Seven crowdfunding success rules for inventive startups
7 min read
25 July 2016
Starting out in business as a product designer isn’t easy. Far from it. Design is an incredibly competitive profession. While the UK is reasonably supportive of homegrown designers and inventors, the British can struggle to succeed for two main reasons.
Either a) they are not nurtured to be entrepreneurs throughout childhood so it doesn’t come naturally or b) investment can be incredibly hard to come by.
As VP at Dynamo PR, I have worked with many startups over the years, including a whole host of inventors trying to break into the toy industry. It’s a £3bn market in the UK. A market that requires constant new blood and innovation to stay fresh and evolve.
Who wouldn’t want to get a foot in the door? In reality, though, it’s incredibly hard for designers to even find the door, never mind get their foot behind it.
Toy companies have an eye-watering amount of pitches sent to them every year and, often, small and overworked inventor relations teams are left to thumb through them. I have seen individual inventors and tiny companies with amazing ideas but they just don’t have the right connections to take the product further and they come to nothing.
While the industry remains fairly traditional, the toys themselves are changing – it’s no longer about wooden ducks being pulled along on a string; many toys integrate technology now – yet some toy companies don’t have the experience to recognise the potential of tech toys, and so they let those pitches slide.
Thankfully, crowdfunding has shaken things up and helped to democratise the toy industry. Designers can now get their innovations to market despite limited contacts, knowledge and funds and, unsurprisingly, there has been a steady growth in the number of designers using it.
Read more on crowdfunding:
- Andy Murray turns attention to cycling, dogs and beauty with trio of investments
- Top ten Crowdcube raises as goHenry sets new crowdfunded investment record
- Antonio Banderas named lead in Salty – world’s first equity crowdfunded Hollywood film
Initially, the crowdfunding space veered towards the adult games market, but as parents are now investors themselves, they’ve become much more confident in investing in toys and the crowdfunding toy space is now a huge growth area.
As the platform has matured, users have become more competent and more likely to know what’s required of them to make a crowdfunding campaign a success.
For those designers who are still blindsided by the world of crowdfunding, read my top tips on the next page.
(1) Prioritise video
I can’t emphasis how important it is to get this right. It needs to be slick, professional and three minutes or shorter.
(2) Be realistic
Your financial goal needs to be realistic. There are too many campaigns where startups say the business is worth £1m and that’s what they want to raise. The amount of companies that achieve this is lower than 0.001 per cent. Your funding goal needs to be what you actually need to make your product a reality.
(3) Don’t forget shipping
If you’re crowdfunding a physical product, then don’t forget to account for shipping costs. This is so important – you need to know about global shipping costs, because if you don’t, this can cause your campaign to sink and your company to go under as you are spending more than anticipated.
(4) Find the right factory
What happens if you suddenly sell 40,000 units in a month? Will your factory be able to cope? It’s worth having a low and high capacity factory in case you need to switch during the campaign.
(5) Be prepared and don’t launch prematurely
Some companies come to me 12 months prelaunch – some three months prelaunch. Before you even consider a launch date, think about PR, SEO, digital ad spend, testing before the campaign goes live, email lists – your friends and family are not enough! – product development, your website… there is a lot to do before you hit that launch button.
Also consider what is going to happen after the product is shipped. Where is the product going to be sold after the initial fulfilment? How are you going to market it? Often, crowdfunders think all they need to do is make a slick video and job will be done. They couldn’t be more wrong.
(6) Keep on top of trends
These happen in waves. I will see one project doing brilliantly, and then three or six months down the line I’ll see an abundance of lookalikes appearing, which is a total waste of development time. Top tip to inventors: don’t do this.
(7) Don’t work in isolation
Be aware of the wider market to ensure you are not wasting your time inventing something that already exists, or for which there is no appetite. And network. Events like the Inventors Workshop, where you can network with peers and pitch your ideas to big toy companies, are perfect to improve your industry knowledge and get a foot in.
Heather Delaney is VP of North America at Dynamo PR. She is chairing a crowdfunding panel at this autumn’s Inventors Workshop, which takes place on 20 September at Whittlebury Hall in Northampton. Early bird rates are available until 8 August. And a special discount is available to Real Business readers using the code INVENTORS10.
Don’t miss our exclusive interview Indiegogo’s co-founder on how she helped create the crowdfunding concept.