Crowdfunding Interview w. Hero-U’s Michael Cole.
My friend Michael Cole successfully raised over $400,000 from 6,093 backers on Kickstarter for Hero-U: Rogue to Redemption. A role playing computer game being created by his parents, celebrated game designers Corey and Lori Cole.
This campaign is notable not just because it raised so much money, but also because of the huge engagement and support that Michael was able to rally from existing fans of the genre and of Corey and Lori’s previous games in the Quest for Glory series, first released in 1989.
Interview by David Pricco, editor @ crowdexpert.com:
CE: How much progress had you guys made with Hero-U before you launched your CrowdFunding campaign? How much of a following or audience did you already have?
MC: The game hadn’t started being worked on before the Kickstarter campaign. We started with an idea, some artwork, and pretty bad video. We spent a lot of time prior to starting researching other successful projects, so we had a pretty organized strategy for getting awareness and a well edited project page.
We had an advantage that our gaming projects leads had an established reputation from working on a cult classic game series (spanned 1989 – 1998), and several of their peers had already raised $400K+ projects. While the aware fan base was relatively small, the fact we had highly motivated fans that were sharing links via social media and posting on Forums was a big help. Another valuable piece was the fact that several of the gaming journalists we spoke with were fans of the old games, and that made it much easier to get initial press pickup.
CE: How much did you prepare before the launch of the campaign?
MC: A few months.
CE: How much of your pre-existing fans and followers contributed to your campaign?
MC: Existing hardcore fans were a big deal to the success of our project due to their efforts helping promote the project. We put together a Facebook fan page about a month before starting, so that the most die-hard old-school fans were updated before we started. We asked them to share the project with their friends and family through Facebook. This strategy ended up being highly effective, as direct traffic from Facebook ended up generating 9% of our total raised funds.
CE: Did you set your goal to the full amount you wanted or needed to raise, or did you intentionally set it low so you could bask in the glory of surpassing it?
MC: We set it at the minimum possible for feasibly creating the project. We thought the number was reasonably achievable based on similar projects.
CE: What portion of your overall financing does CrowdFunding represent?
MC: It’s our primary source of financing for everything. We have some loans available if we need to go over the remaining money on the project.
CE: How many of your contributors would you guess were already fans and followers before you launched your campaign, vs. how many were direct connections of existing fans, vs. how many found out about your venture because of the CrowdFunding campaign or associated media coverage?
MC: It’s impossible to tell. I would guess that most of our pledgers were probably not fans of our earlier games, but the largest amount of contributions came from die-hard fans.
CE: What were your expenses for the campaign?
MC: We had no expenses for the campaign other than time spent working on it. Everything was done on a volunteer basis. The volunteers did receive bonuses at the end of the successful project for all of their time and hard work. We didn’t bother with paying for advertising, nor paying for a high quality video (although a great video may have made our project massively more successful).
CE: Has your crowdfunding campaign gotten you any interest from institutional investors?
MC: We’ve gotten some interest. We have received some offers, but their terms weren’t acceptable.
CE: Why did you choose Kickstarter? What do you think of their platform? What do you think about all the other platforms out there?
MC: I think Kickstarter is the best choice for reward-based crowdfunding. Projects statistically raise more money on it, than any of the other platforms. That being said, for any project that didn’t meet Kickstarter’s strict terms, I would recommend using IndieGoGo, which still provides very good results.
CE: When promoting your crowdfunding campaign, what worked surprisingly well?
MC: Directly pitching any writer that had written about similar Crowdfunded projects in the past. Also, suggesting a headline for the potential article turned out to be highly effective.
The other very effective piece was the Facebook fan page, and encouraging fans to share the project with their peers through their various social media networks.
CE: What were some unforseen challenges?
MC: Initial progress creating the game took a lot longer to get started than expected. From the original $409K raised, only about $255K was left over after all of the expenses, such as Kickstarter fees, and paying for all of the physical goods given to contributors. That is a really low budget for a computer game, and it made securing, and keeping the starting team difficult. Half of the people who helped with the Kickstarter campaign are no longer working on the project, often due to the fact that there wasn’t enough money to immediately start paying full time salaries for every position.
CE: This campaign exceeded its goals. Will you be running a second one?
MC: We plan to run Crowdfunding campaigns for all sequels to this series, assuming that our existing project has modest success.
CE: What would you do differently if you did?
MC: Focus on getting a higher quality starting video for the project.
The big difference will just be that we won’t be starting for scratch next time. Will have plenty of in-game assets to show off to potential pledgers, and making it very clear what kind of game they will be getting, and what level of quality it will be.
CE: Did you originally do everything yourself? Campaign Management? Video editing? Social media? PR? Finance? Or did you hire outside experts or consultants? How did you find them?
MC: We did everything internally. The creators handled all of the updates, creating the videos, and answering questions. I handled all of the social media and PR parts of the project. The rest of the game development team worked on created assets and content for the project.
Handling PR is definitely more do-able than people make it sound. Connections are much less important than pitching journalists that already enjoy similar products/projects, and presenting them with a very interesting story to write about. I pretty much just built all my PR pitches around the modern journalist’s motivations talked about in Ryan Holiday’s book “Trust Me, I’m Lying”.
CE: Have you been approached by many people to help them with their crowdfunding campaigns? What portion of those sound like a good idea or bad idea to you?
MC: I don’t get approached too often, as most people don’t know to find me. I’ve helped with around 6 – 8 projects now. Most of them are from in-person conversations, which reduces the amount of bad idea that get pitched to me.
CE: What do people who are daydreaming about running their own CrowdFunding campaign often not understand about CrowdFunding?
MC: The thing that people get wrong is that they don’t try pitching it first to actual people, before trying a Crowdfunding campaign. If you can’t get other people passionate about your product or idea, then you aren’t going to be able to get funding. It’s important for most projects to capture some of the imagination of their pledgers, in order to be able to fund successfully. It doesn’t mean you need to be a good salesperson, just you need to make sure that you’re talking about your product in a way where other people get excited about it.
CE: What does the media often get wrong about CrowdFunding?
MC: The immediate sensationalist overreactions: Either it’s going to change everything, or that Crowdfunding is already doomed based on a few failed projects. I think reward-based Crowdfunding will primarily only be a new funding alternative for certain types of projects/products that are exciting to the crowds.
The other part they get wrong is that they always complain about major brands using Crowdfunding, and that they will kill opportunities for Indie projects. They underestimate significantly the amount of personal stress that goes into a Crowdfunding project due to the vulnerable state of asking for money. They also underestimate how often pledgers turn against overly entitled and money demanding projects, resulting in the project completely failing. It’s usually really easy to spot a scam or terrible project within a few seconds glance on the page.
CE: What or who were some good resources for crowdfunding info that you referred to while planning and setting up your campaign?
MC: You should use Kicktraq before starting any Crowdfunding campaign even if you aren’t using Kickstarter – http://www.kicktraq.com/. The ability to look up similar projects and see a day-by-day breakdown of their funding is enormously helpful. I’ve learned a lot of lessons from seeing what caused projects to suddenly receive massively more funding.
CE: What were some 3rd party tools you used to automate, track, or otherwise help run your campaign?
MC: I didn’t bother. I just kept track of overall funding day-by-day through Kicktraq.
CE: What do you think about the potential for Investment Crowdfunding once the SEC’s JOBS act rules are implemented?
MC: I personally think the most exciting part of the potential for equity Crowdfunding will come when the Accredited Investor requirements are significantly decreased. The ability for local communities to come together and fund local businesses for a % of ownership, could massively alter how small businesses operate. The need for funding alternatives to banking loans for small businesses is real, and I’m hoping these Crowdfunding changes will be an important funding alternative.
Note: Michael and I were both students together at the UCSB Technology Management Program and are currently co-workers together at our day-job.