How to Create a Successful Online Fundraising Campaign
There are things that you need to know a year ahead of going “live,” and that you need to keep in mind even after you meet your fundraising goals.
At the heart of LumenEd sits the Bright Orange Box. The box is more than just a container. It’s a totally self-contained smart projector and video camera that can be used in remote classrooms around the globe, and that can bring all sorts of digital material into those classrooms. That smart projector is the essence of what LumenEd is all about. The project is a web platform that builds meaningful relationships between classrooms around the world. The “meaningful relationship” happens when the remote classrooms are paired with classrooms elsewhere in the world. The students in these classrooms then become “video pen pals.”
The business model is based around the schools with more resources sponsoring the schools with which they are paired. Hence the social mission.
Henry Harboe, co-founder and head of business development for LumenEd, founded the company in 2013, along with two of his college classmates, Thomas Kreek and Prakash Paudel. All three were still in school when they embarked on the business.
They obtained funding in the early stages from a variety of grants, including Oberlin’s LaunchU, a program to encourage and support entrepreneurship on campus. Henry’s advice to entrepreneurs still in school is to seek out grant funding from their institution. This funding enabled them to do research and pull together a prototype.
By October 2014, they had decided that it was time to start building their orange boxes. They needed money to do this, and they felt, perhaps mistakenly, that “angel investors” would not be interested yet. So they decided to try crowdfunding and attempt to raise $40,000 through Kickstarter, thinking it was a good fit for a hardware company.
LumenEd had to give swag to the backers rather than giving them the product or service they were going to sell, as most KickStarter campaigns do. But at that point, Kickstarter had no one on their staff who specialized in projects with a social mission. In hindsight, IndieGoGo might have been a better fit.
They initially thought that they could get their funding campaign up and done by Christmas. But they quickly realized that this was unrealistic, and pushed their goal back until March. Even then, four months was really pushing it.
Henry recommends you take at least six months – perhaps up to a year – to do it right.
It is nowhere near as easy as it looks to produce a quality video; come up with the rewards; and – most importantly – build your network of financial support before launching the fundraising campaign. You have to get the word out by personally contacting potential supporters and beating the bushes to get publicity from publications in your field. Publicity proved to be difficult because LumenEd’s technology was not far enough along to be of interest. On top of that, its social mission of global education was not as sexy a mission as they had hoped.
Success is in the Eye of the Beholder
LumenEd reached its fundraising goal, but it was very close. They ended up needing extra help from friends and family to make it happen. Not all team members interpreted this as a “success.”
Yes, they raised the funds they were seeking, but they lost four months.
During that time, they could have been building their customer base and otherwise progressing their plan. Being an economist, Henry correctly refers to this as a huge opportunity cost.
In a recent Business Insider article, Josh Udashkin, the founder of Raden, a producer of high-quality luggage, explains that he chose not to use KickStarter to fund his initial production costs because he wanted to ensure the technology would endure. He managed to get venture capital based on a prototype – without the “traction” that Henry and others mistakenly assumed you needed to attract venture capital.
The Best Advice?
When asked about the best advice he got, Henry admitted that it was advice that they did not follow. A mentor advised them to spend time growing their base of committed customers, even before they had an actual product. With a viable prototype of the Orange Box, they could have gotten the customer contracts even before they went into full production. Hindsight is 20-20, as they say.
A crowdfunding campaign will only be a big success if your product is great and the market is ready for it,” Henry added.
“Make sure you’ve spoken to enough customers to prove product-market fit before you launch a campaign. If you already have a small fan base of users who are excited about your product, you may be able to channel their enthusiasm into more publicity for your campaign. Ultimately, crowdfunding is a great way to call more attention to a product that already has a bit of buzz around it, but you shouldn’t rely on it to reach all your marketing and sales goals or use it to replace initial outreach.”
It’s also important to know when to “pivot,” as LumenEd started to do in August. They were exhausted and faced some roadblocks, including the fact that the sponsorship model was not gaining traction as hoped. Two of the three founders are going to move on for now, while maintaining an advisory role on the project. The decision to pay off debt and step back is a wise one. The team hopes that with some new energy and a new infusion of capital, LumenEd will still fulfill its original mission. Just not this year.