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Inside the challenges of B2B crowdfunding campaigns

Last updated on January 21st, 2015 at 01:02 pm

We have all heard of the wild success stories that B2C companies have had with crowdfunding campaigns (Pebble, anyone?) but what about B2B companies? The Net isn’t overflowing with stories about B2B start ups finding tremendous success through crowdfunding, so is it even possible?

The unfortunate truth is that B2B companies face a number of hurdles to overcome in the crowdfunding space. Brian Clark, the founder of Vue Analytics, discovered them first-hand with his campaign on, an app that analyzes mobile app data. His crowdfunding campaign ended with only $2,735 of its $5,000 goal. The shortfall means that his start-up didn’t receive anything in the end, though.

“A lot of our customers want to try to product before they put any money down,” says Clark. “A lot of B2B software can be incomplete at first and not actually do what they say it does, so companies are hesitant to put any money down.”

Providing clients with a free product demo before they buy anything can help get around this problem. Videos and interactive content are also recommended, according to sources interviewed for this article.

Another problem inherent to the B2B world is the fact that the market segment is much smaller. B2C companies market themselves to consumers, so they have millions of potential users, but B2B companies market themselves to other businesses so there are far less potential clients to encourage crowdfunding engagement. The small client base is perhaps the biggest challenge with waging a successful B2B crowdfunding campaign.

Jim Rudnick, the CEO of KKT Interactive Inc, an SEO marketing firm based in Hamilton, says, “If there were number for it, I would guess that 10 or 20 per cent of B2B crowdfunding campaigns work. It’s because as a business I’m not appealing to the 750,000 people that live in the Hamilton metro area to give me enough money to build a restaurant. What I’m doing is investing all that time, all that money, all that effort, all that content into maybe 30 businesses that might be interested. The numbers are so much smaller, so the appeal has to be so much bigger.”

In order to attract such a specialized market segment, the product or service has to be very special. The product has to address a pressing need, or solve a problem that many businesses face in a clever or efficient way. At its core, however, there isn’t much difference between B2C and B2B campaigns. It’s just that with B2C products it’s often a lot easier to make it seem cool or interesting, and you don’t have to target them so specifically.

“The secret of crowdfunding is to be a damn good marketer, and that has to be at the basis for anything,” says Rudnick. “If you can sell something to the consumer you use totally different tactics than when you sell it to a business, but, in fact, they are all rooted in standard marketing.”

Different tactics refer to the way in which you target the market. It’s easy to use social media to spread the word, but as a B2B company you have to be much more targeted.  In the case of Vue Analytics, their software is useful for mobile app developers so they looked up mobile app developers and went to them directly, informing them about their program and their crowdfunding campaign. Vue put in a solid lengthy effort, but it wasn’t enough.

Clark isn’t deterred, though. He has taken this as a learning experience. “I’ve ran a campaign before, but not for a B2B thing,” says Clark. “We kind of rushed into it. Next time I think it will be better to wait until we have a better plan in place.”

Clark plans on attempting another crowdfunding campaign in 2015, but only after doing a couple client case studies so he has a better picture of what the plan should be. He advises that any B2B companies looking into crowdfunding should take the time to do their market research and develop a comprehensive strategy. It definitely isn’t easy for a B2B company to crowdfund, but it also isn’t impossible.

Photo of Brian Clark courtesy Brian Clark 


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