Nine Insights To Keep Your Equity And Raise Working Capital While Driving Early Product Sales Via KickStarter Or Indiegogo.

If you are going to create a company which will have a product aimed at consumers, then you really should test your product, and potentially raise some working capital, with a launch on crowdfunding platforms like Kickstarter or Indiegogo. There is no other strategy that can return early sales, provide real revenue and garner early feedback from customers than these crowdfunding platforms. You get all of the above benefits and do not give up any equity in your company.

Quite a few people have utilized these platforms over the past ten years. The Kickstarter platform alone has raised more than $4 billion dollars since its founding. Crowdfunding platforms specializing in projects or rewards like Indiegogo or KickStarter could be an amazing fundraising strategy for entrepreneurs. But you need to get it right. Review the platform and their rules carefully. And if you do proceed, study other successful projects before you attempt to launch your campaign. Expert advice includes creating a video and using email and social media vigorously.

Here are some key insights to have you hopefully build a solid campaign:

Give people a great story. If you are going to raise funds to launch a product or service that you are passionate about, then tell them a great story. Put some passion into it and a bit of personality. Don’t go over the top but give them an “emotional” reason to support you.

Set your funding goal carefully. Get the funding you need to launch and test the new product or service. Some small startups set reasonable goals of $10,000 to $40,000 and achieve their objective. Others go for $75,000 and only raise $47,000 and so they receive nothing (you have to hit or pass your goal to receive the funds on KIckStarter).

Create a great video. Videos seem to be one of the top reasons people decide to fund a project. Don’t be an amateur and use your iPhone or a webcam. Find someone qualified, a film student or a video freelancer, and create a compelling video with some creativity and personality.

Design a set of rewards that make sense. Some entrepreneurs think that by having 37 reward levels they will cover just about every possible funding scenario. That is too complicated. Simplify to just 10 rewards or fewer that are easy to understand and more important, that you can actually manage.

Prepare your production plans ahead of time. If you are using a manufacturer to help build your product, plan ahead of time to use your campaign funds once you have them. Get multiple bids and understand the production and shipping time lines. Then multiply everything by a factor of two.

Spread the word online. Entrepreneurs need to create positive word-of-mouth awareness that goes beyond your friends and family network. The good news is that you can reach these people via online marketing tools. Do the research ahead of time and identify blogs, websites, podcasts, LinkedIn groups, and the like where you can spread the word.

View your email campaign as critical. Take the time to craft a strong set of emails (at least five to seven ahead of time) that will simply but powerfully tell your story. Provide links to your crowdfunding project and your video. Provide updates regularly on how the project is doing. Use a simple but emotional close and give supporters a reason to care.

Welcome to your new job. Entrepreneurs frequently underestimate how much time they need to spend on their 30 to 45-day campaign. It’s a full-time job that needs to be cared for almost every day. Put in the time and reap the rewards.

Backers are supporters, supporters are backers. Once you have people funding your project, keep them engaged. Constant updates, maybe some behind-the-scenes photos or videos of the product development—anything to make them feel special so that they spread the word to other potential backers in their own networks.

Reward or project-based crowdfunding platforms are amazing things. Where else can you raise money, pre-sell your product, perhaps raise $50,000 or more, and not give up any equity or incur any debt? Entrepreneurs, figure out how to take advantage of these crowdfunding platforms.