While crowdfunding is a great example of the growing democratization of capital formation online, many of the top campaigns turn to professionals for help running their campaigns. One of these professionals, Zach Smith, founded a firm to do exactly that. Funded Today has helped over 150 start-ups achieve success. In one example, with the help of Funded Today, BauBax raised $9.1 million to launch its travel jacket, making it the most funded clothing project in the history of crowdfunding and the 4th most successful Kickstarter project of all time.
Zach Smith, co-founder of Funded Today joins Tradestreaming for an exclusive interview.
Why would crowdfunding campaigns turn to an agency? Can you crowdfund on your own?
You can crowdfund on your own, but any campaign needs some marketing in place, and unless you’re an expert in PR and paid media, you’re leaving a lot of money on the table. With a campaign that has a good product and does no marketing, Funded Today increases pledges by 1000%.
For example, if a campaign is averaging $500 to $2,000 per day, we could take them to $20,000 per day. Magbelt is an example of one of our clients. We increased pledges by 10,000%. Even if a client is running a successful crowdfunding campaign, we can still reach more people than anyone else and drive additional sales because we’re experts in paid media on multiple channels. We can reach over 2 billion people by honing in on likely buyers. We will always augment whatever a client is already doing.
Has crowdfunding gotten more competitive — if so, how?
It used to be that you if you had a good product, you could put it on Kickstarter and reach out to press and they would cover it. Or, if a company had a good product, they would sell X many units per day and stay within the top 5 on Kickstarter (essentially, you’d stay within the top 5 on Kickstarter and continue to generate more sales because you’re in that popular category).
Now, the crowdfunding market is pretty saturated, and it’s not as easy to be a success. With that said, if you have a successful campaign, the market is much bigger, so instead of having a $250K campaign, it might result in a $2.5M campaign.
What are some of the tools in your toolbox that help you be successful for your clients?
We have worked on over 300 campaigns, so we have audience demographics that we use in our social media marketing that we can utilize to hone in on markets that work well and convert well. We can also scale a campaign with just two weeks or four weeks, whereas most people wouldn’t be able to scale that quickly. And, we have credit that we can leverage, so if there’s a campaign that we know will have a good ROI we can spend half a million dollars to front it.
Essentially, we are experts in paid media because the audience for a campaign is the most important. And finally, we know how to reach out to media and generate publicity for our clients. In fact, just this week, we became the first crowdfunding agency to ever represent clients in the top two most popular campaigns on Kickstarter (Xpand Lacing System and UsBidi).
What components are necessary for a successful crowdfunding campaign?
We have something we call the Crowdfunding Success Matrix : there are 4 quadrants that a campaign fits into:
good product and good marketing
a good product with bad marketing
a bad product and bad marketing, called “outer darkness,”
a bad product with good marketing, a “black hole”.
We also have a formula we came up with: Ubiquity + Techy (i.e. groundbreaking technology in their field) + Chill Factor Story + Amazing Video = huge chance of success.
So, ubiquity means is it everywhere. One example is one of our clients called Trunkster. They developed luggage and of course everybody has luggage. Another example (not one of our clients) is Pebble Watch: it’s a watch but the client made it like an Apple iPhone. Or the Coolest Cooler (not a Funded Today client). SilverAir invented socks that don’t stink. By soaking the fibers of the cloth in silver you can wear their socks for 10 days. These are a few examples of clients that fit that success formula.
What does crowdfunding in the future look like? Do you see trends from your clients and in the market? Will more bigger brands enter the space?
Your question comes at the perfect time. In fact, Hasbro, one of the world’s leading toy and game manufacturers, just announced they will be doing a crowdfunding campaign as a way to connect with gamers. So, definitely, we will start to see bigger brands entering this space, and we already are. Also we will see more equity crowdfunding. Typically, you’re pledging to get a perk, and this is the type of crowdfunding we specialize in.