I’ve been getting a lot of requests for coffees from startups who want to hear about crowd funding and the lessons I learnt running a campaign for the Good Night Lamp back in early 2013. I thought I’d capture what I’d say to them here and share it to a wider audience:)
1. What are you?
Before you take this on, have a think about what your product is. Is it a project? Is it a company? Is it a way to get PR for yourself/your consultancy? Is it a way to test the appetite for a corporate R&D idea?
Being self-aware is important in life and in business because it will help you deal with whatever outcome your campaign might have.
- If you’re a project there might be a lot of value in aiming to do a very small run of the product, say 50-100 and raising money for that. Most successful campaigns sit at the $15 000 mark which is not a lot at all in the world of hardware. So think about what you could do with very small amounts of money.
- If you’re a company, then see the next bull-it point. You really want to start building up the company pre-campaign.
- If you’re trying to get PR, well good luck. Journalists are bombarded with requests to write about crowd-funding projects in ways they weren’t a year and a half ago. You may find it easier to reach out to small specialised publications but the audience numbers vary accordingly.
- If you’re testing a corporate R&D idea, be clever about how you market yourself when smaller teams are trying to raise money on the same site. You’re probably not so fussed about the money, but they are and whatever you go after skews the market for everyone else if it’s too low. Try raising the amount of money that would cover your salary for eg. Also be truthful about your allegiances, it’s ok for you to be there, but let yourself known. A good example of how NOT to do it would be Samsung’s massively overthought lamp which only mentions Samsung in the smallest of print.
2. Talk to investors before.
Running a crowdfunding campaign turns a massive countdown timer on. Once you publish an idea in the public arena, you have a year to protect or patent it (this varies on what you’re building, but look it up) so you want to develop it as far as you can without crowdfunding and with external help: investors. Most early-stage investors (friends and family) will be happy helping you out with small amounts that will get you to the pre-industrialisation stage or past the rendering & prototyping stage. Once you go to crowd-funding, they will stick around and become your allies on what is often a long road to success. Meeting with investors pre-campaign is an important way to let them know you’re serious about the role of crowdfunding as a way to test the appetite for your product. Running a very successful campaign also increases your valuation (if you don’t know what that means go buy “Venture Deals” by Brad Feld straight away). So put a shortlist together and go meet the Partners (try not to waste time with Associates) before you go live and ask them for feedback. They might not want to invest early on but will be good to you if they like the idea. Be aware that making a project public also means potential competitors can learn from your success or failure. You are exposing yourself and your idea to the world with little protection against large corporations who might be looking at your product space. You are their guinea pigs. When LIFX came out with their wifi lightbulb, Philips came out with their within a few weeks. Not a coincidence.
You want to have very clear agreements with everyone working with you (in writing) and budgets planned. If you’re massively successful you need to know in advance how you’ll spend the money, what the timelines are for ordering parts, assembly partners, etc. These are not easy to find so you might as well do the work up front before you have hundreds to thousands of demanding customers waiting after your product.
3. Prepare yourself
The most crucial element of crowdfunding is email. You’ll be glued to your inbox for the duration of your campaign. I used to get up in the middle of the night to make sure I responded to West Coast requests in time for them to see it during their day. An important part of the crowdfunding audience is in America, so you want to cater to them a little. If your project page isn’t clear enough for a non-tech person to understand, you’ll get emails. If it doesn’t explain every single aspect of yoru project, you’ll get emails. You’ll get emails from companies who have chosen crowd-funding projects as a market (marketing, warehousing, manufacturers, etc). Depending on what kind of person you are, you may want to give this task to someone who has experience managing communities online. It’s not a particularly forgiving activity, but you’ll get real feedback on what you’ve put out, both good and bad.
4. Make it easy for the press
If you happen to showcase your product somewhere (we had a booth at CES on campaign launch) while running the campaign, you might meet some journalists who might want to write about what you’re doing. Make it easy for them by having a press link, with a dropbox link to a press release (in .doc format and pdf) and some high resolution (300 dpu) images of your product with a white background. This covers 90% of what journalists need, whether it’s going online or in print. The remaining 10% is interviews you may need to do either online or face to face and those are generally fun. They’re also a good way to practice your elevator pitch which you will learn to repeat like a parrot on crack for months (or years in my case).
5. Money isn’t the problem
Out of all the things your product needs to come to life, money is only one of them. The industry is still quite young and finding talent is difficult. Retailers are starting to get it (John Lewis launched an incubator recently) but technology investors in the UK are still only really interested in investing in businesses already generating revenue. If you’re in the US, you’re in luck (as usual) in that respect but a very limited number of funds are investing in this space. The general public is starting to see interesting connected products hit their Christmas wish lists, but if your product retails for more than £100, you might be in the luxury goods market for now. Connectivity is still expensive and pricing a dark art (usually retail price of RRP is 4 times what it costs you to make the product).
It’s difficult but not impossible to be successful. All you have to do is pace yourself and not expect your campaign to solve all your problems.