Crowdfunding is the new way to fund your startup, but people make common mistakes with this approach. The ratio of failed campaigns is higher than successful ones on crowdfunding sites because of these mistakes. But there are basic ground rules on how to launch your startup with crowd funding – successfully.
80:20 Rule
Follow 80:20 rule and spend more time in business planning than launching a campaign. You should cover key aspects of business planning before launching your product on a crowdfunding platform, which can take anywhere between 6 to 8 months depending on product complexity. Focus on these basic key points and have a strategy to tackle them.
- Competition Analysis
- Prototyping
- Demo Video
- Business Website
- Marketing Strategy
Competition Analysis
Analyze your competitor business model, market and product before getting into the prototyping phase. This process will help you gain some insight about target audience (customers) and current product features. You can read competitor product reviews online to analyze enhancement opportunities in your product. This study will give you a good understanding of customer expectation. I would recommend selecting the top 3 competitors from your field for this study.
Prototyping
You need to have 3-4 prototype models of your product. This will be required for a demo video, product review and exhibitions. Business owners generally make a common mistake of only going with one prototype model due to cost factor — which limits their ability to share it with influencers or showcase it in startup battlefields (exhibitions).
Business Website
You need a business website to showcase your product and business model to your target customers. Business website should be ready along with prototype model. Search engines can take approx. 3-4 weeks to index and recognize your website, so it is important that you start planning in advance for your website and submit it to search engines at least 4 weeks prior to start of your marketing campaign.
Demo Video
This is an important aspect for any business taking a crowdfunding approach. You need to get a 2-3 minute demo video of your prototype uploaded on your business website. Don’t go over 4-minute video duration because otherwise chances are that you might lose audience attention and dilute some key features of your product.
Marketing Strategy
This is a make or break point for your business, so do your research and have a good plan to reach your target customers. You can have a good product but if your customer doesn’t understand or doesn’t know about it, then it is futile. Find the online hangout locations of your target customer. Example: Google+ groups and blogs with high followers in your business area can give you quick visibility.
Identify influencers in your target market, reach out to them after you have a demo video and business website, request them to review your product and publish it online.
There is no overnight success strategy, marketing process can take anywhere between 3-4 months to reach your audience and get them subscribed for the launch. Set a subscription goal (number of interested customers) for your business, launch your product on crowdfunding once you achieve your goal but don’t go beyond a 6 month period because an excessive wait period can lead to other subscribers losing interest in product or a competitor deploying your enhancements in their product.
Launch Day
The day you launch your product on crowdfunding, send out an update via email to your subscribers to book their product and offer early bird discounts. The first week of crowdfunding is crucial so ensure you get good visibility through influencers and marketing campaign.
Most successful crowdfunding campaigns achieve their goals in first week. Don’t expect the crowdfunding site will get you customers or investors; they are just a funding platform so it is your job as the business owner to direct interested parties to your crowdfunding campaign to get funding.
The crowfunding mantra is to have a great product, which can solve a real problem, be genuine with your approach, find and connect with your customers. People will buy your product if they trust you.
