3. Do not cut any corners on making an effective pitch
Gabriel Bestard-Ribas of Goji Smart Lock observes: “Crowdfunders support a project because they are drawn to a vision, one they want to engage with. Many people think of their campaign as just selling a product. But you’re really launching your company to the world.”
It’s important to start by showing how your product can impact on the people’s lives, and when it comes to features and performance, focus on the ones that set you apart from any existing competition.
It can be a good idea to show the team, as trust plays such an important part in fundraising. Producing your video can be almost negligible in terms of cost, you could shoot it on your mobile phone, but the though and planning that goes into it must be significant to get it right.
When it comes to perks and incentives, funders love them so be creative. Gavin Fish from Light Harmonic switched for his company’s second crowdfunding venture to Indiegogo, which has a multiple perk feature for backers. Fish used the sites tracking tools to offer free product to non-funders in return for referring friends who become backers. Light Harmonics’ Geek Pulse raised over $1.1m from an initial target of $38,000.
4. Its not always about the money raised
Many crowdfunding companies find the feedback they get to be even more important that the money raised.
Here’s Gabriel Bestard-Ribas, whose Goji smart lock raised more than $300,000 with Indeigogo: “The feedback we get is 10-fold more valuable than the money we raised. Normally, you’re working in the dark until you bring a product to market. With crowd funding we get customer feedback before the product is finalized.”
This feedback goes beyond customers into developing relationships with the press and trade. “The press coverage that our campaign received opened doors to partnerships. We had retailers and distributors reach out to work with us before the product was finished, which helped us to better fit their needs.”
Enterprising individuals have taken the concept to a very personal level where they raise capital by selling equity in themselves, based on their own qualities as a brand and business and potential future earnings, whether they have an existing business idea or not.
New sites, Pave and Upstar don’t even require a solid idea or business plan for raises. Rachel Kim, has worked at Google and Zynga and is a Harvard MBA, convinced 37 investors to give her $100,000 on Upstart this year.
She used half to pay off her student loans and half to launch her e-commerce company Nailed Kit. “I was able to quit my job at the end of May to pursue this full time,” she says. “The money I raised basically will give me six to 12 months to prove this out.”
Jonathan Barton is a director at eCO2 Greetings and Ecard Shack.
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