Crowdfunding is an ever-evolving and increasingly popular market with more than 6 million campaigns worldwide reported last year. I stumbled into the sector helping an old client launch a new product on Kickstarter. It’s exciting to watch innovation and creativity as entrepreneurs are able to launch products straight to the consumer. Over time it has pivoted to more of a marketing stunt by big companies and while there are still startups working from a basement in t-shirts, the gap has widened between grass-root and corporate campaigns.
As more aspiring entrepreneurs look to avoid the arduous and often cut-throat world of VC support, crowdfunding offers an efficient and effective means of raising money, which is why the market is projected to grow to $300 billion by 2030.
Despite COVID dramatically changing our world and our economy, crowdfunding is doing better than ever. Indiegogo found daily funds raised were up 24% in the second half of March 2020 compared to 2019, likely due to forced career changes as a result of the pandemic.
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That being said, a big market does not mean an easy entry, to ensure a victorious campaign here are five things to consider.
It’s Not Just an “Idea”
Don’t share something you think ‘could be cool’ – it needs to be a legitimate product backed by a robust business plan. Most platforms won’t accept render images, if you can’t even deliver images…you probably aren’t going to be able to deliver the product. Invest your own time and money before expecting others to invest there. Prepare: prototypes, high-res images and campaigns with videos earn 105% more than those without.
It’s More of a Community Than a Crowd
For crowdfunding engagement, the key is to gain trust. Provide a brand story, reassuring updates and answers to questions. Campaigns that update followers on a regular basis earn 126% more than without. Building a dedicated community before launching can boost funding, think about building a microsite or email marketing list.
Know Your Limits
If you don’t have the resources to deliver 100,000 units – don’t offer it! Know exactly how many units you can provide and deliver on time. Setting up pre-orders on your website can keep those interested engaged until you can deliver larger numbers.
Prepare for success
Have a strategy that allows you to capitalise on success. Nothing has to be official but having conversations with larger suppliers in the works saves time should you suddenly want to upscale production.
Test and Try
Your community of backers is your focus group that can provide valuable real-time insight into what your audience wants. Offer some limited editions to see what sparks interest, try some different colours, materials or features, use this feedback to perfect your next model.
While crowdfunding is a successful and growing market, it can be easy to want to jump in headfirst without thinking about all that is needed. While many campaigns have potential, those that do well are the ones that establish a well-thought-out strategy.
Written by Heather Delaney, Managing Director and Founder of Gallium Ventures