Be Succesfull in Kickstarter

In this article we look at Kick Starter’s most successful projects and analyze some (not all) of the guidelines proposed by Kickstarter.  Hopefully, Entrepreneurs can apply the lessons learnt from Kickstarter and apply these within the Crowdfunding environment or beyond it.

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To begin with, we should discuss the success rate of Kick Starter projects, and for that, we’ll just quote an article from Mashable that states that “About 41% of the Kickstarter projects fail”.  Therefore, we’ve got a 59% of success rate, which is pretty amazing when compared to the success rate that Entrepreneurs have when investing time and applying to an Accelerator, for example, which usually has an acceptance rate of 0.5% to 1% approximately – you can read about this here – Furthermore, it’s amazing to see the amount of capital some of these projects have raised through Kickstarter, if we compare these amounts to those obtained through some Early Stage / Seed Capital investments, the difference is huge.  Therefore, hopefully, we can detect and extend some of the methods being used in Kickstarter, so that Entrepreneurs can increase their success rate when looking to raise capital for their projects.

So, what do the successful 59% projects have in common?  And what should you try to do to get similar results?  In order to try to answer these questions, we’ll start by looking at information provided by Kickstarter: the Kickstarter Guidelines, Kick Starter School, and Style Guide.

Kick Starter Guidelines

We believe that some of the key reasons why Kickstarter works for Entrepreneurs are summarized within these guidelines, mainly because they mention them as good practices, and this is probably because they have analyzed and inferred these based on analytics on their successful projects:

Funding for projects only

For Kickstarter, a project follows the following checklist:

  • It has a clear goal, like making an album, a book, or a work of art.
  • A project will eventually be completed, and something will be produced by it.
  • A project is not open-ended. Starting a business, for example, does not qualify as a project.”

This is important for those people “investing” or “backing” these projects, because they can expect to see and have a tangible “Return On Investment” in the Short-Term.  Why is this important? Well, because people tend to pay a lot of money for stuff that they can impulsively have today.  When there is a particular risk involved and uncertainty kicks in, people tend to be reluctant to spending their money on something.

Therefore, the three bullet points previously discussed just make sure that there’s a clear start date and end date and that there will be a clear product for the people that are putting money into this.

We could extend these three ideas and apply them for those wanting to start any company as a matter of fact, we could make an analogy for them as follows:

  • Be very clear about what you are offering, leave no room for doubt.
  • Provide visibility for investors, they want to know when you’ll start working on what you are promising, and they want to know that there will be a clear result that will either way work for them (they might get their money back because there weren’t enough “backers”, or they might actually get their desired and promised result eventually).
  • Stick to what you’ve promised.  You said you would deliver something, then that’s exactly what you should do.

Projects must fit Kickstarter’s categories

Kickstarter has two major types of project categories, those that belong to Design and Technology (D&T) and those that don’t.

Non-Design and Non-Technology projects include the following categories: Art, Comics, Dance, Design, Fashion, Film, Food, Games, Music, Photography, Publishing, Technology, and Theater.

Those that do belong to D&T must follow additional guidelines.  So, why is this so?  Well, perhaps because Kickstarter seems to know something about how to seduce Design & Tech Potential Backers, and this is interesting because it provides some insights on these type of “investors”:

  • They are the type of people that probably won’t invest, unless they are well informed.
  • They want to know about the creator’s background and experience, probably because they want to make sure that what is being offered can actually be produced with their skills.
  • They want a manufacturing plan in the case of hardware projects, probably because they want to see that there’s real know-how and hands on experience behind what’s being done and want to see that the people doing this are seriously designing what they are promising.
  • Of course, they also want to see a prototype.  Probably and most certainly because they want proof that this is actually possible.

We could summarize and keep these points in mind as follows: If you want to sell D&T projects to someone, get the information together, show how you are going to do it, show who’s going to do it and show that it’s actually possible.  Then, and only then, it might be possible for you to get them to believe in your project, at least with higher chances than if you didn’t prepare this way.

Last but not least, they add additional tips so that projects being posted remain creative and interesting to the users:

  • Don’t post open ended projects (those that would require maintenance).  They might do this in order to provide a WYSIWYG (what you see is what you get) for those paying for the project and also, probably, in order to minimize potential claims from people getting something that eventually falls apart.
  • D.I.Y.  They welcome experiments and crazy ideas.
  • Aesthetics.  They ask for projects to be visually appealing to potential backers.
Looking at these three, we can suggest the following: Keep it Simple Stupid (KISS), you don’t want to have additional headaches with what you are creating after it’s done.  Be creative and use cool designs to draw the attention of potential backers.
The Kick Starter School:

This section is divided into 8 sub-categories and we’ll just cover them briefly:

  • Defining your project
Here they insist on creating a project that has a clear Start Date and Finish Date.
  • Creating Rewards
This is the Kickstarter Candy machine.  We believe that this is one of the major reasons that people actually care for these projects (besides the actual projects).  The rewards are what people will actually get for backing a project up, a good reward gives a perceivable value to the investment and provides the backer with a tangible return on their investment.  The reward should be something that people want.  Therefore, they must understand what this reward is and they must understand and perceive the value in it.
The value however must match the expected price and massive purchases seem to drive the success rates in Kickstarter, this is why, they strongly suggest that projects provide rewards at low price points (less than $20 usd) in order to get high success rates (around 54%).
You can add premium distinctions to the higher rewards (premium colors, packs, etc.), but you should keep in mind that the mass amount of revenue stream seems to come from a lot of people paying for low amounts of money, rather than from few people paying huge amounts.
  • Setting Your Goal
This is a key factor.
You can set a minimum of 1 day, or a maximum of 60 days to get the money you need.  30 days seems to be, on average, a magic number: a nice balance that seems to drive backers to back your project into successful turf.
Additionally, there is no limit to the amount of money you can get if people really like your project.  However, if you don’t get to the minimum threshold you ask for, you wont get a cent.
  • Making Your Video
Show yourself & Show what you want to do!
Key metrics you get here: “Projects with videos succeed at a much higher rate than those without (50% vs. 30%).”  Big difference!
  • Building Your Project
An interesting insight stated here is that you should’t seem needy: Rather than asking for “help”, “funding” or “support”, Kickstarter suggests that you focus on showing the value on what you are doing and why people would “love” it.  This is a strong psychological point being made here and backed with facts of successful projects.  Remember to show value, instead of asking for help, people will respond better to your proposal if you use this approach.
  • Promoting Your Project
This section shows tips about how to be viral about your projects.  Being viral means that you will make sure that you get visibility from potential customers.  In order to do this, you should try to reach your near network, your network will probably have an x% of people that might be willing to pay something (invest on you).  Moreover, you are interested in reaching your networks’ network, and so on as well.  In this way, you will potentially reach more and more people that could be interested in your project and in turn, willing to invest on you.
Kickstarter gives you some pointers by discussing word of mouth, direct contact, contacting the press and other viral methods so that you can increase the probability of getting people to turn from NPU’s (Non Paying Users) into PU’s (Paying Users).
Basically, what you should do, is make sure that you let people know what you are doing, showing the value in it always making sure that your network’s network and your network’s network’s network, etc. get to know you.  And do all this without becoming an annoying Spammer in the process.
  • Project Updates
This section is like sending status update to your investors.  You want to keep them informed of the progress, not only because you want to keep them interested, but because while you are still looking for more backers, you need them to viralize for you.  By posting updates you keep these people interested and hooked to what you are doing, you are showing value, you are showing that it’s actually happening.  While they see this, they will be interested in sharing this information with others, and that in turn will help you to get more people to back your project.
You can think of this channel as a CRM where you get feedback from your end-customers.  You can iterate and get ideas to further improve what you are doing too.
Comments are really a big deal here, because you will get really positive feedback from people that actually care about what you are doing, and you will be able to make quick adjustments to your project based on this.  Furthermore, some comments include some nice future ideas that could work on a future extension or feature for your project.  Listening to what people have to say is a big deal, pay attention to what they have to say.
Once you are done and the product you promised is done, you want people to know that the final rewards are coming to them.  The real ROI.
  • Reward Fulfillment
This is one of the best parts of Kickstarter.  Not only did you fund your project, you also have end-customers that have already bought your product and are expecting it.  This is when you actually get to send the final product to them… You already have the magic “Traction” word investors like to hear.
This is one of the most exiting moments of the project.  You actually get to deliver what you created.  It’s finally real.  It’s finally true.  You succeeded!
You also get all the information from your backers, be sure to keep this information safe, as you can always contact these people for new products in your Roadmap.

Kick Starter Style Guide

Here you get some information about how to use the Kickstarter logo designs in ways that they think it’s appropriate.  It’s important to follow this, because Kickstarter is a way of showing others that your project is doing well, somewhere at least.

Some Analytics

Let’s look at some KPI’s that are interesting about successful projects.

In order to do this, we’ll focus on 1 project that has been successful: Scanbox.  The data found here is taken from the data shown on June 17th, 2012, bare in mind that if updated, the values could change however.

First and foremost, this is the data that we can get from the Kickstarter project:

  • Backers: # of people that have paid a particular amount of money for one of the Reward options.
  • Goal: The amount of money the project owners are asking for
  • Pledged: The amount of money that the project has currently gathered (this amount can exceed the Goal amount).
  • End Date: the date when the “Pledging” ends.
  • Days to go: The number of days that the project still has available for people to pledge on it.
  • Minimum Pledge: The minimum amount of money a backer can introduce into the project.

From the Rewards columns, we can get the following information:

  • Range: Money required to pledge for a particular reward.
  • Backers: The amount of backers in favor of a particular reward.
  • Limited Reward: A reward may have a limit to the number of backing  it gets.
  • Amount: The total amount per Reward.
Note: For some reason, the amount of backers in this list (4089) does not match the amount of backers shown in the main project summary (4130), and neither does the amount of money pledged ($116137 vs. $128654).  We don’t really know the reason for this, perhaps we are missing something here.  If anyone knows what’s going on, please comment on this so that we can correct the deviation.

If we calculate the percentage distribution per range relative to the total amount of money, we can graph this distribution:

It’s clear that 88% of the money comes from the first three ranges, and 63% from the second one.  Keep this in mind: Lot’s of people spending little is more than few people spending a lot (at least in Kickstarter).

One last important fact is that this project not only reached, but exceeded it’s Goal ($12500 vs. $128654) by 929%.  This is really impressive, mainly because it got to sell much more than it had actually predicted it would.  This is a great KPI if you are looking to understand which projects are the best at exceeding expectations.  It’s important to look at these projects, because they obviously are above standard, there’s definitely something about what and how they are doing it that is really attractive and efficient at drawing customer attention.  In this project in particular, it could be that their product is excellent, or it may well be that their video was really cool and made people interested in seeing if this was actually possible at all.  Comments from backers are a good way of getting a sense of what made them tick.

It’s clear that in order to draw more general conclusions about what’s going on, it would be nice to have this information over time to see the variations.  More over, it would also be nice to have this analyses done to all the Kickstarter projects so that we can detect trends and also get a more reliable and representative sample to infer more things about successful projects.  But don’t worry… we are already doing this, and you’ll get this information soon enough🙂

Hope this information has served useful.  This is the first of many articles around Kickstarter.  If you want more information, please subscribe, and we’ll keep you posted.

Below you’ll find some surveys, feel free to answer some of these questions!

Cheers,

Alec Dickinson

@alecdickinson

Co-Founder & CEO – Tieasy

Check out our previous article on an Accelerator: BBVA Open Talent 2012 & Red Innova

References:

Kick Starter School

Kick Starter Guidelines

Kick Starter Style Guide

BBVA Open Talent 2012 & Red Innova

Image

In this article we look at BBVA Open Talent & Red Innova 2012.   We look at results and their selection pattern in order to help entrepreneurs understand what might they be looking for and how to be prepared for next applications to investors, accelerators and incubators.  We provide an overview of what the application process is like and the projects that were finally selected.

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BBVA provides information about their selection process here.  They have a 4 step process:

  1. Start Day: 29 April: You can start submitting your project through the online application.
  2. Two Week Online Voting: 30 April – 15 May: People vote your project here.
  3. Three Week Project Valuation: 16 May – 7 June: Project Valuation.
  4. Final Event: 14 June – 15 June: Finalists and Winners.

Stage 2: Two Week Online Voting:

Once you’ve submitted the online application, BBVA suggests that you ask people to vote for your project online.  Your result will then help you with 10% of the final decision.

Did any of the projects in the top 20 votes get into the final 20?

The answer is no.

So, does it make sense to go through the voting process? Well, if the top 20 finalists had been part of the top 20 voting list, then yes, because 10% is still a good number when you have a tough competition among the other Top 20 finalists.  However, it seems that in this edition in particular, those who are among the Top 20, had something else that mattered more than being in the Top Voting chart, and it’s important to understand what they have in common.

Another additional fact you might be interested in noting is that getting votes is a stressful endeavor, and you might create a negative buzz if you push to hard on your contacts to get a vote.  So, a future recommendation here is not to focus on these votes and focus on getting a better product/service up and running.

So, why does Open Talent ask you to do this?  Some reasons might be the following: They want to generate Buzz, they want to get e-mails on Facebook and Twitter, they want to expand their community, they want to promote their project.

Stage 3: Three Week Project Valuation:

Here we want to understand what the 20 finalists have in common and what’s the major difference with the rest.  We don’t have access to these projects’ application information, so we cannot infer what we don’t see.  We will focus on what we can, so we’ll look into the projects’ landing pages and descriptions and will try to infer some reasons for their success.

Landing Pages

Does it have to do with the type of landing page used? Among these finalists only two of them don’t have a landing page with an explanatory video or additional rich information.

  1. Ventura Match Makers
  2. Bull4All

Both of these used a LaunchRock landing page, no video, no further additional descriptions, FAQs or working system behind it.

One differential fact about these two is that they are financial oriented.  As you know BBVA is interested in these types of projects, so this might have something to do with why they are in this list.

The other 18 projects have very nice and rich landing pages:

  1. MoveinBlue
  2. Wideoo
  3. TeDa! / GalaxyMovil
  4. Kalakai 
  5. Clic Educa
  6. Buguroo 
  7. AgentBot
  8. Oxobox 
  9. StartBull 
  10. MProjects 
  11. Bolsa.com
  12. RinPay 
  13. Ahorro.net
  14. MyKey 
  15. Energywe 
  16. Gamisfaction
  17. Socialare 
  18. Meddoc

We analyze below some of the common content in these pages.  In order to do so, we’ve broken up the analyses into 13 categories/questions.  Each will be answered with a Yes, No or Not Available (NA – if we don’t find the information on the Page):

  1. Is it already functional? Is the project already working?
  2. Explains what it does through images? Do the owners of the project explain the project using images/visualizations in the web-page?
  3. Explains what it does with a video? Do the owners of the project explain the project using videos in the web-page?
  4. Does it have a nice page? Do the owners use interesting designs in the web-page or is it a static/uninteresting page?
  5. Does it have a logo? Do the owners have a logo?
  6. Feedback section.  Do the owners have a contact form/blog/twitter page/facebook page for users to send information to them or contact them?
  7. Does it use Rock Launch? Do the owners have a Launch Rock page, or have they custom designed their page?
  8. Does it allow for registration/pre-registration? Can users register or pre-register for private beta?
  9. Does it show the team? Is there a link or information regarding the team in the web page?
  10. Is it a multinational? Is the project already a multinational project? Is there any information about this on the page?
  11. Does it already have clients? Do they already have a critical mass of clients? This might be either a small subset of big customers or a big number of users (for example on a social platform).
  12. Is BBVA already a client? Is BBVA already a client of them?
  13. Is the main business: Money/finance/savings/monetization? Is the project oriented to a financial service/product, monetization, payment platform, etc. Or is it on something other than that, such as education or social services?
The results based on the criteria above show the following:
  1. 70% of the projects are functional.
  2. 75% of the projects use images to explain what they do.
  3. 40% of the projects use videos to explain what they do.
  4. 90% of the projects use either images or videos to explain what they do.
  5. 90% of the projects have a nice page, the other 10% use launch rock.
  6. 95% of the projects have a logo with image and rich design.  The only project without a design, does have a specific font for it though which could be considered a logo.
  7. 75% of the projects have a feedback section.
  8. 15% of the projects use Launch Rock as a system to contact users.
  9. 80% have links that allows users to provide feedback, either through a form in their page, or through social networks.
  10. 55% of the projects have an About us section.
  11. 10% of the projects show multinational presence.
  12. 20% of the projects show that they already have clients.
  13. 10% of the projects show that they have BBVA as a client.
  14. 50% of the projects are financial/monetization/payments oriented.

2012 Acceptance rate:

Total projects that applied to BBVA OT 2012: 506

Total Funnel to Top 20 Finalists: 4% Acceptance Rate

Total Funnel to 2 Finalists: 0.4% Acceptance Rate

This means that out of 506 projects, 486 are left out in the first selection round and 504 are left out in the second selection round.

Here’s a brief Poll to get some more info around this subject:

 

 

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