From SCORE Richmond by Doug Carleton:
Crowdfunding just sounds so easy. You read stories about all of these neat products that got crowdfunded to start. You just put up a campaign on Kickstarter or Indiegogo (the two giants in the field), people start to donate, and you can avoid having to knock on doors looking for investors and testing your tolerance for rejection. Sounds great, but unfortunately it ain’t that easy. There is a lot that you need to do first and by far the absolute most critical thing you need to do is research. There is so much good information out there on crowdfunding that you could almost get overwhelmed by it. But the benefit is that there is a great deal to learn from other people’s successes and failures. And to get started, Kickstarter and Indiegogo have a wealth of how-to information on their sites. You may not need to go much beyond their sites.
Another extremely important decision is what is your reward going to be for contributions? Rewards can be tricky. One thing you need to make absolutely sure of is if you are looking for funding for some type of product and the product is the reward, you better make sure that you can produce enough. I have seen instances where a campaign was so successful and oversubscribed that the sponsor’s manufacturer couldn’t keep up with the demand and stopped making them. People were so mad that it ultimately sank the company because of bad reviews. Once you’ve determined what you’re going to do and how, you need to pick the right platform. It might not be one of the big two, but we will stick with them for now. Whichever platform you choose, look closely at their policies, fees etc., but most of all their policy on the money you take in. Kickstarter and Indiegogo are very different. With Kickstarter it’s all or nothing. If you don’t make your goal the money goes back to the investors. With Indiegogo you have an option to keep what you raise.
Once you have determined what platform to use and how much to try to raise, you have to create the campaign. When you’re doing your research, look at as many campaigns as you can. Some can be pretty elaborate. Some not so much, but whatever you put out there it needs to look professional. Cheesy will probably not attract much interest. You are probably going to need some kind of marketing materials including video. That takes time and money depending on how professional you want your campaign to be.
This has been barely a scratch on the surface of crowdfunding. There are many different types – for example, debt crowdfunding sites – Lending Club and Prosper being the giants. But because there is so much of it everywhere, you have to be at the very top of your game so that your campaign will be successful. Remember, research, research, research.