How to Crowdfund Your Creative Project

Crowdfunding’s growing popularity is good news for creative types, who typically don’t have access to bank loans or angel investments that are more readily available to conventional businesses. According to a report from Massolution, arts-oriented projects received about $66 million in 2011 from donation- and reward-based campaigns. That number is likely to keep soaring, as the crowdfunding economy goes from $1.5 billion in 2011 to an estimated $3 billion this year.

Read on to learn how you can claim your share of the windfall.

Four Things to Do Before Launching Your Campaign

If you want people to give, you’ve got to drum up excitement. Here are four strategies for building momentum even before launching your campaign:

Build — and mine — your social network. Fundraising season is not the time to be a wallflower. Plan to let anyone who has ever supported your creative endeavors know you’re looking for backers. Don’t have much of a network in the first place? Then build one. Before announcing their crowdfunding campaign, the makers of the comedy film Gone To Pot spent more than a year building a Facebook fan base of 20,000 people by posting fun photos of exotic varieties of ganja, connecting with medical marijuana advocacy groups, and inviting fans to create short videos for inclusion in the closing credits of the film. “It turns out weed has quite a loyal following,” says filmmaker Martin Keegan, who plans to launch his campaign in early November.

Make a great video. When artist Karyn Olivier decided to crowdfund a book of photographs documenting her freeway billboard project in Houston, she was hesitant about adding a video. “I felt like it seems too goofy and will come off as cheesy, but there is something about putting a face to something that makes it seem more sincere.” Her campaign was a hit. According to site stats, nearly 400 people watched the video (shown above), and she reached her initial $3,000 goal in just four days. Thanks to the built-in video recording features on smartphones, a good video doesn’t have to cost a dime either.

Plan perks people want. If you’re raising money for a physical product like a book or a board game, it makes sense to plan on sending those items out as thank yous. (Kickstarter users should avoid posting photorealistic renderings of products that don’t actually exist in order to comply with new restrictions on vaporware.) But people don’t always want more stuff; often, they just want to feel like they’re part of a cool project. The producers of Charlie Kaufman’s Anomalisa film, which raised more than $400,000 this past summer, offered backers who pledged $250 or more both a studio tour and an early screening of the film in progress. The serialized fiction startup Plympton, which raked in nearly $60,000 in early October, invited backers who pledged $25 to be on its advisory committee for a year. Total cost: $0.

Create multiple entry points. Not everyone has $50 to spare, no matter how nifty your project sounds. So make sure to have lower pledge levels—starting as low as a dollar—to encourage people to participate in and create momentum for your campaign. Likewise, come up with a few over-the-top perks to reward your biggest backers. The serialized digital fiction startup Plympton thanked its sole $10,000 backer with the right to be a co-creator of at least one series over the next year. Not sure what your supporters would like? Ask them in advance. “Some of our high-end prizes were designed with those backers in mind,” says Plympton co-founder Jennifer 8. Lee.

How to Pick the Right Crowdfunding Site

The crowdfunding site Kickstarter has gotten so much publicity lately that you might think it’s your only option. But there are literally hundreds of other sites from which to choose. Here are some of the best, along with their key differentiators:

Kickstarter: With more than $350 million raised for projects since 2009, Kickstarter is the best-known crowdfunding platform, but it also takes the largest cut: a 5% flat fee, plus 3% to 5% for payment processing via Amazon. That means you typically pocket just 90% of pledges. And Kickstarter’s rules dictate that if you don’t reach your goal—even if you raise $9,500 out of the $10,000 you’re seeking—you get nothing. Despite these issues, Kickstarter has a reputation for helping people raise more money than any other site because of such high-dollar success stories like the more than $10 million raised for the Pebble watch this past May.

Indiegogo: The main reason people choose Indiegogo is that, unlike Kickstarter, it lets you keep all the cash you raise even if you don’t meet your goal. Such largesse doesn’t come free: Indiegogo keeps 9% of funds raised under this “flexible” funding plan, plus a 2% to 3% payment-processing fee. Otherwise you pay a 4% flat fee for Kickstarter-style “fixed funding,” plus the 2% to 3% fee. Indiegogo isn’t just some lame also ran, either. Comic Matthew Inman just raised $1.37 million on it to build a Tesla museum. (See video, above, on Wardenclyffe Tower, Tesla’s last remaining lab in Shoreham, NY, which will also be the site of the new museum.) And unlike Kickstarter, Indiegogo allows charity and cause-oriented projects.

Rock The Post: If your creative project is also a legitimate, revenue-generating business—say, a t-shirt shop or a dance studio—raising funds on Rock The Post can set you apart from the flood of hobbyists and wannabes elsewhere. Rock The Post screens each project and only accepts those it considers likely to get funded—more than 90% of submissions are rejected. Once you’re in, an advisor will give you tips on how to reach your goal both before and during your campaign. The site takes a 5% cut plus an additional 3.5% for payment processing.

Gambitious: Games are among the most popular projects on crowdfunding sites. Kickstarter-backed games alone have raised more than $50 million so far this year. So it was only a matter of time before a gaming-centric contender set up shop. Gambitious is unique in that it requires game makers to submit an actual business plan. Backers either pledge money in return for standard perks (like a free copy of the game) or receive equity in the company if both the company and backer are in the European Union. (The equity option will be available to American backers next year once the JOBS act goes into effect.) Launched in September, Gambitious has already signed up some big names, including 3D Realms (of the Duke Nukem franchise), to give it street cred.

Others: Mobcaster helps independent TV producers get funding for their pilots and series. Invitation-only Slated connects independent filmmakers with investors for no fee. Emphas.is specializes in photojournalism projects seeking less than $25,000. Crowdsourcing.org keeps an updated directory of hundreds of crowdfunding sites, if you want to search on your own.

How to Get Real About Your Total Costs

The biggest mistake novice crowdfunders make isn’t asking for too much money; it’s not making a realistic estimate of how much money they will need to cover their expenses.

Say, for example, that you know it will cost $3,000 to record an album of traditional Scottish fiddle music or to publish a photo book of rare birds. Subtract fees (of about 10%, including payment processing), the cost of shipping out gifts to your backers, and taxes (yes, contributions are considered taxable income if you send a gift in exchange and are not a registered non-profit), and you might net only half of your total funds raised. In other words, you should ask for at least a third more than the total amount you think your project will cost.

Many crowdfunders don’t realize until after their campaign is over that they underestimated their costs. “I was asking for way too little,” says Ed “El Celso” Tahaney, a Calfornia-based artist who recently raised $5,744 from 95 individual backers for his installation of plastic soda bottles at an Incan temple in Qorikancha, Peru this past summer. (Click on the video above to see part of the completed project.) Since Tahaney beat his target goal of $5,000 by nearly 15%, he was able to use the extra funds to cover some of his unexpected expenses.

If you feel uncomfortable asking for the full amount up front, once you reach a lower goal, you can announce a stretch goal and send updates to your backers explaining how you’d use any extra funding. Starburns Industries—which initially asked for $200,000 but ended up raising $406,237 for an animated, stop-motion film written by Charlie Kaufman—explained to backers that the extra donations would go toward making a better movie. “You can make a movie for $200,000, but you have to make more compromises,” says executive producer Duke Johnson. The extra $206,237 will go toward things like better puppets and higher picture quality.

How to Motor Past the Mid-Campaign Deadzone

It happens to even the most successful campaigns: After a swift start and a flurry of pledges from your inner circle of friends and family, donations start tapering off in the second or third week. “You get into this weird dead zone,” says Plympton co-founder Jennifer 8. Lee.

Here’s how to turn things around:

Don’t let your campaign drag on too long. A month is the sweet spot for most crowdfunding campaigns. Any longer and people will put it on the back burner, then “forget” to donate. Any shorter and your project can seem rushed and disorganized. It’s also best to end your campaign on a weekday evening so you can give the final push when people are probably bored at home and surfing the web anyway.

Stagger your updates. Assume that donations will taper off in the second week of your campaign—and be ready to re-energize it by sending out an update on funds raised or newly added prizes.

Maintain separate email lists. You may want your first email at the start of the campaign to go only to close friends and family, the second to professional colleagues, and the third to everyone else. Casual acquaintances are more likely to be motivated by seeing that the campaign already looks like a winner (thanks to pledges from your inner circle). And be careful not to annoy people who already funded you with numerous follow-on solicitations. After reaching her initial funding goal in less than a week, artist Karyn Olivier sent out her first update—announcing a new “stretch” goal—only to people who hadn’t already contributed.

Don’t freak out.  The mid-campaign slump is normal, not an early indicator that your project is doomed. Avoid the urge to add perks you can’t really afford or to start emailing people on a daily basis.

How to Satisfy Your Funders

Nobody likes dealing with a flake—especially when that flake has your money. So if you ever hope to get your funders behind another project, you need to assure them that you’re on the ball, making progress, and will have something to show for their faith.

Finish early. Looking for a great way to make your backers really happy? Beat expectations. Flutist Marco Lienhard (shown in the video above) actually started pre-production on his new album, The Traveler’s Song, before his campaign closed in early September. “I told people I’d get them the CD in October, but I knew it would be ready in September,” he says.

Communicate. It’s not always possible to finish early, of course. If  you’re running late, like three-quarters of all crowdfunding campaigns, let your backers know. When comedian Tig Notaro got cancer this year, she had to delay production of her short film Clown Service, which she had crowdfunded with $10,000 in donations on August 3. Less than two weeks later, she sent out a note to backers explaining why the movie would be late: “In the event that you haven’t heard, Tig has been diagnosed with cancer and will be undergoing treatment. We are hoping to revisit this in the next 6 months, if everything is back on track. We will update you as we know more.”

Be clear and sincere. We all understand that stuff happens. If at all possible, let your supporters know when you will finish the project for real this time. That kind of transparency will keep their goodwill and prevent them from burning out on giving good money to creative campaigns that never come to fruition.