Crowdfunding expert, Clay Herbert, advises project developers on how to execute successful crowdfunding campaigns – and he believes that the work you do before launch makes a big difference to your campaign.

Target the crowdfunding pitch

Herbert urges anyone hoping to get a new crowdfunding project off the ground to look hard at their sector in order to figure out who might be most interested/supportive of their campaign – and contact them to ask for their support.

“Successful crowdfunding is about being targeted,” he said in this video report. “Instead of thinking about mass, think about who are the 1,000 people that care about my product and how do I contact them.”

In one pet-related project, this advice led the campaign founder to do a great deal of initial work to identify 13,000 people who happened to both be cat lovers and fans of good design. Doing so proved to be a good idea — the campaign raised $271,154 — $241,000 more than the initial $30,000 goal.

Old ideas, new technologies

It makes complete sense, of course.

Most crowdfunding campaigns attract most of their initial funding from family, friends and colleagues of the project founder(s). The rest of the cash comes from the crowd, and while big investors will become more interested as a campaign gathers momentum, identifying and contacting potential interested strangers can make the difference between success and failure in the attempt.

This is precisely why Herbert urges anyone who has an idea to launch a project to put some time into researching their sector first.

Not only does this make solid business sense in terms of identifying and estimating the potential value of your market, but it may even unlock fresh opportunities in your chosen sector you’ve not yet identified.

In truth it’s the same rule as has always existed for business: the more effort you put into understanding your market the more likely you are to achieve success in your attempt. This has always been the case for new business start-ups. It also remains true for crowdfunding business ideas – the only difference being that it is now far easier to reach people who may support your attempt than ever before.

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Indiegogo CEO, Slava Rubin spoke with FBN’s Jo Ling Kent at Fortune’s BrainstormTech conference in July, and had a number of interesting observations about the fast-developing crowdfunding industry.

Indiegogo goes global, mobile

“We already send money to 70-100 countries each week, but we really think [access to capital] is going to be a completely global phenomenon,” he said. “We want to make the user experience as mobile as possible, ” he added.

He’s also got a contextual opinion on how crowdfunded business start-ups can work within the more traditional VC (Venture Capital) industry: Pick up initial funding using the crowd, and then approach the VCs for second round investments.

“When you have a platform like Indiegogo, it’s totally open so anybody can raise money for absolutely any idea,” he said.

Market validation

Rubin observes that while companies raise tens of thousands to get themselves moving from crowdfunding services like his own, many then follow this up with an institutional round to raise millions.

“It’s really great to use Indiegogo to get that market validation, to show that people care about your product and want to pay at a certain price point,” he said. “You get a lot more data than just walking around from VC to VC saying, ‘Will you give me money?’”

Saving the economy, one pitch at a time

Discussing the constant growth in Indiegogo’s business, Rubin predicted that the entire crowdfunding industry will become far more mobile from next year. “We’ve had nearly 200,000 campaigns and 7,000 are active at any time,” he said — and Rubin anticipates further growth.

Crowdfunding is good for everyone. As all these new businesses get the cash they need to escape the plan and enter the real world they make a real economic difference. How? By creating jobs and economic prosperity, he said.

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London may be the UK hub, but this doesn’t mean business ideas and acumen don’t exist outside the capital. Crowdfunding service Indiegogo’s Anastasia Emmanuel has a vision to switch the UK on to its own potential.

Innovation everywhere

“Great Britain is a nation of innovation but Britons are being stifled by a lack of available finance. Through the power of Indiegogo, we want to see kitchen table businesses thrive, nurture new inventions, support amazing causes and stimulate Britons to fulfil their entrepreneurial ambitions and creative dreams,” she says.

Emmanuel took a moment to chat with CrowdfundInsider to elaborate on her plan to enable UK business inside and outside the capital. Entrepreneurs outside London have a much tougher time finding and getting their ideas financed because venture capitalists and angel investors are so often London-based and London-focused, she observed.

That’s a situation that distorts the nature of business success in this country.

‘More than London’ says Indiegogo

“We believe that lack of crowdfunding successes outside London, isn’t because of a lack of innovation or creative talent, but, a lack of awareness of crowdfunding as a viable alternative to traditional finance, be it bank loans, investment or grants,” she said. “London is it’s own bubble and we have amazing success stories every week on Indiegogo, distributing millions of pounds.”

In pursuit of the mission to make those outside London more aware of the potential of crowdfunding services, Indiegogo recently sent its roadshow to several cities across the UK. This will be the first of many such attempts as the service attempts to help stimulate business outside the capital, said Emmanuel.

Taking a slice

Investors take note — while it remains true that reward-based crowdfunding services such as Kickstarter and Indiegogo don’t yet offer a true return on any investment (beyond the chance to get to know innovators with good ideas) Indiegogo does plan to introduce an equity crowdfunding  platform in future.

Image c/o: Harshil Shah

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When you’re about to invest in a company you ask questions; you check balance sheets; you engage in due diligence, discovery and check criminal records. You meet the team. All these things are as true for investors using crowdfunding services as it ever has been, but author Dan Marom thinks these services make it even easier to make good investment decisions.

Crowdfunding wisdom

“I think crowdfunding is a crucial toolkit for an entrepreneur,” Marom, who wrote The Crowdfunding Revolution tells the Irish Times. “It’s the democratisation of entrepreneurship.”

Kickstarter isn’t the only crowdfunding site in town, he explains, there’s peer-to-peer lending, equity, donation and reward-based funding services — many of which are included within our directory of services.

While reward-based crowdfunding can be characterised as little more than buying a product in advance, equity-based crowdfunding means much more:

“It’s very popular to say it will destroy conventional venture fundraising, but my personal view is that the future lies in a synergy,” he says.

Can’t fool all the people all the time

You see, the advantage of pointing the crowd at business ideas is that it means those ideas come under far more oversight than any individual investor can possible deliver. You have a crowd of experts taking a look, rather than just the limited number that may exist inside your investment company.

“Sometimes it’s wiser to have the crowd do due diligence,” Marom notes, and while the crowd may not have complete expertise in the business it is being asked to look at, it’s a start. “It’s not easy to fool the crowd, but it could happen,” he says.

The potential positive impact of crowd-based decision making concerning new business ventures is one thing, but there’s another consideration that should please investors: In most cases the business itself has been vetted by the crowdfunding service.

Watch the line

Savvy investors already understand this, of course, which is why so many funding rounds fall around the 30 percent to 40 percent funding mark — usually around the line at which a founder’s personally aquired funds shut down. Businesses that rise above that line are potential investments for seasoned crowd investors, as achieving this means either the idea has impressed a lot of people or the people behind the idea have figured out their marketing.

There’s more in future, of course, Marom believes that it won’t be too long now until big firms begin to crowdfund ideas: “not just funding, but also crowd-sourcing new ideas and also, crowd-sourcing execution”.

Read the whole interview here.

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Greg Simon is CEO of health-focused crowdfunding service, Poliwogg. He recently sat down with Equities.com to talk about how the crowd can fund a healthy crowd — and why these investments make so much sense.

Discussing recent US rule changes (the JOBS Act) which enable a wider number of investors to take equity positions in crowdfunding projects, Simon notes that the previous regime posed problems for health-focused firms: they could get early funding but this became harder in the mid-game.

“Well, it’s been very expensive because health care companies need a lot of money and before the JOBS act they could only have a certain number of investors. So it made every investor give them a whole lot of money which kept a whole lot of people out of the game because they couldn’t afford to diversify with those levels for minimum investments,” he said.

Another problem was that in the past you weren’t able to generally announce what you needed investment for, it was necessary to talk to investors one at a time. This meant you only had a limited number of people you could convince.

“So if you’re raising money for a company that’s working on a treatment for Parkinson’s disease, you can’t tell anyone unless you know they’re wealthy enough. That means you have to go to investors one at a time, and that’s a very lousy way to raise money. We wouldn’t be able to sell many cars if we had to sell them that way,” he said.

Simon predicts health-related investments will attract a wide number of investors, and suggests these investments may mean big changes for health care:

“People have the opportunity now to put their money where their heart is in terms of their health interest. They can invest in the companies that are investing in them, that are trying to create new therapies for them but need a lot more money than the venture capital industry is willing to provide.”

He hopes these changes in investment rules as they relate to crowdfunding services will enable “a lot more” health-related startups to bring their idea to light.

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In perhaps the biggest signal yet that crowdfunding is becoming an incredibly viable investment play, Indiegogo CEO, Slava Rubin (above), recently suggested to CNBC that his service may enter the equity crowd funding markets in future:

“I think there is a massive market to be had if equity crowdfunding ever happens,” he said. “We are super bullish, but we have to wait and see what the regulations will be.”

Such plans would be a big step for Indiegogo. The service is already among the top three reward-based crowd funding sites. Any move to enter the equity investments space pits it against the likes of Angels Den or CrowdCube. Meanwhile, KickStarter has categorically said it has no interest in equity funding.

This seems set to change, of course, as financial regulators worldwide recognise the need to loosen up their rules to enable a wider church of individuals to make investments in innovative firms. After all, why should the potential benefits of such investments be limited to “high net worth” individuals?

“It’s a tricky balancing act, you need to look for investor protections and also make sure you allow for innovation,” Rubin said.

“What’s really interesting is that why everybody is talking about equity crowdfunding, Indiegogo has grown over 1,000 percent since the JOBS Act was signed, because there is massive demand for funding without equity,” he said.

Indiegogo plainly hopes to capitalise on any such market deregulation. “It’s a really exciting industry, the 80′s was all about desktop computing, the 90′s was all about online commerce, and the early 2000′s was all about social networking,” Rubin said. “And this decade will go down as the decade of funding by the time it’s over.”

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