Hearing that 90 percent of all startups fail within the first three years is enough to deter most people from launching a company. And on top of the time and energy it takes to come up with a great idea, you have to secure enough funding to bring your product or service to the marketplace.
But for many young companies, crowdfunding platforms like IndieGoGo, Kickstarter, and GoFundMe have become valuable tools for testing the market. We asked founders who have successfully used crowdfunding platforms to launch their companies for tips about staying on the ball during the process.
Research the market
Before you register for an account online, make sure that you understand the market you’re trying to disrupt. Your idea may be truly original, but if there’s no demand, it may not receive the reception that you had hoped for. Do some research on similar projects and talk to entrepreneurs who’ve gone before you in the crowdfunding space. Ask about what worked and didn’t work for them.
Even if your idea has been done before, ask yourself, “How can I make it better?” and “What makes it unique?” There’s wisdom in focusing on an untapped niche market rather than a general audience where there’s already a lot of big-name competitors. Do the hard work of finding that sweet spot before launching.
Build a prototype
When you have a concept that is ready to launch, it’s important that you build the ship that lets your idea sail. It shouldn’t just be a concept by the time you start your campaign. Build a prototype, even if it’s not market ready and even if the prototype isn’t complete.
Having something to show potential investors allows them to envision your project and trust that your idea has wings. Give them every reason to believe your idea is promising, worth the investment, and that results are attainable.
What if your prototype isn’t quite finished?
WeWork Charging Bull member Jose Cayasso, founder of a presentation software called Slidebean, said his biggest takeaway from his first Kickstarter campaign was that as long as your website is professional and your prototype idea is feasible, funders understand if your actual model isn’t completely done.
“We didn’t have to spend a dime to test our physical project,” Cayasso says. “We did very little coding and actual development. It’s a fake-it-till-you-make-it model.”
Get advice from family and friends
Even if you don’t have the backing of an accelerator, you can still garner support from people in your immediate circle. Test your product with your family and friends. Ask for their honest feedback. Be open to suggestions for improving and modifying your idea.
Don’t move forward until you get a vote of confidence from the people around you. If loved ones have a hard time supporting your idea, it’ll be that much harder for strangers, who don’t have a stake in your success, to back your project.
Before WeWork Soho West member Julie Sygiel, CEO of a high-performance lingerie line called Dear Kate, put together her first crowdfunding campaign, she asked her friends for ample feedback and addressed their questions on her website.
“We put together a draft page, and showed it to our friends, and asked if we were explaining our mission and product clearly,” Sygiel says. “We asked them, ‘Do you have questions or doubts about making a pledge?’ and we answered all their main questions.”
Round up early backers
At Kickstarter, if you don’t meet your fundraising goals in the timeframe you set, you don’t get any of the money. Make sure to set goals that are realistic so that you won’t run the risk of losing money altogether.
WeWork Soho West member Jacob Wood, founder of a men’s clothing company called Woodies Clothing, says he carefully calculated what he thought he could raise with a crowdfunding campaign.
“I did a lot of analysis and found that campaigns are typically at least 80 percent funded on day one,” he says. “I set my fundraising goal a little bit above that, so I’d be at least 80 percent raised on day one.”
He also made sure friends and family members would give him an early boost.
“I knew I had a certain number of family and friends and super early customers I could count on to pledge about $10,000 from day one,” says Wood.
Reach out to the media
Media coverage motivates people to pay attention to your product. Lining up interviews with the press helps get the word out. Even if journalists don’t write about your product right away, it will be in the back of their mind when you follow up later. Journalists are much more receptive to people who have pitched story ideas in the past, so don’t be afraid to build up a relationship with members of the media who write about your market.
“In crowdfunding, you can’t assume you’ll get attention,” Cayasso says. “Most projects that go on Kickstarter fail. It’s up to the team or entrepreneur for their project to get enough exposure.”
Cayasso says he recommends contacting the media two to three months before launching a crowdfunding campaign.
“Kickstarter is interested in your project succeeding,” he says, “but the ones who are most successful get the word out about it first.”