set out to raise a mere $15,000 in order to get licensing and manufacturing for the project under way. What made this project so successful? After all, there are other iPod Nano projects. And it's a wristwatch, which even with the addition of a Nano, might not be the coolest or most necessary of accessories. Bryce Roberts, the Managing Director of O'Reilly AlphaTech Ventures, points to some reasons he's identified that contributed to the success of the Lunatik/TikTok fundraising endeavor. These lessons that can be seen in
other successful Kickstarter projects (such as Diaspora), but they're also applicable in many ways to more "traditional" funding efforts.
Tell a personal story
The Lunatik/TikTok "pitch" wasn't a bulleted list of qualifications or clients. Rather, the members of the team "told personal stories that created a connection to the project that had nothing to do with their professional pedigree." While this sort of storytelling doesn't boost their professional credentials, Roberts argues, it does give the entrepreneurs a certain personal authority and helps to connect them to funders and potential funders in a different way. Roberts argues that the best fundraising pitches always emphasize this personal aspect. "It's a given," he writes, "that if I chose to invest in you I believe I can make money, but there are the intangibles around personality, perspectives, and life experiences that will make a potential funder more likely to want to believe you." Tell the product's story If you watch the TikTok video (below), you'll see the product is featured throughout. This demonstrates what the product can do - and that it can do what the startup promises. The video also demonstrates the larger potential of the product. These might be "small, nice little features" that some investors would dismiss. But with the crowdfunding model, the right storytelling around this seems crucial. "The difference between a nano strapped to a wristband and a premium quality, highly designed,
customizable piece of wearable technology is simply a matter of how you tell the story." But even when you aren't using a site like Kickstarter to raise money, it's crucial that your product be front-and-center in your presentations. Give rewards and issue progress reports Investors, by definition, invest in order to make a financial return. Nonetheless, argues Roberts, you should offer more than simply the promise of "making money." These sorts of non-financial rewards can be personal and personalized. By design, Kickstarter tells its users, "the best way to inspire support is to offer people great rewards. Everyone loves limited editions, one-of-a-kinds, and fun experiences (parties, screenings, balloon rides!). Spend some time brainstorming your rewards and people will respond. No one needs another coffee mug." And as your project and your company are constantly evolving, it's good to keep investors and potential investors up-to-date on your progress. In the case of TikTok, the creators even filmed themselves in China when they traveled to the factory where the watch kits were being made. But the same could be said for all funding relationships; keep your investors apprised of "how you're making progress and how your story is continuing to unfold in a big and important way."
Bryce Roberts, the Managing Director of O'Reilly AlphaTech Ventures, points out the funding lessons learned out from the different KickStarter projects like Lunatik/TikTok, Diaspora and others, such as the following:
1. Tell a personal story
2. Tell the product's story
3. Give rewards and issue progress reports
There are a lot of iPod Nano projects out there but the LunaTik/TikTok project made it bigger because:
1. The members of the team "told personal stories that created a connection to the project that had nothing to do with their professional pedigree."
2. The TikTok video features the product all throughout.
3. By design, Kickstarter tells its users, "the best way to inspire support is to offer people great rewards.