Crowdfunding campaigns are all the rage nowadays. Who doesn't need money for their business or entrepreneurial venture? I mean the whole concept sounds like a dream, post your great idea or product and watch the money pour in and rack up. Of course… it's not that easy.
Lately I've been getting more questions and crowdfunding and the best way to go about setting up and promoting campaigns. I think crowdsourcing and crowdfunding and amazing and show the power of the internet, but the majority of these crowdfunding platforms and sites have painted a fair rosier picture than what reality is. Honestly, raising money on these sites is much harder than it used to be as it's getting more and more crowded everyday. Keep in mind we only hear about the success stories and not about all the failures on these crowdfunding sites. There are a lot of crowdfunding campaigns that might have been executed extremely well that failed or ones that were basically were not even worth running.
In my article suggesting tips for running a successful Kickstarter campaign check out #3 on the list, getting people to write about you campaign. This has become much more important since I wrote that article.
A couple months ago I was contacted by someone who had a business-to-business product for the music and tradeshow industry. He wanted, or needed, to raise money for his company so that he could take product manufacturing to the next level. His plan was to run a Kickstarter campaign to get the money as he already had poured quite a bit of his own savings into launching this product.
As I talked with this potential client more about this lighting system and doing a crowdfunding campaign it became apparent he wasn't sure of a lot of things. This gentleman had yet to setup a website and was going to launch it along with the campaign. (The main sales platform for had used was eBay.) This was a really bad idea. I started to grill him more about all his plans for the website, the design, and if he wanted to sell products directly on there. He claimed he had ecommerce experience but wasn't really aware of options like WordPress (with Woocommerce), Magneto, or OScommerce. On top of this the reward system he had for contributing money was wacky. This was a bad way to get started and it sort of felt like he was trying to get to first place in a car race with a faulty transmission and engine.
Bottom line, he was seriously underestimating how hard this was going to be and the time commitment he needed to invest. (You have to invest a lot of your time to do crowdfunding successfully.) Also business products typically don't do well on crowdfunding platforms. Really consumer oriented products do better since people want to find things they can use in their everyday lives.
My biggest issue though was I couldn't think of any colleagues, sites, or bloggers we could approach to write about this product. Therefore I knew it was “dead on arrival” since if we couldn't create buzz on from any websites, it would be hard to gain a critical mass to reach the funding goal. People think social media creates web buzz but often it works the other way. Also generally the most successful campaigns are for companies and people that already have a reputation.
Even though the guy had a clear idea of why he needed the money and what he would do with it, it was still completely impractical to do a crowdfunding campaign for this product. He hadn't thought through a lot of his business plans and people will see through this. I took apart most of his plans in 5 minutes and I couldn't rewrite his material to make this sound better. More importantly journalists, like myself, are great at sniffing out BS pitches or half-truths from PR agencies and reps regarding crowdfunding campaigns. I get a lot from PR firms contacting me regarding crowdfunding campaigns but usually it's not presented in this way. They really try to make it seem like the product is already available. If he isn't clear, I can't be serious about pitching this to anyone.
I advised this guy to;
- Consider other funding options, if they are available.
- Forgot the crowdfunding thing altogether.
- Get a website up, gather testimonials, build his web reputation.
- Reconsider his options 1-2 years down the road when he has proven sales.
- He he is serious choose another crowdfunding platform that is less crowded.
It would have been easy for me to take this guy's money but since I knew he wouldn't have a good experience running any crowdfunding campaigns with me, I wasn't going to work with him. Besides if he didn't fulfill his promises this would leave a black mark on his company. Not a good way to get started.
If you have thought of running any crowdfunding campaigns or have done one yourself, what are thoughts? I am right that crowdfunding isn't as easy as these platforms make out? Do we too often hear of the success stories?