The decision to launch a crowdfunding campaign for your technology product can shape the future of your business. Crowdfunding is much more efficient than traditional fundraising and, most importantly, provides a forum for product validation. You’ll also be able to gain loyal advocates and early adopters at a much quicker pace than going straight for e-commerce.
With the many benefits of crowdfunding, it also presents its own set of unique challenges. Here are the five common issues and how you can deal with them:
Your brand image depends on your ability to fulfill your promises. How you treat your campaign when it’s over is a huge indicator of how you’ll run your business moving forward. Your backers pledged money towards your campaign, and you should be able to fulfill those orders.
A joint study conducted by Kickstarter and the Wharton School at the University of Pennsylvania found that 9% of campaigns were unable to fulfill orders to backers between 2009 and 2015. As you can imagine, it would be difficult to expand your business beyond crowdfunding, which is always the end goal, if you didn’t deliver on your initial promises to your original customers.
All startups should have a proper ecommerce order fulfillment plan in place. Order fulfilment isn’t about just shipping your tech product to customers. The process behind it includes inventory management and other logistical processes, and focuses on everything from organizing warehouse materials to filling an order and packaging and shipping.
These processes takes up valuable time and resources, which is why it’s advisable for tech startups to outsource this process, especially as the business grows. When choosing an order fulfillment firm, it’s good to know what other tech companies they’ve worked for, and whether they have experience with order fulfillment for crowdfunding campaigns.
Choosing Your Rewards
You’ve got a great product, but you may find it difficult to pick relevant rewards. The good thing is, you can use this challenge to your advantage and let your creativity shine. For the higher-tier rewards, which typically include the product or a customized version of the product, be sure to set a product limit. This implies product scarcity and incentivizes backers to purchase sooner than later. The average reward pledged is $25, but you should have a multitude of options to suit a variety of budgets.
Kickstarter’s list of 96 creative reward ideas will help you decide on unique ideas of your own. Additionally, scour the current campaigns and take a look at the rewards other tech products are using. Use this as inspiration and keep a list of viable options before conducting cost research.
Building interest is pivotal to campaign success. Crowdfunding requires full commitment for all members involved, and the harder you work before, during, and after launch, the better off you’ll be. There are three primary ways to build buzz for your campaign: press, pop-up events, and social media.
For press; if you have the time and resources, you can go the DIY route and pitch to different outlets. Otherwise, the better option would be to outsource your PR outreach efforts to a team who is experienced in technology crowdfunding. Hosting a live event or participating in a conference will also be great exposure for your brand. Invest in a booth at the Maker Faire, Disrupt, or one of the many other tech-focused events. And lastly, set up a promotional plan to reach people via social media.
Set Realistic Goals
Whether you’re raising money via Kickstarter’s all-or-nothing model or Indiegogo’s take-what-you-get platform, setting realistic goals can dramatically affect the outcome of your campaign. This applies to both your overall funding goal and your reward prices (remember: your funding goal can’t be changed after the campaign goes live). Before you set any dollar amounts, do your due diligence. Consider how many people would be interested in your product based on research and your social reach.
It’s better to undershoot than overshoot when it comes to these numbers. Think about how much money you’ll need to make a profit and get the business up and running beyond the crowdfunding campaign. And lastly, evaluate your worst case scenarios to help mitigate potential risks.
Choosing The Right Platform
The rise of crowdfunding means there are ample choices for startups. The two most popular options are Kickstarter and Indiegogo. Though very similar in purpose and function, there are several differences between Kickstarter and Indiegogo that startups should consider before crowdfunding on either platform.
Kickstarter hosts less campaigns than Indiegogo, but has a much higher success rate. However, Kickstarter tends to err on the strict side when it comes to campaign rules. Some rewards are prohibited, and all campaigns need staff approval before going live. Indiegogo is more laidback, and requires no approval before posting a campaign.
One of the major differences between the two is that Indiegogo allows campaigners to keep their funds if they fail to reach their funding goal, while Kickstarter does not. Indiegogo also tends to feature more tech-focused product than its counterpart. When choosing your platform, consider your needs and the type of flexibility you’re looking for.