If you’re serious about putting a product onto the market, you’re likely to start thinking about raising funding to get the ball rolling. But how do you go about doing this? External investment through venture capital firms is a common method. It works, but sometimes investors might be sceptical or not understand your product. This is hard to take, believe me, we’ve been there with the Flipper Zero.
But luckily, there are other options. Crowdfunding via platforms like Kickstarter provides non-dilutive capital without giving your precious equity away. It’s a particularly effective way of generating funds if you have a tangible hardware product. It’s perfect to gauge interest, estimate demand on the market and get buyers in immediately. The people of Kickstarter are geeks; they love new and experimental stuff.
Despite the name, don’t think of Kickstarter as the beginning of your business journey. Your preparation should start way earlier if your campaign is to gain the traction it deserves. Like with anything, the more time and effort you put into it, the more successful it will be. Before you Kickstart your project into action, here are some tips on how to lay some solid foundations to give your product the best chance:
Establish your community first
There is a reason I’ve put this first: it’s by far the most important. It’s no secret that without an audience or buyers, your product will have very little chance of going anywhere. So, let the world know about your product and that you’re going to launch a Kickstarter campaign.
Try developing a simple website, make some renders, write an engaging article and publish it on relevant platforms with thriving and engaged communities. This is a great way to gather a loyal audience and gauge their interest, willingness to pay, and potential areas for concern. You’ll also gain an idea of your production costs and minimum order quantity (MOQ). It’s a great way to test ideas out for your project and get any teething issues out of the way.
It’s important to regularly update your growing community on what is going on. Try to get onto every platform and media outlet possible and always keep these updated. With regular and honest communication, people will become your fans; they will get excited and eagerly await news on your progress. We recommend also getting a more global audience, particularly through sites like Twitter, where micro-influencers can help spread the word. All this helps to establish and maintain a vibrant community and keep it engaged throughout the whole campaign.
Keep your community engaged with transparency
When you start preparing for a campaign, the question of marketing soon enters the picture. You can either engage a Kickstarter commercial agency or use in-house production. This is vitally important for your campaign to raise interest and knowledge about your project.
The agency is a safe and clear option; the whole thing will be organized for you. However, they might just pour money into advertising and then email leads. They usually have a low conversion rate because your audience won’t remember your company or who you are. So, it’s well worth putting in the effort yourself to build a loyal internal community and potential future fanbase.
It’s better to keep your audience informed before the Kickstarter launch through regular updates, monthly newsletter posts, and transparently sharing the various stages of our journey, even failed prototypes! Another key thing is replying to all correspondences across the channels, which makes people loyal when it comes to setbacks. Remember the audience on Kickstarter- they love all the behind-the-scenes action.
Set more pessimistic funding goals to increase campaign performance
You’ll have noticed that many projects tend to set funding goals that they are likely to reach. This is often around the $10,000 mark, which isn’t usually enough for production. The campaign performs better when the funding goal is reached quickly at a higher speed. This not only brings more trust among the Kickstarter community, as people tend to donate more when they see that others believe in this project, but it also serves marketing purposes. Reporting that a final amount of money is hundreds of times higher than the original goal is always better.
More honest is to set a target that would cover only necessary expenses. At the same time, you need to understand that for the project’s future, you might need much more.
Of course, it’s not as easy as just setting a low target. You also need a solid understanding of your audience and customer base, how much it will cost to enable your project and MOQs required for successful execution.
Try to predict and control all production costs, but be ready for alternatives
I know 2020 showed us that we can’t predict everything. The universe is more than capable of throwing a gigantic spanner in the works and throwing everything so far off the route we don’t even know where it is we were going in the first place.
Nevertheless, from a design and production point of view, it’s important to constantly check availability (for today, tomorrow and six months ahead), predict costs, and find reliable manufacturers and alternatives. Be sure to control all production costs and stay within your set budget. Then, if we do have a 2020 2.0, you should be prepared not to dive headfirst into the negative.
A shortage of one component, such as a small chip, could be critical to the entire supply chain. After the end of Kickstarter, you have to fulfil all the orders made during the campaign. If you are not ready for such a rapid boost in deliveries, there could be questions about the efficiency of order fulfilment. A shortage of units on the market might encourage third-party sellers to exploit the situation, reselling the product at higher prices. Your reputation can be at risk.
What can you do? Design and implement a complex and robust anti-fraud system. But to achieve the availability of your hardware devices in stock, you might need to rebuild the entire logistical infrastructure, expand the production line at the factory and accumulate more capital because orders will require a 50% prepayment. It is always good to expand the number of warehouses and eliminate those that are not reliable. Once, one of our warehouses sent a person 700 units instead of one.
To be ready for possible delivery issues, try to find reliable partners, take over preparing import documentation, and figure out how to declare items in each country.
Are you a mature project? Try using Kickstarter as a marketing tool
As I’ve said, Kickstarter is a community of geeks. It’s the perfect place to target your niche audience as they’re usually people who are already inclined to explore and support innovative projects. They’re a bit more impulsive when buying things because they’re partly motivated by the exclusivity of a product that is often only available for a limited amount of time.
You can use Kickstarter to tailor your campaign directly to those interested in your specific product without traditional (and expensive) advertising or marketplace distribution. It’s a great way to check whether a new product would suit the market and whether there is demand for it.
Companies like Lego, Sony and Nebia have even established internal departments to assess a potential new product’s viability via such crowdfunding platforms. They have repeatedly used Kickstarter to organize market launches for new versions of their products.
Despite the undoubtable benefits, a Kickstarter is not without its financial risks. You will still have to consider initial outlay costs like the development of your product, all the designers involved, software writers, (many) prototypes, filming videos- all this isn’t free. But it’s very important if you are to convert the audience that you’ve grown and that are now following your company and its journey, into buyers, which is why you set about this in the first place.
It’s also important to remember that it’s not the right choice for everyone and every business or product. If, for example, you already have both a community and cash flow from previous and successful products, it may be best to avoid Kickstarter altogether. This is because there are fees that you pay to both Kickstarter and Stripe (5% and 2-4% respectively). What’s more, you can’t charge for delivery, which will vary depending on the country, and you don’t have a direct channel of communication with the buyer. Although not fit for all situations, executed in the right way for the right project you could give your product the Kickstart it needs.
So, if you take one thing away from my article, make it this: Community. If you do decide a Kickstarter is what your project needs, then put serious time and effort into gathering a large audience so that your Kickstarter is fuelled from the off.
Fail to lay these foundations and you’re unlikely even to raise enough funding to get your project off the ground. But use these tips, and your Kickstarter will take on a life of its own when it finally comes to launch day.
