How To Crowdfund A New Tech Product
When it comes to disruptive technologies, crowdfunding will go down as one of this decade’s major breakthroughs. Shattering the theory that only banks or wealthy investors could fund new products and services, crowdfunding has opened up exciting opportunities for creatives and entrepreneurs. You don’t need one rich backer to develop a great idea, when a thousand suburban supporters have equivalent spending power.
Crowdfunding began in 2003 when a group of musicians rebelled against the Big Five record labels by asking fans to finance albums sold online. The success of ArtistShare inspired rival platforms like KickStarter and Pledge, and mass-funding proposed products or services became wildly popular with people on both sides of the fence. A small supporter contribution might be rewarded with exclusive products, part-ownership or simply a philanthropic buzz. Meanwhile, the campaigns people support receive voluntary up-front investment that can transform a concept into reality.
Many of today’s established tech brands owe their success to crowdfunding, including Pebble and Pono. Crowdfunding technology campaigns last year included smart belts, photo processing tools and a hybrid watch that ended up raising a hundred times its original $50,000 funding target on Kickstarter. A project’s popularity can often take even its own impassioned developers by surprise.
Meanwhile, other firms have evolved to manage crowdfunding campaigns, keeping consumers informed about progress while ensuring developers receive sufficient funding. Despite taking either a subscription or a percentage of any income raised, platforms like Crowd Supply and Crowdfunder are highly respected. The latter is aimed squarely at Silicon Valley, reflecting the public’s interest in crowdfunding technology schemes.
Whether you’re looking for investment in your existing business or a new idea, these are the key steps to consider:
Offer something unique, or which isn’t readily available
It’s fair to assume the mobile handset market doesn’t need another five-inch smartphone. Yet the 3D printing market is ripe for new products. A key attraction of crowdfunding technology for consumers is the prospect of becoming an early adopter. If the wider market is well established, explain why your product or service is different to existing offerings.
Select a funding platform relevant to your industry and finance model
While general crowdfunding platforms like Indiegogo have considerable merit, specialist tech services will attract an engaged and knowledgeable audience. Appbackr is the obvious choice for mobile apps, while Crowdfunder is aimed at tech firms. Some platforms specialize in particular finance models; RocketHub provides venture capital for entrepreneurs, whereas Seedrs is an equity crowdfunding service supported by various accelerators and brands.
Give people a genuine incentive to invest
Crowdfunding’s early successes were driven by fans wanting new content from their favorite musicians. People will be less willing to invest in an unknown tech firm, so you need to incentivize them. You could offer a stake in the business, purchasing discounts, exclusive products or early access to something that will eventually go on general sale. Investors might simply want their money back with interest at a later date, once the business becomes profitable.
Study previous crowdfunding schemes for successes – and failures
Some crowdfunding campaigns operate on an all-or-nothing basis, where any investment is repaid if a minimum target isn’t met. Studying campaigns which had to pay back insufficient funds may influence your own scheme. Equally, consider why some technology crowdfunding schemes generated a hundred times the original finance target. Were entrepreneurs too modest in their goals, or did they just tap into a market with huge demand?
Set achievable goals across a clearly-defined timeline
When people make a commitment to a theoretical outcome, they need reassurance about its viability. Business plans are often a struggle for entrepreneurs, but they’re crucial to a crowdfunding campaign’s success. Budgets need to be modest yet sufficient, while timelines have to be realistic. Try to avoid issuing a second funding request without being able to offer evidence of progress (or proof of concept), and don’t let projected completion dates slip.
Whip up publicity on social media
Crowdfunding is commonplace nowadays, and potential investors are spoiled for choice when it comes to investment opportunities. A dynamic name and a compelling elevator pitch will help your campaign find an audience, but social media is also crucial. A single retweet from a key influencer might open a thousand doors, so be proactive on social media and publish weekly updates in a blog. Investigate keyword-driven social media advertising, too.
Once the funding target has been reached, keep in touch
Even a successful campaign represents the beginning of a journey, not the end. Meeting your objectives will satisfy investors, but there’s plenty more you can do with your engaged and invested audience. If you’ve retained copyrights, could your product or service be refined into v2.0, or expanded with extras and upgrades? Funding and support is much easier to obtain second time round, if your first campaign delivered on its promises and objectives.