One solution founders often turn to is crowdfunding. Over the last decade, we’ve seen more and more companies turn to platforms like Kickstarter and Indiegogo to raise funds. Successful founders aren’t just using the platforms to raise funds, but also to do everything from market research to product validation.
Here are tips from two GTA founders to make your crowdfunding campaign a success.
Be launch ready before the campaign starts
Crowdfunding campaigns can be successful—but only if your startup has all its ducks in a row, says Mary Chong, president and co-founder of advanced bicycle design and build shop, Revelo Bikes. “You have to have the pricing, distribution, manufacturing—all of that ready to go,” she says. Revelo Bikes launched its successful Indiegogo campaign for its LIFEbike in 2015, raising $33,556 to produce its unique compact electric bike.
Revelo spent months finalizing its manufacturing and distribution plans and went into its campaign with a fully tested product prototype. It’s a state of market readiness that Chong says too many startups don’t reach before launching their campaigns. “We actually delivered the goods six months after the campaign closed,” she says.
Validating your idea
While Revelo’s bike was ready for production before its crowdfunding campaign began, that’s not always the case. There’s a virtual graveyard of failed crowdfunding campaigns where backers were left with nothing more than a screenshot. Most notably among these is the Coolest Cooler, a high-tech cooler that raised more than $13 million without ever delivering a single cooler to a backer.
It’s a lesson that Dom Mazzuca, a business student at George Brown College, took to heart. Mazzuca is the founder of Maple Mountain, a startup that has created a new soft cooler with a snap-tight lid. The idea for the cooler came to Mazzuca while he was speaking with one of his mentors at startGBC, George Brown College’s entrepreneurship hub.
Mazzuca had tried selling a traditional soft cooler but had met resistance from larger players in the market. Talking it through the product’s main weakness (rust-prone zippers) with his mentor helped spark a new idea. “That instant, I raced home and started doing research on the project. After a year of work, the Kickstarter launched,” he says.
With support from family and friends, Mazzuca was able to fund the creation of a working prototype, which helped him secure manufacturing agreements before launching their crowdfunding campaign last month. So far, he’s raised $33,240—more than $8,000 above the campaign’s goal.
He’s found another benefit of a crowdfunding campaign: market validation for founders seeking additional funding through traditional lenders or venture capital firms. “You can go and say to a lender, ‘We raised this amount of money in only 30 days,’ “ he says. “This clearly validates that there’s a need for this product.”
The Revelo Team
Crowdfunding campaigns are marketing campaigns
When planning your crowdfunding campaign, it’s critical to look at it as a marketing expense, Chong says. As a startup, you spend time and money building business leads through events, social media and other channels. For Chong, Indiegogo was the right choice for the Revelo LIFEbike campaign because it presented an opportunity to add new potential customers to its audience.
The Revelo team’s main lesson from its Indiegogo campaign is that a crowdfunding campaign is much more than a “set it and forget it” marketing effort. “It’s a marketing campaign more than anything. What we learned was that running a campaign sucks up all your energy,” says Chong. “Once you’re out there, you need to keep it going, you need to keep feeding it. I think startups really need to think about whether they really have all the resources and energy to support a campaign.”
Crowdfunding campaign takes having all hands on deck, Chong says. From the launch through the closing of the campaign, the Revelo team managed social and email inquiries to help bring more funders on board. Keeping funders informed was also critical to the campaign’s success; the team constantly communicated product and shipping updates throughout the campaign.
Take your time
Mazzuca’s advice to other founders is to make sure to give yourself enough time to launch a crowdfunding campaign properly—it’s important to put in the time to build a project plan for getting a campaign ready, he says. Block out the time needed for prototyping, testing, business development for your manufacturing and distribution—and most importantly, give yourself time to rest and recharge.
“With product development, it seems like you’re always up against time—and it was no different for this project. Make sure you’re giving yourself enough time to launch the product and just make sure it gets done right.”
Get the latest startup news, business advice, industry updates and success stories from Toronto entrepreneurs on our news page.