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Crowdfund Your Next Product

  • June 1, 2017
  • Written by Meridian Admin

Crowdfunding has been around awhile and it’s still going strong. It’s well worth looking at if you are wondering how to fund a new product line, get some advance sales, or even if you just want to do some market research.

What is crowdfunding? Well in its simplest form it’s where a company, or individual puts a video up on a crowdfunding platform and encourages people to support a product or a project in return for rewards, or pre-financing (usually in the form of pre-purchase).

Often you will also see equity investment, venture capital, charitable donation, and peer to peer (P2P) lending lumped in with crowdfunding, but in pure terms these are not what crowdfunding is all about. In this article we will focus on using crowdfunding to help launch a new product by offering rewards, or soliciting advance orders.

The Kickstarter crowdfunding platform is the most well-known and largest. It boasts over $3 billion in pledges to date funding 124,447 projects through 12.8 million backers, 4.1 million of whom were repeat backers. All this accounts for almost 38 million pledges. A word of warning – Kickstarter works best for people who create something new – if you have something innovative this might be a good place to start. There are lots of other platforms, so search around and see which one fits your needs best.

So, how do you get your share of this money to support your business? As with anything that seems too good to be true, crowdfunding is not easy, but it is possible to raise a lot of money if you do it right.

For instance, Flow Hive: Honey on Tap Directly from Your Beehive, a campaign on the Indiegogo platform raised over $13 million USD (17,380% over their target) for their unique method of extracting honey from beehives that was both easier on the bees and on the collector.

Now, stories like this attract media coverage but for every one of these there are several hundred that don’t even reach their revenue targets. All the same, if you do it right this can be an excellent way to raise money, get feedback, achieve advance sales and ensure your product launch gets noticed.

Launching a crowdfunding campaign requires a lot of work and books have been written on the topic, so in this article we’re simply going to provide an overview, give you some tips and urge you to research, research, research what other companies have done successfully, and not so successfully, on a bunch of crowdfunding platforms.

What are the benefits of Crowdfunding?

· Raises money

· Raises awareness

· Tests product viability and validates ideas

· Encourages feedback

· Gets advance orders

· Early adopters promote your product or project

How does Crowdfunding work?

· You decide on a product, or project

· You sign up with a Crowdfunding platform

· You create a pitch video and write a creative pitch to excite people

· You come up with desirable rewards linked to amounts pledged

· You offer an opportunity to pre-purchase product at a special price (optional)

· You send everyone you know a link to your campaign

· You promote your campaign heavily

· You deliver the rewards

Tips

· Have a product or project that excites people (and the media)

· Build a massive list (thousands minimum) of potential pledgers before you start

· Promote your campaign to publications and bloggers in your industry

· Come up with creative and exciting rewards (between 3 and 5)

· Make sure your video captivates your audience

· Secure a few sizeable pledges before you launch – no one wants to be first to the party

· Monitor your campaign everyday and be involved with your pledgers

· Choose a Crowdfunding platform that suits your campaign – understand fixed versus flexible funding

· Set your funding target and length of campaign correctly – research other successful campaigns with similar products

What people do wrong

· Not researching how Crowdfunding platforms work thoroughly

· Launch a campaign without having a large enough database to promote it to

· Launch a campaign and fail to monitor it

· Have too many rewards and confuse people

· Not planning enough – the key to success is planning

· Setting funding targets too high or low

· Setting the campaign length incorrectly

· Forgetting that if the campaign is successful there will be a lot of shipping of rewards and/or product

As you can see, there’s a lot to consider when launching a Crowdfunding campaign. The overall key to a successful campaign lies in the planning. Research the various platforms extensively and understand how they work. Look at what types of campaign are successful with each. Look closely at successful campaigns and see how you can adapt what they did to suit your product or project.

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