Since Kickstarter and its chief rival Indiegogo launched, the tech and web industries and have seen a wealth of entrepreneurs make their case before the crowd. Looking to fund everything from tech gadgets to movies and charitable causes, entrepreneurs of all stripes have turned to the crowd to bring their ideas to a mass market.
Simply launching a crowdfunding campaign isn’t a recipe for success. While many campaigns achieve incredible success, many only hit their goal by a slim margin, and even more never even pass their goal. Crowdfunding is simply the first step of a much longer process and one that is mirrored in the day-to -day competition that any new business faces when it comes to market.
Crowdfunding campaigns can accelerate the early stages of innovation, brainstorming, and strategy any company needs in order to survive. Crowdfunding campaigns teach those who undertake them valuable lessons that apply to entrepreneurship as a whole.
Here are five lessons any entrepreneur can draw from the world of crowdfunding:
1. Solve a problem
Products and services that achieve the greatest success solve a real problem or fulfill a need that hasn’t been met by existing services.
For AIRTAME, the problem was the jumbled mess of cables that exist in every conference room and the convoluted process we go through when we want to connect our computers to a TV or monitor during a meeting. Wire solutions are messy, complicated, and don’t allow for remote connectivity.
AIRTAME came up with a small dongle that plugs into the HDMI port on a TV and uses wireless connectivity to connect to your computer or mobile device. It also allows other users to connect to a screen remotely.
AIRTAME found a balance between the affordability of the consumer solutions, such as Apple TV, Chromecast, and the functionality of the enterprise options to address the needs of smaller businesses. They also focused on providing a business could use to both implement and manage the devices across meeting rooms or multiple locations.
The solution to a real problem turned into one of the most successful campaigns on Indiegogo and the most successful European campaign at the time, raising $1.4 million.
“First, validate there is actually a need in the market for a solution like yours. Next, use crowdfunding and feedback to nail the market fit and develop specifically to that demand,” Jonas Gyalokay, CEO of AIRTAME’s explained.
2. Be funny, entertaining, and capture the crowd’s imagination
Of course, not every product or service has to solve a problem. Sometimes, to be successful you just need to make people happy, make them laugh, or inspire them. Several artists and entertainers have turned to crowdfunding to bring new projects to light that might not have been possible without the validation of an awaiting audience.
A recent example is the campaign for Super Troopers 2, a sequel to the stoner comedy from 14 years ago. Broken Lizard, the production company behind the film, turned to Indiegogo and just closed their campaign after raising $4.5 million.
The company turned to the movie’s most devoted fans who would desire a sequel, then used a strategy to reach a larger crowd – humor. Their funny campaign video hooked the audience, doing much of the hard work for them. Whether you’re trying to market a product or sign up a new client, humor is one of the strongest strategies you can use.
3. Find a niche that fits your offering
Finding the right market or audience can often be a challenge. Sometimes entrepreneurs have the desire to bring a new experience to the market, but it’s not immediately clear how to achieve that goal.
You can start by appealing to a specific niche through the right mix of messages and content. For the entrepreneurs behind Carta2, that meant looking to the world of gaming in order to share their car customization service with the world.
Carta2 (pronounced like “car tattoo”) lets customers order custom stickers for their car. The decals are large enough to completely change the look of a car, covering extensive portions of it. To allow users to visualize this, Carta2 built a solution that allowed users to see the car decorated in a virtual 3D environment.
They used a 3D gaming engine that powers some of the most popular games available: Unity. Realizing that a 3D customization experience, powered by a gaming engine could appeal to the gaming community, they targeted that market to reach their crowdfunding goal.
“[One] advantage of crowdfunding is that you can get a sense of the consumer. We were able to directly be in touch with our future customers and hear what they wanted from our platform. It has helped us become a better company in the long-run,” Noa Lebovich, Carta2 Director of Customer Relations and Business Development, said.
4. Innovate and remix
If you’re building something new, it better be — well, you know — new. There’s no point putting in the time and effort to launch a crowdfunding campaign, or a new business, if it’s identical to what’s already available.
Pebble is one of the stars in crowdfunding history because it combined key technologies to create something new — namely one of the world’s truly successful smartwatch platforms. Pebble’s unique mix of technologies allowed it to capture the imagination of consumers ahead of the release of wearable platforms from Google and Apple. It did so by innovating many of the paradigms that are quickly becoming a standard part of the wearable experience such as monitoring notifications and serving as a remote control for a user’s phone.
Another product that leveraged innovation was The Core from Mass Fidelity. The core is a portable, stand alone speaker system that can simulate an entire surround sound system from just one small box. The company leveraged technology to provide a solution that sounded amazing, but was portable enough to match the experience users were looking for.
In the crowded home speaker market, crowdfunding was a way for Mass Fidelity to confirm its innovations were enough to attract users. Mass Fidelity raised a remarkable $1.4 million during its campaign, and gained positive reviews from the media.
“The Core leverages technology that allows for new, better, and more convenient ways of listening to high quality sound. Did the consumer want that? For us [crowdfunding] was a good way to validate that the market was ready for a paradigm shift in the way that audio was consumed,” Ben Webster, Founder and CEO of Mass Fidelity said.
5. Time your campaign well
Just like in crowdfunding, a major factor in entrepreneurial success is timing.
This was the case for Oculus Rift. The well-known project was acquired by Facebook (before it even launched) and is arguably one of the most successful crowdfunding campaigns of all time, even though it didn’t raise the most money.
Oculus Rift launched in 2012, after technology matured to allow for a realistic virtual reality experience that wasn’t nausea-inducing. That problem plagued virtual reality in its 90s iteration. By the time Oculus Rift’s campaign launched, memories of the horrible 90s virtual reality experiences had passed and people were more receptive to a new virtual reality solution. Sometimes failures have to be forgotten before someone attempts to solve the same problem again.
Beyond these, there are plenty of valuable lessons to draw from crowdfunding campaigns throughout history. The short, intense periods of innovation and adaptation initiated by crowdfunding campaigns are a great source of inspiration for building a successful company.