Six Tips to Raise Capital through Indiegogo - Apex Filling Systems.

Why Raise Capital Through Indiegogo?

The Catch-22 for many startups and small businesses is that in order to attract investors you need to appear profitable, but demonstrating the profitability of your product requires some up-front investment. Fortunately, crowdfunding platforms now allow entrepreneurs to engage directly with many potential investors. This offers regular people a chance to get excited about your vision and support it with contributions of $100, $25, or even just $5.

The founders of the Washington, D.C., distillery Republic Restoratives raised over $119,000 from their Indiegogo campaign after traditional investors turned them down. “We had met with a local community bank and they couldn’t have been less interested. We had no credibility. After our Indiegogo perks campaign, the bank was all of a sudden interested,” said co-founder Pia Carusone in a recent blog published by Indiegogo. Their distillery is now funded and operating with great success. For this post, we will focus on Indiegogo specifically.

Although the potential for success is high, only about 13% of Indiegogo campaigns end up being fully funded. The good news is that not only do you have the option to accept capital from partially-funded campaigns on Indiegogo, but you can also greatly increase your odds of raising enough capital with careful research and strategy.

1. Do Your Research

Reach out to your market and listen to their feedback. No matter how good your idea seems to you, your campaign can only succeed if there are enough people who feel excited by your product. If your idea is too unfamiliar or too niche, you will have a harder time attracting support.

2. Prepare to Get Personal

With crowdfunding in particular, investors want to feel connected before they contribute. You might let them get to know you and your team, offer them perks that they find meaningful, or show how some of your profits will support a charity. Popelouchum Vineyard will name a new variety of grape in your honor, and Public Goods offers a lifetime membership to the initial investors of their at-cost line of health and beauty products.

Also, be ready to listen to your investors. A food and beverage manufacturer, for example, might add new flavors of juice to their product line at their suggestion. Get ready to keep them in the loop at all stages of the campaign, and hopefully beyond.

3. Raise 30% of Your Capital from Your Inner Circle First

No matter how emotionally engaged people are in your campaign, they still want to feel confident that the campaign will be successful before they contribute. Research has shown that investors are more likely to contribute to a crowdfunding campaign if it has already raised 20-30% of its goal.

First reach out to all your contacts, as well as those of your team, and see if they will agree to contribute enough to reach that 30% mark. (This also serves as a good way to test your market.) If so, then set up dates for a soft launch and a hard launch. The soft launch is the first real day of your Indiegogo campaign, when your contacts make their contributions. Set the hard launch for 48 hours after the soft launch. You will promote through all your marketing and public relations efforts on that date. Then your first new investors will see that your campaign already has momentum.

4. Build Up Your Team

Another way to make investors feel confident in your campaign is to show that there are great people on your team. Show them faces that go with all the functions of a business, including marketing, production and fulfillment. In addition, show them the people who will make your product special. This can be professionals such as a master brewer, a cosmetician, or a chef. Another advantage of having more people on your team is that you increase the number of people in your network who can spread the word about your product.

5. Keep It Visual

Indiegogo has found that campaigns with a pitch video raise four times more than those without. Use the video to connect personally to your audience.  Show them your product, and let them know how it came to be. The video does not need to be very expensive, depending on the return you are seeking, and three minutes is a good maximum run time.

Photos that show off your product in the most appealing way are also crucial. Aim to include around seven to ten images.

6. Offer Great Perks

Perks are what draw many people to supporting crowdfunding campaigns. They are hoping for a fun product or a meaningful experience in exchange for their support. For example, a health and wellness producer who wants to expand their skin care line might offer a sample of a certain product for $25, a deluxe package of creams and serums for $75, and an invitation to a special product demonstration event for $250.

Another important tip is to offer contribution options at different, affordable levels to increase the total number of investors. And definitely include at least one perk for $25; research shows it is the “magic number.”

More advice and inspiration for running your campaign is on the Indiegogo site, including “The Essential Guide to Crowdfunding.”

Naturally, we’d be thrilled to address any questions about the packaging industry for you and help you reach your goal.

Best of luck!