During these trying times, you’re probably wondering: now what?
As someone who helps entrepreneurs launch their crowdfunding campaigns, I’ve kept my pulse on all things crowdfunding and coronavirus (COVID-19). During the past month, I’ve taken a look at the information out there to really understand what is happening as this pandemic continues.
In short, as people are asked to stay home, there is incredible opportunity for you, your business and your campaign to launch and grow online. Let’s see how.
How Is Coronavirus Impacting The Crowdfunding Industry?
From a crowdfunding perspective, the average backer does have more “disposable income” than the average consumer to spend on new and novel products. Even at this time with the economy being impacted, unemployment rates rising and spending trends changing, Kickstarter and Indiegogo are still seeing robust growth in launches and campaign funding.
According to Indiegogo, it seems that stay-at-home orders from around the world has created an uptick in traffic.
During the second half of March 2020, Indiegogo traffic overall increased nearly 14% compared to the same time last year, and daily funds raised on Indiegogo were up 24% compared to the second half of March 2019.
Where’s The Data?
For those of you out there who are interested in seeing how campaigns are doing, here are recent campaign launches, and their phenomenal successes so far. As you can see below (and directly on the Indiegogo and Kickstarter platform), campaigns are continuing to be funded (and wildly overfunded) even as COVID-19 impacts other parts of the economy.
- MOFT, a sleek laptop desk that launched on February 18, was 1,450% funded within 24 hours and continues to trend upwards. They’re at over $630,000 raised with more than 9,000 backers.
- Oros, an apparel brand, launched their campaign on March 10, was fully funded in two hours and have continued on to raise more than $210,000.
- Starlight, a cooperative board game, launched their campaign on March 17 and reached its funding goal of $35,000 within 17 minutes. They’ve amassed over 6,000 backers with hours left in their campaign. This product doesn’t come cheap as its base product starts at USD $75.
- Babymaker, a lightweight discreet ebike, launched on March 17 and hit $1M in campaign funding within 2 days of their launch.
- Rotofarm, an indoor garden for herbs, was fully funded within 8 minutes of their launch.
- Pakt, the feature-packed travel backpack, launched on March 17 and raised $233K on their first day.
Crowdfunding Experts Agree That Crowdfunding Continues To Thrive
Crowdfunding is a huge multi-billion dollar industry. As such, there are others who, like me, are working with entrepreneurs and campaigns every day. Experts like BiggerCake, LaunchBoom, BackerKit and Enventys Partners have all shared their own take on the impact of COVID-19 on the crowdfunding industry. In short, the preliminary data from all parties is showing that the crowdfunding industry is certainly quite healthy and campaigns are continuing to meet (and exceed) their campaign goals.
The Impact Of COVID-19 To Your Business
Now that we’ve seen that there is healthy demand from the backer side, let’s look at how COVID-19 impacts your business and crowdfunding process.
A Supply Chain Shock
The further we move, the more lean our supply chains have become; it means less inventory on hand and lower costs. When one part of the supply chain is impacted, the rest is thrown off course. With a global slowdown from COVID-19, there has been a shock on the supply chain. Imagine an iPhone, if supply for raw materials to make the tough glass shell becomes impacted, everything else about the phone also experiences a slowdown. The great news is that China is already beginning to “turn on” their manufacturing plants and move into business as usual, meaning that delays can potentially be modest.
What You Can Do
It’s time to have a Plan B. As an entrepreneur, you’re probably well-versed in “figuring it out” when things don’t go according to plan. A supply chain shock is one (of many) things that you will experience moving forward. The best defense against this is to learn to plan for backup and be comfortable going into “we’ll figure it out” mode when things don’t go according to plan.
Maybe tensions in South America means that Chile can’t export enough copper and leads to serious price increases in copper as a raw material.
Maybe tensions in the Middle East leads to a dramatic increase in shipping prices around the world. In this case, manufacturing plants can run out of components.
It’s also time to learn to communicate very effectively and openly with your manufacturing partners. Since they are your eyes and ears on the ground, getting to know them well will provide you the most real-time information about the supply chain and how you can best prepare.
Manufacturing And Shipping Delays
Businesses in China are doing everything they can to keep their workers healthy. This means that companies, both big and small, have been affected by factory closures in China. For example, a client of mine slated to begin marketing for his crowdfunding project in March has delayed his project until July because he was unable to get in touch with his manufacturers for their fifth prototype. Although he was raring to go, marketing without being sure of his final product costs (and final timeline for production) would have been unfair to backers.
In short, if you are working with a Chinese manufacturing company to produce your product, you are likely to experience delays.
What You Can Do
If you’ve already launched your project, communicate with your backers. Since most people around the world are aware of the impact of COVID-19 on all facets of life, they’re more likely to be understanding of any potential slowdowns and changes in timeline.
If you haven’t launched your project yet (and you want to get this out to the world soon), it’s time to think about an alternative way of manufacturing your product. Are there other countries that might be able to do the same thing at a comparable price? Are you able to source things locally while minimally increasing the price for end-users? Otherwise, launch your project with your existing plan while being completely transparent about manufacturing or shipping delays in the future.
More Favorable Advertising Costs
Companies that are producing right now are the most impacted by manufacturing and supply chain changes. They’re forced to decrease (and even turn off) their online spend due to decreasing inventory, lack of supplies and lag time in product delivery and shipment to warehouses. As such, advertising prices on already-affordable platforms like Instagram and Facebook are becoming increasingly more affordable.
Remember that crowdfunding is raising money even before a product goes into mass manufacturing. Since backers don’t expect to receive products right away, you have the upper hand. As a creator, you’re asking people to contribute funds before a product even gets made; you can collect the funds now and pour it into manufacturing once things have gone back to normal. As companies turn off their advertising spend selling products that can’t be made, there is vast opportunity for crowdfunders.
What You Can Do
There’s no better time than now to do a push with paid advertising (unless you’re launching a travel product). Advertising costs on both Facebook and Instagram is more than affordable right now and crowdfunding backers know to wait months before expecting their products to arrive.
What To Do Now?
If the last couple of weeks are any indication, the global lockdown is pushing people indoors and online. While there is uncertainty in the market, crowdfunding is uniquely positioned to succeed. From a customer base that on average has a higher disposable income to delayed product gratification, there is a silver lining in this pandemic for those who want to crowdfund their products on Kickstarter or Indiegogo.
Therefore at this time, I’d encourage you to continue planning for your launch. Remember that all successful campaigns go through rigorous preparation. This is a great time to secure an audience and get them ready to pre-order on launch day.
No matter what stage you’re currently in, I’m here to help. That’s why I’d like to introduce you to the Crush Crowdfunding Bootcamp. In the signature course, I will show you through readings, videos and tons of additional assets (like exact templates and swipe files!) how you can take action and implement the system for your project to produce real results.
Inside, you’ll find:
- 90-day launch plan
- Highest-converting landing page template
- Launch email scripts
- Crowdfunding page templates
- Crowdfunding rolodex
- Promotion resource page
- And much, much more.