As trends go, crowdfunding is a toddler: all fired up and streaked with independence, in constant motion and grabbing at any shiny object put in its path, wobbly but growing more confident each day. If crowdfunding were a tactile thing, les enfants terribles would take a bite out of you.
But crowdfunding is not so new that it hasn’t birthed its own progeny—the crowdfund consultant. (I am referring to donor- and reward-based crowdfunding since, to push my metaphor one image too far, equity crowdfunding remains in a protracted period of gestation.) You could argue that the nature of crowdfunding defies such conventional paths, that part of its appeal is that every individual now has the tools and the potential audience to find her own way to success, middlemen be damned. Yet it’s a career track that’s found a foothold, and by the looks of the roster of individuals and companies identifying themselves as such, in my own niche capacity myself included, there are no signs the trend will slacken.
The truth is crowdfunding done well is really hard. It takes a diverse skill set. Creative types, who are big users of this new source of capital, are often weak on the communication, marketing and business end of things. Just scour a popular platform and you’ll see projects with great potential that don’t achieve their goal simply because they don’t know the space well enough to leverage it.
It also takes time to learn how to be successful at crowdfunding. Six months is a reasonable learning curve. Creators would rather be working on their art, innovators are immersed in inventions, and entrepreneurs seem to run on fumes as it is. So there is a need, and the vacuum is filling up, fast.
In an industry so untested, how is an individual or startup supposed to know whom to hire? Just saying you’re an expert doesn’t make it so. Since I spend an ungodly amount of time on the topic, I thought it would be helpful to share some tips I’ve picked up along the way. And since it would defeat the purpose to limit it to just one opinion, I contacted some of my colleagues, with whom I’ve formed a virtual salon on various LinkedIn crowdfunding groups, and asked them to weigh in.
Here’s what’s come of my research:
1. There is no one-size-fits-all consultant. No one’s been doing crowdfunding long enough to claim the mantle of expertise, myself included. My background and experience makes me suited to help you navigate storytelling and communications, marketing and media strategy, in the crowdfunding space. If you’re strong in those areas you don’t need me. Find a consultant with direct experience and credentials in areas where you feel most vulnerable. Then make sure that’s overlaid with hands-on crowdfunding experience.
2. Create an airtight contract stating responsibilities. Obvious advice for anyone looking to outsource? The difference is that a crowdfunding campaign has so many steps, from pre-launch strategy to perks delivery, and so many simultaneous tasks to coordinate. Without explicit task assignments important work will fall through the cracks. Then, who’s to blame if the project fails?
3. Solo operator or full-service company? It’s tempting to think you can pass your project off to a team of experts who will run your campaign to great success. But that’s not how it works in crowdfunding. Whether you hire an individual to fill a gap or a team of warriors, you have to remain fully engaged with the crowd because they need to feel your passion.
4. Walk away if someone promises success. Unlike a trainer or a dietitian, who can predict within a small margin of error that you will succeed if you follow their strategy, crowdfunding offers no such magic pill. The success rate is still estimated at 40 – 50%, even when you do everything right.
5. Hire someone impartial. With hundreds of platforms already competing for market share, let’s make sure the industry doesn’t devolve into doctor-pharmaceutical industry coziness. Consultants should recommend platforms because of cost, ease of use, filling a niche need, or excellent customer service. Here’s a post bycrowdfunduk supporting her recommendations with sound reasoning.
6. If you don’t feel ready to launch and a consultant says you are, trust your gut. Hopefully you’ve done your research before you retain a consultant and you know that a paltry social media presence won’t get you far. There’s a metric to gauge your fundraising potential: calculate 5% of all your social media fans and multiply that by the most common pledge amount, which is $25. If the number falls short of your desired goal, keep building you community.
7. Look for active, knowledge-sharing consultants. The only true way to gauge a consultant’s knowledge is through his work. If your dream is to campaign on Kickstarter, a favorite is Funding the Dream’s active podcast series with loads of free, useful information. Money from the Masses offers project analyses and advice on market creation and sales.
8. How to negotiate payment. In traditional fundraising, consultants are never hired on a percentage of the total funds raised. According to the Association of Fundraising Professionals ethic’s committee, “performance-based compensation, measured as a percentage, encourages abuses.” Flat fees mitigate this. In crowdfunding transparency is king. If you do decide to pay a percentage of your goal, it’s imperative you state that clearly and openly.
9. Look for crowdfund consultants with industry memberships and affiliations. Like any market, players need to validate their expertise. Membership organizations serve this function. Going forward, groups like theCrowdfunding Professional Association, pioneers in the industry, will help by making recommendations of dues-paying education-continuing members. Others, like the National Crowdfunding Association, are hot on its heels.
10. Zen Master Suzuki Roshi gets the last word. “In the beginner’s mind there are many possibilities, but in the expert’s there are few.” Depending on your interpretation, the Zen Master may just be giving this new career his stamp of approval.