Getting started with Kickstarter.com, a crowd funding website; requires understanding some basic principles. As we begin this series of blog posts on crowd sourcing funds for your business, product or service, it is necessary to give an overview of this popular source of investment capital. There are few who could, with integrity anyway, deny crowdfunding represents one of the most titanic shifts in business funding since Angel investment became main stream. Until recently, a few wealthy individuals largely controlled the flow of investment and decided who received it and who didn’t. Crowdfunding has not only blown this ‘good ole boy’ network out of the water but has allowed market access to tens of thousands of entrepreneurs and small businesses which otherwise wouldn’t have it.
Venture capitalists, Angel investors as well as the ever present banksters, were the gatekeepers and selected who succeeded and who languished in obscurity. When thinking back on how much innovation was stifled by the old saying “it’s not what you know but who”, we shudder to think how different the world would be had crowd sourcing been available to previous generations! As PCs and laptops brought information access to the masses, so too does crowd sourcing put funding at the fingertips of the ambitious among us. Although it remains a financial tool in transition, those who understand the true power of this instrument are surely rejoicing at the democratization of investment. The crowd is touted as a new innovation but truthfully, it is far from ‘hot off the presses’. There is an elite class which has used this tool for years, though calling it something quite different; political candidates. All politics and feelings of current President of the United States aside (Barack Obama), his 2008 presidential bid can accurately be called the most successful crowdfunding campaign in history. Millions gave amounts as small as $1 and when the 2008 presidential campaign was over and he elected, more than $850 million had been donated.
The principle of crowd sourcing funds is this; individual, smaller investors, contribute minute amounts of money to a business, campaign or cause. The many, collectively, make up a larger amount of investment which is then received by the campaign’s creator and used to execute planned objectives. Speaking from personal experience and having pounded the pavement to meet with larger investment groups, I believed our watch company, located at bannekerstore.com, would never see the light of day. For those having experienced the many more ‘downs’ than ‘ups’ with raising investment capital using more traditional approaches, you’ll understand when I say there are times when one feels like throwing their hands up and asking “is this idea really worth it”?
Of course, the answer is and has always been an unequivocal YES! Your idea, business or cause is much too important to leave in the hands of an elite few which, more often than not, over-promise and under deliver or worse; under-deliver and try and take over your business while treating you like an employee.
More than anything, crowdfunding gives the resources to bring great (not to mention profitable) business ideas to market and much more quickly than has been true in times past. But why is it so critically important? Many technical and complicated reasons could be offered but the crowd provides necessary investment without tons of strings attached allowing you to scale your business when and how you desire. Whether a project requires a few thousand dollars all the way up to $10 million or more, crowd sourcing platforms, of which Kickstarter is one, provides what is most important; platform and access. Let me be clear on one point which other writers seem not to understand; while we’d agree the crowd is a great testing place for market viability of an idea or cause, it should not be used as the entire measure. Too many entrepreneurs who’ve conducted campaigns and having been unsuccessful on the first attempt, get discouraged into believing because crowds didn’t buy-in, their idea is not worth pursuing. Nothing is further from true!
Unsuccessful campaigns can result from many things, a few of which are;
Idea, business, cause or project wasn’t presented correctly
The wrong platform (website) was chosen. Even if your first campaign is unsuccessful on Kickstarter, that never means it won’t be successful on other platforms such as Indiegogo.com
The right incentives (will be discussed in a future article) weren’t offered to contributors (the general public)
Not enough research was conducted
Length of campaign was either to short or long
More could be added but under no circumstances should lack of results, especially for the inexperienced, be taken as lack of market interest. Next, it also provides direct contact to shoppers and future customers of your business or cause. Those who contribute are, for all intents and purposes, future clients and customers and even better, can pass your sales plea along to their social network which may begin a virtually cost-free viral marketing campaign!
So what is most important when beginning the planning process? Your entire campaign should be based on a strong value proposition. One plague successful entrepreneurs suffer from more than the general public is the belief just because they are 100% bought in to the best business idea, others will be also. While sometimes true, it isn’t always. Getting buy-in, even for not so great crowd-funding ideas, is often about how it is presented. To begin, go to Kickstarter or other crowdfunding websites and examine top campaigns (by dollars raised). Pick several and answer this question; what makes them so compelling and more importantly, would you donate? Is the pitch so compelling you would pass it along to other social networks? The best value propositions are those you would give your hard earned money to and these should be, if not the idea, copied to maximize effectiveness.
Getting started with research should begin now so what are you waiting for?