By Michael Karavolos
With over $16 billion raised globally in the crowdfunding industry last year, it’s easy to understand why entrepreneurs and startups are increasingly turning to this practice as an attractive alternative to conventional mediums for financing the launch of new products and ventures. The barriers to entry are relatively low since you don’t have to be a well-connected entrepreneur in Silicon Valley to convince an angel investor to hand you a large sum of money. Instead, you’re putting your marketing skills to work by asking a larger pool of people to support your product.
It’s no secret that the crowdfunding industry is booming. It seems like every day you hear about an exciting new startup crushing their campaign goals and launching their company via Kickstarter or Indiegogo. Still, crowdfunding isn’t for everyone and not every successful product needs crowdfunding. It requires significant financial investment, time, and energy. As such, here are four things every startup must do before launching a crowdfunding campaign.
1. Prove your product’s market fit. When we create a product it’s like falling in love. No one can tell you it’s not the best thing in the world—well, no one but the market. That’s why you have to have that conversation, early, and often. I always advise startups to build a qualified list of their first 1,000 leads. If you can’t do this, or if it proves to be really hard,it’s a warning that there is rough road ahead. Learn, pivot, and improve. Give them what they want (not what you want) and they will give you what you want.
2. Determine if it possible to make (and for how much). Before launching a crowdfunding campaign, you need to know whether what you intend on building is even possible in the first place. Before seeking crowdfunding, I recommend that you do some research to determine if making your product is even possible, and if it is, how much will it cost? It’s not going to be pretty if you raise $100K but need $200K to make the product into a reality because now you have a commitment to your backers. They want their product and people can quickly become irate if they don’t get it.
3. Set a realistic time line. Many clients come to me with the idea that we can launch a crowdfunding campaign and get some quick money in two weeks. Getting people to give you money is not magic and it isn’t easy, no matter who or how. It takes time, effort, dedication, resources, and a strong plan. Expect to spend 12-16 weeks on the campaign from the launch meeting to the day the campaign ends. That’s not nights and weekends; it’s full-time weeks.
4. Assemble your A-team. A great man once said “a small group of determined and like–minded people can change the course of history.” Well, the same goes for the course of a crowdfunding campaign. These days, no campaign is conceived, created, and managed by one person. There is a lot of competition, and campaigns are getting bigger and better. You need an A-team: PPC, Design, Copy Writing, Email, Social Media, Video, PR, and Customer Service. Assemble the right team and you’re 80% of the way there.
Michael Karavolos is the VP of Digital Marketing and leads the Miami office of Trident Design, LLC., a full-service invention incubator that works with inventors, startups, and corporations to develop and market products ranging from housewares to consumer electronics to medical devices. If you have any questions or feedback, drop Michael a line on Twitter at @socialevolution or email at mkaravolos@trident-design.com