5 Lessons Learned From Crowdfunding
In recent years, crowdfunding has become a serious option for product developers — and a welcome alternative for those long constrained by traditional funding models. Bootstrapping is painful, angel investment involves a lot of effort and energy, and venture capital is primarily only for startups that are well along their path to success (and arguably may not even need the VCs). The latter two options involve writing long-drawn out business plans and roadshows that are at least as complicated as shipping a product.
The ideal solution is one where securing financial support is not as arduous as traditional methods while allowing the product developer to have a close relationship with their future customers. This would free the product developer from the chains of abstract market research and unrealistic milestones while giving them real validation and guidance.
The advent of crowdfunding seemed to herald the arrival of a new solution to the pernicious propblems.
At Gnowit, we have a long term vision to make internet content consumption easy, engaging and elegant. We envision an information analysis product that can automatically track all the new information published in the world while only presenting those elements that would truly, seriously interest each individual user. Our media monitoring platform was our first baby steps in that direction.
However, we were missing a key component, the ability to learn about our users and personalize the information for them. We felt ready to take the next step in this direction via the development of a personalized, mobile application that would employ our Artificial Intelligence technology to recommend articles that would match each user’s unique interests. As regarding to a viable funding model: check, check, check — all of our criteria were met through the crowdfunding model. We knew we needed funding as this was a large undertaking but we also knew that there were many people out there who would support it.
So, we took the plunge and put together a video and a description of the problem. Our indiegogo campaign is currently running here.
Now, I’m going to focus on just of the lessons that we have learned about crowdfunding thus far.
1. Crowdfunding campaigns are not ‘free’
Yes, I know you lose around 9% of the funds to credit card/paypal and platform fees. However, to run a really good campaign, you’re going
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to have to devote a lot of time and effort. Coming up with a good product description, crafting perks and rewards that would both entice and please backers is not easy. Neither is it particularly easy to try and get press and buzz.
2. You are not alone
This is not just a truism for extra-terrestrial life. Developing an innovative high-tech product is a hard thing to do, any way you look at it. It is so much easier when you’ve got friends and an ecosystem that is positive. Every time a backer funds your project, an angel out there gets its wings back. You know that someone reached into their wallet and put some money your way because either they believe in you and your team, or they want the product and believe that you can deliver it. This is validation. Pure gold.
3. It does not need to be perfect
Perfect is the enemy of ‘done’: Some call it ‘analysis-paralysis’. We worked hard to put the description of the product together, and wrote a case for why we could deliver. We created concept graphics, and a video. In the end, the description was great (but did not really convey the long term vision), the concept graphics were polished (but did not show the real power of the product) and the video had a solid story that it was conveying (but was shaky and a bit hissy due to background noise). If we had more time, we could have redone these – but we’re adapting – we’re modifying the content, and adding more graphics, but we probably won’t update the video significantly (too much product development awaits!).
4. Traffic – lots of traffic
A crowdfunding campaign is an excellent excuse to get out there and tell everyone you know about what you’re doing. You can legitimately ask your network to advertise your ‘cause’. We got thousands of impressions. However, this won’t happen unless you are willing to get out there and confidently state your vision, and humbly ask for help.
5. Your own personal network matters
These are the people who know you. The core of our initial support was from professional colleagues, relatives, and close friends. There were quite a few former students of mine who supported the campaign as well, which validates my desire to go back to university to teach when I’m ready to retire (not there yet!). These ‘angels’ are also the ones who will pass on your message to their networks.
The most important win for me, personally speaking, was that I was worried about trying to build a new product, using technologies that I’d developed in the labs, but which were not proven. Just the fact alone that there were people who believed in us, and were willing to put money to support you, was enough to give us the courage to take on this challenge.
Today, I feel that I have an obligation to deliver – to live up to the trust that my friends, family and the generous backers have reposed in us.
Gnow.it is going to happen.