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By Protonet Team. Published 19. August 2014.
This past June, we at Protonet – a German company that makes a very simple personal server – ran a crowdfunding campaign on Seedmatch, a platform that’s similar to Kickstarter in the U.S. In just six days, we raised more than $4 million dollars, and even though more investors were lining up, we closed the campaign after having given away non-voting stock options worth 20 percent of the company.
This wasn’t the first time Protonet used crowdfunding to raise seed money. In 2012, we raised more than a quarter of a million dollars in 48 minutes – a European record for such a crowdfunding campaign. Our latest campaign also broke a couple of records, including the “fastest million dollars of all times” (89 minutes) and the largest amount ever raised by a German startup ($ 4 million).
Here’s how we capitalized on what admittedly is a hot product in Germany and perhaps, given an increasing concern for data independence by Americans, a popular server in the U.S. as well.
We hired professional engineers and designers to create our line of servers, so we wanted to make sure our crowdfunding video was produced by a professional team of filmmakers with enough advance time. After a two-day shoot, we called it a wrap and waited for the results. They were “OK” but not good enough for our standards. Even though it was a few days before launch, we decided to shoot a completely new video. Go ahead and compare the results yourself: version #1 and version #2. (Yes, they’re both in German, but you’ll get the idea.)
Success depends on the size of the community you’ve already established and engaged with prior to the campaign. At Protonet, we ‘d already scored a successful crowdfunding campaign in 2012 and we also had attracted thousands of followers on social media. This was critical to our success.
Before you start your campaign, ask your friends and family, co-workers from previous jobs, the local incubators and startup groups, and everyone you know to follow you on social media like Twitter, Facebook, and Instagram. Be sure to provide content that reflects your values and is relevant to your product or service – in our case, it included comments on being independent. You’ll gain followers who share your beliefs. It’s also important to connect with people in real life. Throw a party, ask people if you can interview them for your blog, and offer to contribute and mentor those in your industry. These actions will help establish a solid relationship with your community.
Exactly four weeks before campaign launch, we started our first phase of communication. We opened a landing page announcing that “Something huge will happen and we won’t tell you now. But if you want to know, drop your e-mail address here!” We pushed this message out onto social (but not public) media and hundreds of people started signing up to get the mystery news.
Two weeks later (14 days before kick-off), we came out with the news. This time press was important. (I wrote an article on how to get big press ROI here.) We called everybody we knew, every startup, every blogger, and every old friend to make sure you’d have to be on another planet not to know what we were doing. We encouraged business and industry newsletters to target specific groups, and also retargeted all our website visitors because they’d already obviously expressed an interest in our product.
The day we kicked off the campaign, we also launched our second product. This server, the Maya, was given as a reward to the first investors willing to chip in 2,000 Euros or more. Scarcity turned into a race for time, and the majority of our investors tried to get their stake as early as possible. Swarm theory suggests that individuals follow the crowd, and the same appears to hold for crowd investing, although we don’t have the science to back it up. In the end, we gave every +2,000-Euro investor one of our products to make them happy. It cost us a lot of money but we were able to triple the number of product owners.
Most established platforms like Kickstarter or Indiegogo have good demographic and other analytic data on their network’s users that might be useful to better target your campaign and also communicate your message to make it more relevant to those networks. Contact these platforms and see if they will share this data to help promote your campaign and also let you use their networks to target specific users.
Investors look at teams and ideas that are compelling and inspiring, but they only open up their wallets to those they can trust to pull off what they promise. To build up this trust, you’ll need some kind of track record: a working prototype, a successful career in your industry, a good instinct for trends, or a relationship with entrepreneurs and well-known investors who will endorse you. Try to find two or three really good arguments why people should trust you with their money.
This is probably the most difficult and unquantifiable yet the most important aspect of your campaign. It’s what can make a campaign go viral, or not. You’ll need to create scenarios for how your product or service could improve people’s personal or professional lives, and present your vision of how your products will help make them better people, happier or more independent. If you have something that could cheer up your friends and strangers and get them to talk about “possibilities” and “opportunities,” you might be headed in the right direction. And, of course, there’s always plain luck and good timing. In our case, our product solves a timely need for privacy; we had the right technology; and we found the right angel investors before we launched our crowdfunding campaigns.
As you can see there are multiple variables to running a successful campaign and we just highlighted the most important ones. Every team and idea has a unique angle of attack – try to find yours and accelerate your mission in the best possible way – regardless of what other projects may do.