Is trying to crowdfund your business worth your while?

Maya Nehru Founder & CEO of CompassModa, Inc.

November 10th, 2014

Has anyone used crowdfunding platforms, such as Indiegogo, to acquire funds? If so, was it worth your while?

Boris Kogan Startups and innovation

November 11th, 2014

Crowdfunding has certain niches where it can work well (hardware/apps.) In those niches, to get above the noise floor, you have to invest in professional production and a PR campaign, and preferably have an angel investor willing to put a decent chunk of money through the campaign to gain exposure. If you don't get above the noise floor/into the top 20 projects in your category, it's a waste of time-every time people have to click "see more projects" to get to yours, it loses 70% of your audience. So, worth it for additional exposure if you already have some investment and a budget. Another caveat: Brady Forrest of Highway 1 hardware accelerator warns against too low a raise in this interview: blog.swarmbuild.com/hardware-renaissance-brady-forrest-hwy-1/ A final caveat: as Eric Klein of Lemnos Labs says, you can sell a few thousand units of ANYTHING on Kickstarter. This doesn't necessarily translate to market traction, or any benefit post-campaign. Sincerely, Baruch

Chris Carruth VP/Director. Strategy | Business Development | Operations | Product | Solutions

November 10th, 2014

There is a ton of information on crowdfunding all over the web, including online courses, some free, at Udemy.com. There are all kinds of metrics that are quoted at this point given the millions that have been raised.

After researching( and still researching now) the interesting thing I found is that the success depends on a) prep and b) the experience. Too much to go over but I would suggest you go to Udemy and take some courses. Secondly there is a website run by a kickstarter "expert" who does post campaign interviews to find out what went right and what went wrong. (http://artofthekickstart.com/)

There are also crowdfunding "meetups" in many cities now that dig into metrics, landing pages, and a host of other issues tied to success.

Crowdfunding, as with outside investors, fails more often than not. It may take 3 months of prep to finally actually launch, so you are looking at 4 months minimum, assuming a 30 day campaign.

I will say this - it is a heck of an experience and you will learn, even just during your research, of many tools and techniques that are very cool and very useful regarding the mechanics of planning, pre-launch, launch and post-launch of your campaign. It is a lot of work and most who have a day job end up working 14 hour days until the launch is over. No short cut here unless you hire outside help to take some of the social media pre-launch/launch tasks off your plate.

Chris

Evan Cohen Senior Manager - Hardware, Design and Technology at Indiegogo

November 14th, 2014

Hi Marcy,

I work at Indiegogo and I'd be happy to answer any questions about crowdfunding here in the US. In the past year I've worked with well over 150 campaigners and would be happy to pass along the best practices.

Please feel to reach out - my email is evan@indiegogo.com

Evan

Arik Marmorstein

November 10th, 2014

Hey Maya,

I founded the "Israeli Kickstarter", a crowdfunding software for fashion company. It really depends on your venture. If it's an app, it is harder because you don't really have something to give in return. If it is a B2C consumer product kind of company it is easier.

Best,

Arik

Anonymous

November 10th, 2014

Hi there,

You can find Crowdsourcing related discussions here: members.founderdating.com/discuss/topic/Crowdfunding

also I found these 2 discussions that are more relevant to your question

1-members.founderdating.com/discuss/1523/What-are-the-best-equity-crowdfunding-platforms

2-members.founderdating.com/discuss/1443/Crowdfunding-Kickstarter-v-Indiegogo-or-another-platform

Chris Carruth VP/Director. Strategy | Business Development | Operations | Product | Solutions

November 11th, 2014

The reality is that crowdfunding has been used to fund virtually everything you can think of, from movies to video games to food to hardware to apps to...name it, it's been used. The need for an angel circumvents the whole premise of crowdfunding - raising money without outside investment.

That being said, backers like to invest in campaigns that have traction. The challenge is getting traction quickly to motivate others to jump on board. As I mentioned in my post, the majority of work is not the campaign itself - it is prep. Prep being building a pre-launch presence, testing the reward tiers with interested backers before it goes public, building relationships with influencers, journalists, etc. For most this means some type of budget to cover online tools, some social media consulting (could be through a virtual assistant), etc. Campaigns have been done on shoestring budgets..and successfully.

Crowdfunding is as much about psychology as the product - why would anyone contribute money to make potato salad?

And yes, I agree, raising funds does not mean the product will be a huge success. It does provide indicators of interest which any solid entrepreneur will test to be true or not once the product is available.

Robert Bouthillier Owner, Design Net

November 13th, 2014

The feedback above is spot-on. My perspective is from that of a product development firm who has seen three of our clients go the crowdfunding route. One that was very successful was an iPhone eWallet accessory and they created a ton of buzz before the campaign launched, the next was an iPhone thermometer and it was successful, but had not generated the upfront interest before launch, and the last was unsuccessful since it represents a completely new product category in fitness training for the lung muscles. This last one was lacking the substantial upfront PR and educational effort with celebrity endorsements that were required prior to launch.

So the preparation is clearly worth its weight in gold, but also realize that you must carve out a 30 - 60 day chunk of your life that you will be dedicating to the support of the campaign. It requires constant feedback for questions and even if you get good traction in the first week, there is a "lul" at the 50
% mark that will require new incentives/rewards to be offered to keep driving traffic to the end of the campaign. It's invigorating, but be sure to read the guidance for crowdfunding in advance so you have a roadmap with PR, announcements and incentives planned upfront.

Since crowdfunding members do not gain equity, they finance your inventory and production and you can launch a product with substantially less outside funding and the pre-orders obviously reduce risk all around.

Bob

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