How crowdfunding saved my startup from an early death: IIT Madras student entrepreneur speaks
Have an idea but have no funds? Here are some tips from a young founder of an education startup who raised money through crowdfunding.
My organisation was dying. We were in college and all our operating expenses were then covered by the tutoring that and Samyak and I were doing. Before we knew, our team grew from a couple of undergraduates at IIT Madras to 5 full-time employees in just three months and we needed to pay salaries. When all other funding options looked far, I relied on the strong community of people who believed in our cause. Crowdfunding was our only way to swim through that ocean and not drown. But when I looked at the stats, I realised India had less than 26 percent successful campaigns (the stats for the US are not that promising either). Planning for six months runway, I had to raise Rs 6 lakh, and that was a huge amount of money. The only thing that could save was an efficient strategy.
I am writing this today because I want to share our story on how we raised 25 percent more than what I had planned to. The idea is to develop a framework that would enable other social entrepreneurs to leverage the platform and multiply their impact.
The way I structure it, there are three parts to the campaign:
- Strategic planning
- After connect
Planning is by far the most important component to go about this. Do it well, and you can see funds pouring into your campaign. I had spent more than four weeks in planning our campaign and developing tools that will help.
Ask this to yourself: why should people give you money? There are hundreds of campaigns that we see every single day, so why you? Your cause might be genuine, but if it doesn’t move me much, I am not going to put a penny in it.
A lot of times, we try to justify what we are doing from a logical framework and forget about the emotional aspect and the intuition part. For crowdfunding, it matters how people connect to your cause. Psychologist Daniel Kahneman says that most of the time, our fast, intuitive mind is in control, efficiently taking charge of all the thousands of decisions we make each day.
Understand the power of big and small. Small enough to help people visualise how their money is going to make a difference for that particular child, and big enough for them to see how they are a part of your grand vision. Learn the art of storytelling and create a compelling story around your programme.
The next task is to understand the amount that we could raise. Here is how I did it. I created a database of everyone I knew in a column and put the amount of funds that I could expect from them. I asked both Sam and Awnish, my founding members, to do the same.
This is one place where you really have to evaluate the networks around you and note down your realistic expectations. When you complete that list, you will get an idea of the total amount. Double that amount and that’s the kind of money that we generally raise for our projects.
After this exercise, you must identify ambassadors who really believe in your work and would go on to ensure their networks contribute too. I was fortunate to have that kind of support as they raise about 20 percent of the entire funds for you.
As a final step, line up a couple of people who can be your first supporters. Remember, crowdfunding is all about getting individuals to contribute, but nobody wants to contribute to a campaign with zero supporters. In that case, it becomes incredibly important to have people who support the campaign the instant it goes live.
Typically, this is how a general trend of a campaign looks like. You need to have a grand opening, which should provide you with 30 percent of the funds within the first week. Understand that it is difficult for you to sustain people’s interest in your campaign as time goes. They make waves in the beginning, but then people forget about them. And the last step of planning is to ensure you have enough marketing collaterals to support yourself during the flat period. We had kept ready around 20 social media posts to put out either daily or on alternate days.
Execution is all about timing, getting your channels right and ensuring everyone has a chance to contribute. And, of course, some amount of luck.
Well, as they say, it’s all about timing. You need to figure out the best time to launch the campaign unless you have come to a dead end. Never start a campaign during the last weeks of the month when people have less money in their accounts. Festival times when people receive bonuses are a good time too.
Once your campaign has been launched, ensure that you publish it on all the social media channels reach out to everyone you know. One of the strategies that worked for us was that every time someone would contribute, we will thank them on their Facebook wall and tag a couple of their friends. You have to realise the power of network of networks - this is where the rest 50 percent comes from.
Make sure your ask is customised for each person. It must have a bracket that ensures you get large contributions but also should allow others to add value. This is how we did it.
It helped us because there were lots of my connections who initially didn’t know about Involve, but contributed a small amount because they saw themselves making a difference. What people look for is two things: If this is something worth contributing to (which comes from the story you tell), and if the money they contribute adds significant value.
Pro tip: Get one of your relatives to contribute to your campaign and then share it on your family WhatsApp group praising that relative. You know how it works then!
Luck played a huge role too in our campaign:
Case 1: One of my close friends “A” asked another friend “B” to contribute a small amount. B liked the idea and shared with his father “ C” who runs a school. Realising the importance of peer teaching in today's’ education, he instantly gave us Rs 1 lakh to design the complete programme.
Case 2: Our campaign was going through the flat phase and we needed a high. We still needed to raise Rs 3 lakh more. Our campaign got an offer for 1.2x impact and suddenly it tipped. We ended up raising Rs 1.5 lakh in a single day. We had lots of anonymous contributions ranging from Rs 250 to Rs 15,000 and well, trust me I had no idea how.
After-connect: A lot of people think that once you have successfully raised the amount, the campaign gets over. I think the other way. The after-connect is an essential part of long-term relationship building with your supporters. These are people who have contributed to your programme and if they know that their money has been utilised well, they are going to spread the word about you. Most importantly, they might come back next year and contribute again. So continuously update them on what is happening and stay connected.
Wish you happy fundraising. Feel free to write to me in case you want some more tips.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)