Picking Crowdfunding Perks for Your Campaign
Indiegogo has found that campaigns using perks generate 143% more money than campaigns that don’t. They’ve also discovered that more perks are better than fewer. While the average Indiegogo campaign offers four, the average successful campaign uses seven.
In short, perks can be effective tools to drive investment in crowdfunding campaigns, and this holds true for equity-based offerings as well. So, let’s say you’re preparing to launch an equity crowdfunding campaign and want to figure out what kinds of perks to offer.
You’ve got a surprising variety of options that you can choose from, ranging from simple bonuses to unique personalized experiences. All have their benefits. Let’s discuss the various overarching categories and break down the types of perks that may increase your chances of successfully reaching your maximum funding goal.
Offer Investment Bonuses
For StartEngine campaigns, this is one of the most straightforward types of perks at your disposal. Equity investors are analyzing your offering and determining whether it fits their financial objectives. They are calculating the chances, to the best that they can, of whether investing in your business will help them realize a financial gain.
How do you attract financially-minded investors and encourage them to invest larger amounts of money into your business? Simple. Sweeten the deal and offer them more for their money.
Bonuses Based on the Size of the Investment
Do you want to incentivize investors to put in larger amounts of capital into your business? Try offering bonus shares if they contribute a certain amount of capital.
For example, let’s say you are offering common stock at $1 per share. If an investor commits $1,000 or more, then you could offer them a 5% bonus on their investment. So, an investor would receive 1,050 shares for a $1,000 investment.
You can also create tiers. Maybe it’s 5% for investments of $1,000 or more, and 10% for investments of $5,000 or more. Look at GeoOrbital’s successful $1.07M campaign for inspiration, which offered 5 tiers of bonus shares, with the first threshold at $1,000 and the largest threshold at $50,000.
This can be effective to get an investor that was originally going to invest $750 to instead invest $1,000 or encourage them to make an even larger investment in you.
Bonuses Based on the Time of the Investment
Do you want to create momentum at the start of your campaign? Try offering early-bird perks. For example, independent tech publication Hacker Noon offered a 10% bonus to those who invested in the first 24 hours of their campaign and a 5% bonus for investors who participated in the second day of their raise.
This can be an effective strategy to generate early momentum and develop social proof that can help other investors decide to participate in your offering.
Send Company Merchandise
On the other hand, while investors are financially-minded, they are also consumers and offering merchandise can be a nice addition to their investment even if that’s not the detail that pushes them over the edge to convert and invest in your business.
Merchandise is a feel-good perk for investors and can help improve their opinion of you and your brand. If your investors then use that merchandise in public, it’s another way that your brand can gain exposure.
For example, you can do as Atmos did in their campaign and offer one of your physical products as a perk (if your business produces a consumer product). Discounts on your product or for purchases on your online store (such as what apparel company Hylete did with their online store) are also effective implementations of tangible perks.
Investors are your best brand ambassadors, so getting our products into their hands is a great idea because if they like it, they are far more likely to tell their friends about it than your average customer. If your business doesn’t have a consumer-facing product, you could also try offering unique merchandise, such as a T-Shirt that says “Invested in [Your Company’s Name]”.
Create Unique Experiences for Investors
This is where perks can start to get really interesting. Experiential rewards are higher-effort and higher-risk—giving your investors a lackluster experience is worse than giving them nothing—but the right experience can mean a lot more than a material possession.
Also, experiential rewards give a chance to offer investors a perk that aligns with your company’s values and create something truly special for individuals who invest large sums of money into your vision.
Take, for example, the private tours and dinners offered by Farm.One during their campaign. Farm.One is a startup that grows rare produce and microgreens in an underground vertical farm and sells that produce to chefs in New York City. The crux of Farm.One’s pitch is the fact that chefs in major cities want to cook with fresh and esoteric ingredients but often have to import them.
What better way to demonstrate that mission than to show investors the farm and even let them try the microgreens that have been prepared by Michelin-starred chefs? It’s a once-in-a-lifetime experience and creates strong ties between those investors and your business.
What shape an experience-based perk takes very much depends on what your business does, but a creative perk that offers something truly special may convert an investor into one of your biggest financial supporters.
Conclusion
No matter what kind of business you are building, perks can be a useful tool to drive more investments on your campaign. Remember that creative perks can strengthen your relationship with your new investors and increase their lifetime value for your business, even though planning a dinner for your local investors may sound like more work at first.
Strategizing what perks you will offer is an important step for planning your campaign marketing, so use this article as a jumping-off point. Start brainstorming what you can offer to your investors to create a memorable experience for them that will encourage them to be active supporters of your business in the years to come.
Disclaimer
It is important to note, that while it’s of the opinion of many companies on our platform that these perks do not alter the sales price or cost basis of the securities in their offering, and are intended merely as a “thank you” to investors that help the company achieve its mission, it is still recommended that investors consult a tax professional to fully understand any tax implications of receiving any perks before investing.
