At the start of this year RunRev became one of the first Scottish companies to hit the headlines for a Crowdfunding campaign, raising nearly £500,000 on Kickstarter (compared with a target of £350,000). They were kind enough to run an event this morning to share their experiences with us, and Kevin Miller spoke eloquently and at length on how they had prepared for and managed their campaign. For me the key takeaway is that 90% of the funding came from or via their community of existing mailing list subscribers, users and supporters. Only 10% of the funding came via Kickstarter users and promotion through the Kickstarter platform.
Kickstarter is a Crowd Reward platform where people offer cash in exchange for rewards. You can still see the RunRev campaign online on the site, and see the rewards on offer here: http://www.kickstarter.com/projects/1755283828/open-source-edition-of-livecode. The funds raised are essentially treated as sales revenue (for accounting and VAT purposes), and Kickstarter takes a cut of the funds raised, and an additional fee for credit card transactions.
RunRev had carried out detailed planning to ensure that the rewards offered could be delivered at an appropriate cost, leaving enough funds to cover the core development activities that were the primary purpose of the campaign. With over 3000 individual participants, budgeting for managing the delivery of all the rewards is pretty important.
RunRev had a sophisticated marketing campaign ready before launching one Kickstarter using mailshots, social media, press and PR. Throughout the 30 days two or three of the key UK staff were running the campaign, working on social media and responding to questions on Kickstarter. They also used supporters in the US to cover times when they weren’t available in the evenings. Other campaign management tasks included updating the video in response to feedback, adding more reward categories, and continually refining the message.
Kevin said he felt that 30 days was more than long enough to raise the money and that a longer campaign could easily have failed due to lack of momentum. They raised a good sum of money in the first few days (they were ahead of schedule) , and the total jumped massively in the last few day. In the middle of the campaign total rose steadily but fell well behind schedule, and if that phase had lasted longer more users might have worried the target wouldn’t be reached.
Hearing Kevin speak really helped to emphasise to me just how much effort goes into a successful crowdfunding camapaign. In “selling” £500k of rewards through Kickstarter, it seems to me that RunRev probably applied at least as much effort as any £500k sales campaign, or possibly even a similar effort to raising £500k in equity! While CrowdFunding is clearly an important option to consider for companies looking to fund development, it is vital not to underestimate the effort that will go into doing it properly! It is NOT the “easy option” that some press might have you believe!
New Report on Crowdfunding in Scotland
The Glasgow Chamber of Commerce has just launched a new report on Crowdfunding: http://www.glasgowchamberofcommerce.com/projects/crowdfunding-report-launched.aspx
Previous blogs on Crowdfunding that may interest you: