Managing your Campaign Operations for Crowdfunding Success By Jennifer Bailey Innovation & Operations Management Consultant Babson College Professor
When you hear the words “Crowdfunding Campaign Success,” what comes to mind? Raising money? Campaign donors? Operations, perhaps?
Director of CaribShare Biogas, set a goal of US$20,000 for her crowdfunding campaign on the Indiegogo platform to complete the construction of her Biogas plant.
Don’t worry. If Operations didn’t come to mind, you’re not alone. Most entrepreneurs often forget to consider this critical factor that can make or break a successful crowdfunding campaign. Here are three common operations-related mistakes which entrepreneurs make before, during and after their campaign.
Once you have estimated the capital required to fund your upcoming operational milestone, it’s important to set a realistic fundraising goal that considers not only the donations collected from the campaign, but also takes into account all of your campaign expenses. Remember - in terms of “true” capital raised, you’ll only benefit from the campaign’s profits, and not from the gross funds raised. This is because you’ll have to pay to produce and deliver your rewards. Where possible, consider using low cost or free rewards offered to donors, in order to maximize your campaign profits. CaribShare Biogas offered rewards that included a tour of their Biogas facility (no cost to them), as well as complimentary hotel accommodations that were donated by the hotels with whom they partner to generate biogas from hotel waste. And, don’t forget other campaign costs and expenses, such as the platform administration fees, which are typically a percentage of the funds raised. In the end, your net capital raised should equal the funds required to build your prototype, to acquire your equipment, to purchase your start-up inventory or to achieve your specified project goal.
Mistake#1 Before the Campaign - Not setting a realistic fundraising goal to achieve your operations milestone You should treat your crowdfunding campaign like you would any other investment pitch. It’s important to be clear on the operational milestone that you’re trying to achieve and understand the capital required to get you there. Typically, crowdfunding campaigns are used to raise money in the early stages of a business to achieve a critical operational milestone, such as building a prototype, acquiring equipment or purchasing start-up inventory. In order to know how much money you need to raise, you’ll need to generate a solid estimate of the budget required. For example, Branson Centre Official Entrepreneur, Carol Lue, who is the Founder and Executive 20