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There is no question that crowdfunding is revolutionizing the way business is conducted. Crowdfunding has moved—relatively quickly—from an ‘alternative’ financing method to mainstream. These statistics breakdown and help quantify the popularity of crowdfunding…
*Statistics are from Crowd101 (link below)
The crowdfunding industry is experiencing huge overall growth. Entrepreneurs are using crowdfunding for proof of concept, early idea validation and customer pre-orders. This is shifting the business funding and financial ecosystem, and really putting the power of fundraising in the hands of individuals.
However, before you head out to launch a crowdfunding campaign, there are a few basics that should be worked out first.
Step 1: Develop your message. Before explaining the benefits of your product, demonstrate the problem(s) it solves. This helps potential investors recognize the problem in their own life and acknowledge that a solution is necessary. Once your message is developed, work on honing it until it is short, concise and perfect.
Step 2: Clarify how much funding you need. This involves research, and lots of it. Pulling a nice round number from the sky is exactly what you shouldn’t do. Prove to investors that you have what it takes by researching each stage in the product development process, and provide realistic estimates for each phase and how you came to these amounts. Meet with product designers, manufacturers and other key players to firm up costs and timeframes for yourself and investors.
Depending on the size of your project, it is a good idea to focus your crowdfunding requests on specific parts of your business or certain phases of development. This way you won’t be asking for too much money, and left disappointed if your goal is not obtained.
Step 3: Avoid a cold start. There is an innate psychological avoidance to being “first”. People tend to hesitate if they see that no one else has backed the campaign yet. Increase your chances of gaining investors by starting out with initial investment capital. This money can be raised with your starter crowd.
A “starter crowd” are those in your inner circle and community that want to see your campaign succeed. These are the people you reach out to before your campaign has even gone live. That way, once your campaign is up and going you already have a certain percentage of funding accounted for and avoid a cold start.
Keep in mind that raising funds is really the first step. If you didn’t reach your goal, find out why. Analyze the feedback and then adjust your goals accordingly. For example, you may find that your message wasn’t getting across clearly and investors weren’t sure what value your product served in the marketplace. Now is the time to address this. Listen closely to what people are saying and adjust your campaign, message or product accordingly.
If you had a successful round of funding, maintain a relationship with your investors and show your gratitude. Work hard at fulfilling the promises made during your campaign because regardless of how much someone invested, they may be willing to invest more during a second round of funding.
Here are a few more powerful statistics to highlight from Crowd101:
Like infographics? (We do!) Crowd 101 has a great “Crowdfunding Success Statistics & How You Should Raise Money Online” infographic here.
3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.
Many entrepreneurs out there have great ideas but get stuck on their first big leap into action and ask themselves…Should I prototype my idea or start crowdfunding first? Should you get started on a crowdfunding site with a great idea sketched onto a piece of paper or develop a functioning prototype to clearly communicate your idea. In short, the answer is that prototyping comes first. Having a prototype of your product idea maximizes your chances of receiving funding.
1. A prototype shows investors that you are serious. When you take the time to have a functioning prototype built you are showing any potential investor that you are committed to making this product a success. A prototype also gives you a chance to refine your idea and make sure that it is a viable product that can be built (and easily manufactured at a later date). As you will see on any crowdfunding website, a product video is key. Having an aesthetically pleasing prototype to show off in this video will help your marketing efforts and allow you to clearly explain and demonstrate your product.
2. First impressions are invaluable. Having a prototype not only provides investors with an idea about your product but it also gives them insight into you and your business. Investors want to see that you have thought this through, you are prepared and ready to execute. The quality, functionality and overall aesthetics of your prototype will allow investors to gauge your commitment and ability to handle future challenges.
3. Crowdfunding your way to success. While a prototype will help you raise capital for your product, it will also help you delve into product development and manufacturing in a more streamlined manner than if you were just starting from a paper sketch of your idea. A prototype provides a clear vision of your product and it will help you clearly communicate design and functionality aspects with your engineering and manufacturing partners.
Please feel free to contact us with any prototyping or product development questions you may have at firstname.lastname@example.org
3D Innovations is a full service 3D Engineering/Design company – from the 3D Design to a fully functional 3D Prototype & Product.