Why You Should Crowdfund

There’s no getting away from it. Engineers who have the goal of launching a business need funding, and out of all the methods available for raising money, crowdfunding might be the best way to go to market with innovative technology.

Crowdfunding is not only faster than most other fundraising methods, but it also gives you crucial user feedback early on, allowing you to make necessary and desirable improvements to your designs.

As you weigh your options for bringing your idea to life, here are a few reasons why you should consider crowdfunding above all the others:

Go to market faster. Before crowdfunding, entrepreneurs had limited options for raising capital. They could apply for a small business loan, search for grants, pitch to venture capitalists, borrow money from family members and friends, or tap into their savings. Crowdfunding, however, provides a way for you to raise the necessary funds in order to more quickly launch an idea, and it also connects you with early adopters.

Validate your design. If your product attracts many backers, then you’ve received validation that it might do well in the market. Many successful entrepreneurs have taken advantage of this momentum to make a more impressive product debut later on. Venture capitalists keep an eye on crowdfunding platforms to find new projects with big potential. Validation used to be a costly hassle, but crowdfunding makes it faster and more scalable.

Gather free user research. Instead of hiring people to try your product or searching for trial users through social media, you can access enthusiasts eager to test the viability of your product through crowdfunding. Backer feedback has helped numerous campaigners refine their designs before going to market.

Identify early adopters. Crowdfunding puts you in touch with your target users. For example, through Indiegogo’s categories and online promotions, you’ll connect with consumers already searching for a solution like yours. Then, they’ll recommend the page to their friends, increasing awareness of your product at an early stage.

If you’ve decided crowdfunding is right for you and your product, plan ahead in order to launch the most effective campaign possible:

At which point in the design process should I start my crowdfunding campaign? 

You should have a working prototype of your product before launching a campaign. Backers on Indiegogo don’t know you or your qualifications—the only reason they will fund your campaign is if they understand your product and believe that you can produce it. A working prototype will prove that. Also, backers will be anxious to receive your product once they’ve funded it. We recommend that you have a bill of materials (BOM) and position yourself at about six months from manufacturing so that you can successfully fulfill your promises to backers. If you rush through the process, you might undercharge for your product because you haven’t yet determined the exact cost of production. Avoid losing money on your campaign by planning ahead.

How much market research should I do?

First, it’s important to do some general research, but you should also recognize that crowdfunding often presents a more expedient path to getting a sense of the marketplace than traditional market research. Backer feedback regularly helps engineers improve on their designs throughout the crowdfunding process, and when you make the most of the same opportunity, your solution will make a better impression once it goes to market. 

What do I need to succeed with crowdfunding?

Start with a solid plan. Here are the best practices to keep in mind as you prepare for your campaign: 

Grow your audience ahead of time. Campaigns that reach 30% of their goal in the first two days are much more likely to exceed their ultimate crowdfunding goal. 
Set realistic goals. Establishing a low fundraising goal—at first—can set your campaign up for success. You’ll more easily get 100% of the money and convince backers that they can trust your business. Then, you’ll have the momentum to create stretch goals and raise more money. 
Update your backers. Email you backers to keep them engaged in your campaign. The average conversion rate from email is 34% higher than other forms of outreach.
Share tasks among team members. Divide the workload so that you can establish an effective campaign. If your strength lies in engineering, delegate marketing tasks to a family member or friend who has more experience with promotion. Set aside at least 60 days to plan the campaign and 30 days to manage it after launch. With a campaign team on board, you’ll accomplish more than you could by yourself. 

How do I choose the right platform?

Your crowdfunding partner can have a significant impact on your success. Indiegogo takes pride in offering key benefits that set them apart from other platforms:

Expert support and partnerships that can help you make the jump all the way to retail (if that’s your goal)
Pre- and post-campaign tools 
The flexibility to choose how and when to get your money, with options including Flexible and Fixed Funding 
Access to the latest technologies that make it easier for backers to support your campaign, such as Apple Pay and Stripe payments
Fulfillment support from dedicated partners, including Amplifier and Brookstone
The ability to sell your product on major e-commerce platforms through dedicated retail partners, including Amazon and Newegg
Round-the-clock support from real people

Indiegogo and Arrow have teamed up to better support entrepreneurs. Through an innovative Arrow Certification program, you can have valuable access to partners who will help you with design, prototyping, and manufacturing. If you have a product that incorporates electrical components, for example, engineering experts will review your BOM and design for manufacturing and assembly (DFM), offering professional guidance to help you refine your product. You have the option to get certified by Arrow – give your campaign a strong sense of credibility in the eyes of backers and develop the most impressive product possible.

We want to support engineers all the way to market. Sign up for our go-to-market program with Arrow or start your crowdfunding campaign today. 

 

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