Crowdfunding And The Future Of Your Tech Innovations
Crowdfund creates interest and funding for the tech industry the world over. Should you be considering a crowdfunded startup?
Until the late 2000s, funding a new enterprise or endeavor required one of three things: deep pockets, a benefactor or corporate support. Musicians were unable to record albums without a record label bankrolling them. A conveyor belt of entrepreneurs appeared on TV’s Shark Tank While self-made millionaires like Sir Richard Branson were familiar faces behind many new products and services. So where were the ordinary people and was there another way?
Power to the People
The meteoric rise of crowdfunding has created finance models that simply didn’t exist before the likes of Indiegogo and Kickstarter debuted in 2008 and 2009 respectively. By encouraging members of the public to provide a small chunk of any startup or development costs, new enterprises were able to harness support from large numbers of small investors. Those contributors were typically rewarded with future discounts, exclusive products or a share in the spoils of a successful enterprise. And despite our innate aversion to risk, millions of people have crowdfunded products as diverse as 3D printers, celebrity autobiographies and a science center dedicated to Nikolai Tesla.
Starting Up and Up
Crowdfunding is one of the internet age’s greatest developments, and it’s being enthusiastically embraced by the tech community. Familiar names like Oculus and Pebble are the result of crowdfunding enterprises, while hands-free drones and medical scanners are among cutting-edge technology being developed by armies of amateur investors. Indeed, such is their enthusiasm that a few crowdfunded projects have massively overachieved on their original intentions. The Coolest Cooler was advertised on Kickstarter two years ago with a monetary target of $50,000, but ended up generating over $13 million from 62,000 supporters.
While traditional business models clearly retain merit, crowdfunding represents a viable and increasingly popular way to launch new ventures. Indeed, the main problem any startup enterprise faces today is distinguishing their offering from numerous other products and services competing for public funding.
Some of the key ways to achieve this are outlined below:
#1. Choose a specialist crowdfunding service.
There are now dedicated platforms for female entrepreneurs, customized T-shirts and scientific research projects. Registering with the right platform will maximize your chances of reaching interested audiences, who are more likely to know why this particular enterprise deserves support.
#2. Offer something new.
From hydroponic food kits to new methods of controlling our homes remotely, there are innumerable opportunities for forward-thinking entrepreneurs to launch something not widely available. Investors often relish being involved with groundbreaking innovations, so an original concept will attract significantly more attention than a variation on a well-worn theme.
#3. Provide substantial discounts.
One of the most successful crowdfunding enterprises of all time was the Pebble smartwatch, which eventually achieved 100 times its initial investment target. By offering a $150 item to supporters for $99, and providing similar reductions for multiple orders, Pebble achieved an average pledge of $149.
#4. Be detailed and transparent.
Don’t just ask for money. Provide detailed analysis of the project’s aims, how any capital will be spent and what could be accomplished if the original target is exceeded. Set realistic dates for progress, provide regular updates to investors and interested observers, and explain why you are uniquely well-placed to take on this particular challenge.
#5. Harness the power of social media.
It goes without saying that every opportunity should taken to promote new or planned crowdfunding ventures. Use social media accounts and email signatures to advertise forthcoming campaigns, and encourage pledges to discuss the project through Q&As or updates. Dedicated blog microsites are also useful for boosting SEO results and whipping up word-of-mouth publicity.