The only thing more challenging to an entrepreneur than building a business around an amazing idea is finding the right people to invest in it--both actual investors and those early adopters willing to take a chance on buying from you.
When my co-founder and I started Influence & Co., we knew who would make good clients, but finding them can be hard when you're so new. That's why it's exciting to see such a variety of crowdsourced fundraising platforms online: It makes entrepreneurship that much easier for people with solid ideas but without the same initial access to investors or early clients.
It connects communities of potential customers and investors to great ideas and helps businesses and entrepreneurs find their footing. But you can't afford to lose that footing once you earn funding and finally close your campaign--that's just when the real hard work begins.
There's More to Your Crowdfunding Campaign Than Reaching the Fundraising Goal
I recently connected with Steve Young, founder of SYNEK, to learn more about his experience running the most well-funded Kickstarter campaign in St. Louis to launch his company and what advice he has for other entrepreneurs looking for success after closing crowdfunding campaigns of their own.
When Steve and his team started SYNEK, they were introducing a totally new piece of technology: a countertop draft beer dispenser. Their idea was a huge hit, and the team raised nearly $400,000 more than its quarter-million-dollar goal.
While raising that kind of money and exceeding your goal by so much might seem like a feat in itself, Steve said that the real difficulties of crowdfunding like this start emerging after you're funded.
"Delays from our factory compiled with delays from our suppliers, and the three-month lead time intended for product testing and adjustments was shortened to just two days," Steve said.
"We ironed out the defects in the next three months and refunded anyone who wasn't up for the early-adopter lifestyle anymore, but it wasn't an easy road. It was simultaneously one of the best and worst experiences of my entire life."
Unexpected things come up that delay your development and manufacturing, and then it's like a domino effect, in which each delay impacts the next step of the process--which is why 84 percent of successfully funded Kickstarter projects don't ship on time. And when those issues arise, Steve recommends constant communication with your customers about any progress and delays.
Despite the challenges that come with crowdfunding and developing new products, Steve said, his company would not be as successful without this kind of fundraising campaign.
"It lets you tap into a community of visionaries and early adopters that just doesn't exist anywhere else," he said. "It also gave us a chance to build a relationship with our supporters and let us shape the product with them along the way."
That's why the team turned to Kickstarter for its latest project: a countertop wine dispenser that learns your palate. Somm by SYNEK adjusts temperature and aeration for every wine on its own and tailors the experience to the user.
Learning from his previous crowdfunding experience, Steve said that this time around, the team is ready to go into production immediately after the campaign ends.
"All of the relationships that we had to build from scratch last time are already in place. We've seen the whole process firsthand, and we're ready for whatever new challenges are coming our way," he said.
Crowdfunding Beyond Kickstarter
Not all crowdfunded projects take off through Kickstarter, though. We recently started working with StartEngine, an equity crowdfunding platform that wasn't on my radar yet. While Kickstarter is more of a rewards-based platform that allows customers to earn cool prizes or discounted products tied to how much they contribute, equity platforms like StartEngine can attract much larger investors to your project.
Although this kind of platform is different, especially in terms of the average amount of money you can raise and the level of involvement you can expect from contributors, many of the same best practices around engagement and communication after a session apply to both.
Ron Miller, CEO and co-founder of StartEngine, mentioned that one of the first things a team should do after its fundraising round closes is create meaningful engagement among its new brand ambassadors.
"The types of considerations would include soliciting input on new product development, marketing messages or strategy, and even questions about how to improve the quality of the product or service created," Miller said.
Building a community around the people who have invested in your company and getting their input, regardless of whether you actually implement each recommendation, is important to success after you've reached your fundraising goal.
As far as your team's preparation for production, it's as important to develop and test a product funded through Kickstarter, like SYNEK discovered, as it is for ideas funded through equity platforms like StartEngine.
"The key elements that should be considered include constant testing to ensure that the product or service indeed meets the needs of the customer base," Ron said. "By conducting structured testing and measuring results, teams can ensure that their product or service will be met with success in the market."
Whether you take a fundraising approach through Kickstarter or raise the stakes with an equity crowdsourced fundraising tool like StartEngine, it's clear you'll find the most success by researching, testing, and communicating consistently throughout your entire process--from initial fundraising through product delivery and audience engagement.