When you hear the word crowdfunding, what comes to mind? You may conjure up the image of a young designer, a business school student or a hipster kid merchandising the very latest handcrafted fill-in-the-blank. But crowdfunding has become both a engine for growth and in some cases survival. Last week a Minneapolis bookstore, Once Upon A Crime, turned to crowdfunding just to stay in business. Onehundred a company that produces all of their products within a 100 mile radius of Boston runs one to five crowdfunding campaigns per year with 21 total campaigns and a cumulative raise of over 2 million dollars. For years, teachers have been leveraging crowdfunding sites like DonorsChoose to make up for budget shortfalls.
Here are three insights around crowdfunding that could stimulate your imagination. One, backers like to be involved; most humans have a natural desire for participation and platforms like Kickstarter, Indiegogo and the recently launched Whirl, a socially driven blockchain-powered newcomer that let's you create a campaign only after you have funded someone else's satisfy this need. Secondly, this is a pre-market way of understanding a product in the form of refinement input and pre-launch testing. Lastly, crowdfunding delivers what design thinking conceptualizes, meaning you generate a physical product.
Looking for some real world examples? Let's begin with these three that all launched on Indiegogo.
• GilletteLabs introduced its heated razor and surpassed their fundraising goal by 492 percent and sold out.
• LEGO FORMA, a premium LEGO experience designed for adults, also successfully raised for their mechanical model fish this year.
• Last year Bose used the platform to test wireless earbuds for sleep which are now on Time Magazine's list of the most innovative products of 2018.
Create Your Own Crowdfunding Spark
If you are looking to power crowdfunding internally consider following the precedent set by Hasbro and three others.
First Build, backed by GE Appliances, is a home grown co-creation community changing the way products come to market, and inviting the community to influence the process. Products are designed and manufactured in Kentucky.
Two years ago Sony launched a campaign on it's crowdfunding platform First Flight for E-Ink Timepiece "FES Watch U." It was branded under the guise of Sony's subsidiary Fashion Entertainments, since Sony was curious how popular the product would become without a major name behind it. Sony debuted First Flight in June 2015, and it is dedicated to internal projects. The platform does not explicitly promote its relationship with Sony, and it helps employees to get an accurate estimate of the potential of their ideas. First Flight runs quarterly contests to engage teams, and the platform also functions as an online retail store for projects that are successful. Products are available for purchase by residents of Japan.
Lastly platforms such as idea connection offer an open innovation service used by P&G, PepsiCo, Nike, and many more. This offers a more controlled environment in comparison to Kickstarter or Indigogo. The down side of these platforms are:
• You are tipping your hand when it comes to product innovation.
• It is impossible to control what your brand is sitting next to in terms of on-screen real estate.
• The people who are backing you are anonymous other than their screen name.
The value of community building and pre-sales validation likely out weighs the risks. Community is powerful to enable a channel for outside in ideas that you might bring to market or scale. Give it a try.