There’s been a buzz in the technology media recently about the imminent launch of Kickstarter in the UK. The US based crowdfunding website is one of the better known, but there are reportedly over 40 such sites already operating in the UK.
What’s all the fuss about? For start ups and private inventors who are short of cash but rich in ideas, it has often been necessary to give away equity in a new venture in return for capital investment to get the project off the ground. Often the investor demands a high percentage of the business as it is seen as high risk before any revenue from sales has been generated.
The great thing about crowdfunding is that you get to pitch your new product / idea to your potential customers in the hope they will pre-buy the product and bridge the funding gap to go into production. If the funding target isnt met then buyers get their money back and the product remains on the drawing board. From the inventors point of view this has two main advantages.
- You don’t need to give half your business away to an investor before you have even started!
- Perhaps even more importantly, you get to test the market without committing large sums of cash to production set up and manufacture. If people like the product, they might buy it. If no-one is buying, that’s a sign that the market isn’t there for the product, or you haven’t got the product right yet. That’s really valuable information.
Successful projects can generate serious amounts of cash really quickly. For product based projects these tend to have;
- A good idea that has been well communicated. Often video, animation, and rendered images of the final product.
- A clear proposition, what the buyer will get.
- A preferential rate for early adopters.
- A capable team ready to spring into action when funds are in place.
- An effective PR campaign to generate interest in the product, often social media based.
If you think this approach could be for you or your business, why not get in touch to explore how we can work with you to create a great crowdfunding pitch!