Do you have a killer idea for a new product? Maybe you do, but in business it’s not just about ideas – it’s also about execution and bringing great ideas to life. Anyone can come up with something cool, but it takes a true entrepreneur to pull together all of the necessary resources to make a vision into reality.
Unfortunately, getting access to those resources is much easier said than done. Consider everything that goes into taking a new product idea from a dream to a reality – funding from investors, making prototypes, plans for marketing and branding your business. But even just the funding has been a nightmare for so many would-be entrepreneurs. For many, the funding process is this: You come up with an idea, then pitch it to investors or venture capitalists and hope they throw you a bone. Considering how many people approach them every week with “the next big thing,” investors everywhere can probably be forgiven for having little time or patience to listen to your pitch.
Fortunately, there are ways in which you can get funding for your projects and ideas without having to go through the traditional gatekeepers. Crowdfunding has gained considerable traction for this purpose, and it has opened a whole new world for startups and small businesses to raise money and attention for their products.
What is crowdfunding and why should you consider it?
As the name implies, crowdfunding is the process of raising funds from a large pool of people. Rather than go for just a few investors, product developers can raise large amounts of money from a wide array of backers who, individually, may only donate a few dollars apiece.
But the money isn’t even the best part. An idea, once it’s presented on a crowdfunding platform like Kickstarter or Indiegogo, is presented to potential donors who in all likelihood will be the first buyers once the product comes to fruition. Generally, more donors means more buyers. If they’re willing to donate to your product, they’re clearly interested in what you’re doing.
Crowdfunding, in addition to raising seed money, provides valuable feedback regarding the validity of an idea before any money is actually ever spent. This is a huge break from business as usual, where a startup dumps a large amount of time and money on something that ends up having no real market.
Now that you know what crowdfunding is and why it can be such a powerful way to develop a product, here are some tips to help you have a successful campaign.
Tell your story masterfully
It’s almost become a banality to say that storytelling is a major component of success in marketing, but it bears repeating here in the realm of crowdfunding. Having a story that connects with your audience is key to get people interested and emotionally invested in your product’s success.
Fast Company wrote of the wildly successful Kickstarter campaign run by the startup Eone Timepieces. Eone took to Kickstarter to crowdfund for its product known as The Bradley – a watch you can touch to tell the time. This product failed to get venture funding largely because investors didn’t see the need for the product. Why can’t you just look at a watch to tell the time?
On Kickstarter, Eone showed its audience why its product matters. Note: The key word here is “showed.” They told the story of an army veteran who lost his sight while serving. The man, despite his setbacks, went on to win two gold metals at the Paralympics. They didn’t just say that their product was great, they showed who needs a watch that can tell you the time by touch, and they allowed the audience to make an emotional connection with a real-life story.
Eone went on to raise $600,000 for its watch, more than 10 times its original goal.
Show your backers your budget
Your potential donors may be very interested in your idea, but they’re not just going to hand their money over without knowing how the funds are going to be spent. That’s why Entrepreneur recommended putting a detailed budget on your campaign page, showing your donors how much you need and how that money will be spent. This will show your backers that you know your stuff – you’ve done the research and you know exactly how to steer the ship on your project.
Be careful though: Two key things that often get forgotten are the rewards you will offer your donors and the fee you must pay your platform for a successful campaign. For example, Kickstarter takes 5 percent of the money raised should you meet your funding goals. Make sure you account for this, or you could end up with a shortfall somewhere else.
Leverage your network to reach the crowdfunding tipping point
Most of your initial support will come from people you know. Reach out to people in your personal and professional networks and ask them to donate what they can and spread the word to their own networks. This is important because, as the Kickstarter site noted, you want to hit 20 percent of your total funding goal as soon as possible. According to the crowdfunding platform, 80 percent of projects that reach this critical benchmark go on to reach their funding goals.
Entrepreneur recommends sending personalized messages to your friends, family and professional contacts explaining your idea and why it’s so important to you. This is going to take some legwork, but it will pay off in the end. You want your early donors to feel like they’re part of something important, and you can’t achieve that if you just send out a mass email begging for money.
Get the press involved
Beyond your initial donors pitching in money and spreading the word of your campaign on their social networks, you’ll want to get some coverage in relevant publications. Simply put, more traffic to your campaign page means more chances for donations. If you’ve hit the 20 percent mark, it shows your crowdfunding effort already has some buzz around it. This is perfect for a journalist who wants to cover something up and coming.
Do some research on reporters and bloggers who cover the space your product exists within and find out how you can pitch your idea to them. One great way to do this is by tying your project in with something that’s trending in your industry already. Another way to get their attention is by showing how your campaign is related to another successful product’s launch. By showing how your product is interesting and timely, you will greatly increase the chances of getting valuable press coverage and more traffic for your product’s launch page.
With these tips in mind, you should have a solid foundation on which you can launch a crowdfunding campaign. If you’ve had some success with crowdfunding, do you have any other tips? If you haven’t yet tried to crowdfund for a project, how do you plan to approach your campaign?
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