Crowdfunding for startups: When to start?

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With over $16 billion raised globally in the crowdfunding industry last year, it’s easy to understand why entrepreneurs and startups are increasingly turning to this practice as an attractive alternative to conventional mediums for financing the launch of new products and ventures. The barriers to entry are relatively low since you don’t have to be a well-connected entrepreneur in Silicon Valley to convince an angel investor to hand you a large sum of money. Instead, you’re putting your marketing skills to work by asking a larger pool of people to support your product.

It’s no secret that the crowdfunding industry is booming. It seems like every day you hear about an exciting new startup crushing their campaign goals and launching their company via Kickstarter or Indiegogo. Still, crowdfunding isn’t for everyone and not every successful product needs crowdfunding. It requires significant financial investment, time, and energy.  As such, here are four things every startup must do before launching a crowdfunding campaign.

1. Prove your product’s market fit. When we create a product it’s like falling in love. No one can tell you it’s not the best thing in the world—well, no one but the market. That’s why you have to have that conversation, early, and often. I always advise startups to build a qualified list of their first 1,000 leads. If you can’t do this, or if it proves to be really hard,it’s a warning that there is rough road ahead. Learn, pivot, and improve. Give them what they want (not what you want) and they will give you what you want.

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