Crowd-funding, while nothing new globally, is still in its infancy in Oz. Provided it can remain on the good side of Australia’s consumer protection laws, it has the potential to go gangbusters in traditionally underfunded segments, like the arts.
The process of sourcing cash from the public to bring projects to fruition, crowd-funding isn’t restricted to scaleable business endeavours as with venture capital. All that’s required to launch your very own crowd-funding project is a stellar idea that you can turn into a reality, and a knack for sweet-talking your supporters into parting with their ker-ching.
Australian crowd-funding web platform Pozible, launched less than a year ago, has seen many such projects realise their funding aspirations via its site – for a 5-7.5% cut. The two-man band grew out of co-founders Rick Chen’s and Alan Crabbe’s work with struggling visual artists.
“We came across musicians and film makers that had used [crowd-funding] platforms in the US and Europe to pre-sell items relating to their line of work,” Chen says.
“At that stage, no one was providing a crowd-funding service for the creative industry in Australia and we viewed this as a great idea.”
In an article posted on the ABC website, Lateline’s Michael Atkin cited local financial and consumer-protection law violations as a potential cause for concern for platforms like Pozible. However, Chen’s confident its model will keep the company out of hot water.
“Pozible is an invitation-based platform. This means that we carefully choose projects… through a vetting process to ensure they comply with Australian Securities and Investments Commission (ASIC) and Australian Competition and Consumer Commission (ACCC) laws and regulations.”
“Projects must be approved and confirmed prior to listing. Pozible also does a check on the project creator to ensure they are legitimate.”
Pozible’s biggest success story
Australian independent news website NewMatilda is one company to reach its fundraising goal via Pozible’s platform – to the tune of $175,838 from approximately 1,200 donors.
Founded in 2004, NewMatilda found itself in urgent need of funding mid-2010 when its primary investor dipped out. Its loyal readership’s response to the news they would be shutting up shop was overwhelming, and current editor Marni Cordell decided to look for “creative ways to process money” in an effort keep the non-subscription site running for a further 12 months.
Having initially heard about Pozible via word-of-mouth, Cordell was drawn to the company’s pledge-based “all-or-nothing” model. Although NewMatilda’s suggested donation price-points ranged from $50 to $165, any contribution was welcome.
Once the crowd-funding campaign was live on Pozible, NewMatilda was in the fortunate position of having to do very little marketing other than emails, a handful of articles, and the odd quiz night.
Cordell bigged-up Pozible as a great solution for both individuals and organisations that wouldn’t otherwise secure funding. Moving forward, NewMatilda plans to build donations functionality into its own site.
How to make crowd-funding work for you
Projects peddled via Pozible only receive the donations if they reach their full target in 90 days. Currently two-thirds fail. So how do you ensure your creative project’s one of the chosen 33.3%?
“Planning is the key to success,” Chen recommends.
“If planned properly, project creators can really exploit a crowd-funding platform through every aspect of social marketing – this is evident in the most successful crowd-funding campaigns worldwide.”
“Knowing who your first supporters will be and knowing who will spread the word effectively are very important at the start of any crowd-funding campaign.”
For those looking for further guidance on crowd-funding, here are…
…Pozible’s 11 tips to crowd-funding success
1. Plan your project and set yourself a goal
It’s important to set yourself a realistic and achievable funding target. As most crowd-funding platforms apply a time limit to raise your dosh, Pozible recommend you set your goal at the minimum you need to kick-start your project.
2. Invite people to be a part something
Don’t be shy. There ain’t no shame in asking someone to support your creative project or idea. You’re crowd-funding, not begging. Get people involved in something great.
3. Embrace collaboration
The crowd-funding process isn’t just about financial support. It’s also an opportunity to find like-minded individuals or organisations to lend their creative skills or expertise to your project, giving it the greatest chance of success.
4. Know your influencers
People love a good trend to follow. If your project is endorsed by a celebrity, respected industry leader or publisher be sure to big up the connection. Endorsements for your project build credibility and should be a key focus.
5. Learn from others
Crowd-funding has become a point of discussion online – read the articles and advice from people who’ve been successful. More importantly, learn from those who’ve been unsuccessful.
6. Be Sociable
Take every opportunity to tell people about your project – even if it means stepping outside your comfort zone. Learn about upcoming events, festivals and local community activities that may equal opportunities to spread the word.
7. Share and connect online
Crowd-funding platforms, like Pozible, have been built with social media integration front and centre. Whether it’s Facebook, Twitter or MySpace, be active on your personal page. Give regular updates and encourage friends to share your project. But try not to sound too needy.
8. Another day, another dollar
Raising cash for your project won’t be easy. It takes passion and commitment to be successful. Realistic expectations from the outset will help to build momentum. People will appreciate your dedication and will be more likely to spread the word about your efforts.
9. Say thank you
An obvious one, but still worth a mention. A personal message of thanks and recognition will serve you well.
10. Know your audience
Without an audience you’ve got next to nada. Therefore it’s worthwhile taking the time to get to know them. Suss out what your supporters would like to get out of supporting your project. It may be as simple as a signed postcard or album.
11. A story to tell
What is it that makes your project different from the others? Tell your audience where your idea stems from and what makes it unique. People need to connect with your project if they’re to become evangelists for your idea.
Only one obvious question remains; Could this model by applied to the early stage venture industry in Australia? We watch and wait with interest.