Most Popular Reads
- Ecommerce Trends: 135 Stats Revealing How Modern Customers Shop in 2017
- How to Master Product Photography on a Tight Budget (We Did it With Less Than $50)
- The Complete Guide to Advertising on Facebook: Strategies That Convert
- 15 Google Shopping Campaign Tips to Make More Money While Spending Less
- PCI Compliance: What It Stands For, How to Achieve It and Avoiding an Audit (Checklist included)
When my husband, John, and I decided to crowdfund our invention, RingSafe, on Kickstarter last February, we knew it would be a lot of work. And even though it ended up being harder than we thought, we would still do it again. We’d probably just do a bit more prep. In my last post, we talked about the benefits and drawbacks of crowdfunding. Today, we help you explore whether or not crowdfunding is right for you and your business. After working through these 5 questions, check out my presentation, “How to Prepare for Crowdfunding,” from UP Summit 2014, or download my recommended resources and crowdfunding decision tree.
1. Is your idea targeted and specific?
Well-scoped, targeted ideas tend to do better in crowdfunding. This is because it’s much easier to connect with a tightly defined audience and ignite their passion so they can help fuel the buzz about your idea. If you are trying to do something very broad or sell B2B, crowdfunding may not be the best option for you. The types of business and creative ideas that do really well include: Gadgets, Electronics, Accessories for popular mainstream products, Jewelry, Art, Books, Games and Creative projects that can be shared (movies, music).
2. Do you need to keep your idea secret or under wraps?
Many entrepreneurs get paranoid about their amazing, awesome, unique, one-of-a-kind idea and feel that there will be immediate copycats once they expose it to the world. Mostly, they’re paranoid. But, if it’s that great then you should protect it by filing a provisional patent (if it’s patentable), or consider another funding avenue. If you’re already protected or aren’t that concerned, then continue down the crowdfunding path.
3. Can you define a specific and attainable funding goal?
No matter which platform you choose, you’ll need to prepare a funding rationale for your backers. You need to be very specific. Try not to go too pie in the sky. Very few campaigns that sought to raise over $100,000 have gotten funded. The most common successes are in the $1,000-$15,000 range. Also, be sure your budget includes money to actually build and fulfill your rewards (whether it’s a product or an experience or art). If your plans aren’t yet detailed enough to build a rational budget, then pause and figure out what it would take to actually get going.
4. Will you benefit from market validation?
If you answer no to this question, it doesn’t mean that you shouldn’t do a campaign, but it does mean you should think hard about it. Since validation and exposure are huge benefits of crowdfunding that complement the cold hard cash, you would only be getting half of the ROI of doing a campaign. You might want to look at other funding sources to get more bang for your effort.
5. Do you already have a fan base for your idea?
When I say fan base, this is 500-1000 people in your network plus strangers who have already expressed interest via a tweet, a like or signing up for an email waitlist. If you answered yes, you are probably in great shape to start actively planning a crowdfunding campaign. If no, then put that on pause and work on building your network. This is the one biggest lesson we learned in building our campaign and in reviewing the successes of much larger campaigns. Before we launched, we had an ‘ok’ following of about 200 people who had actively expressed some support for RingSafe. I’m confident that some of the stress and concern that we experienced during the proverbial trough of our campaign would have been averted—and we probably would have raised 2-3 times our goal —if we had given ourselves a little more time to build that audience in advance. So do not pass go, don’t skimp on this step. Pause your decision and go win some fans before you decide to move ahead with a campaign.
If after considering my prior post, you think the pros outweigh the cons—and your idea seems like a fit—and you’re willing to put in the time and effort, then jump on the train and get help from the community to validate and fund the first step in what will be a long but very fun journey from idea to full-fledged business. My next post on alternative funding will offer practical tips on how to prepare for your campaign based on the many books, blogs and resources we consumed and the lessons we learned in doing our own campaign. Until then, feel free to check out my presentation, “How to Prepare for Crowdfunding,” from UP Summit 2014, or download my recommended resources and crowdfunding decision tree.
Less Development. More Marketing.
Let us future-proof your backend. You focus on building your brand.