Starting a new project can be very stressful for a startup. Investors typically want to see a product, or series of products before jumping on board to help the business grow. Part of the early stages of a startup involves finding the funds you need to get those initial projects off the ground. Not everyone is capable of bootstrapping these early initiatives, and the risk involved with doing so can far outweigh the potential for success.
Enter Kickstarter, a popular alternative to publishers and investors that allows you to find the funding you need by appealing directly to your potential customers. A lot of startups use Kickstarter as a combination marketing tool and pre-order system. Your prototypes may be complete and all you need is some extra funding to initiate the first round of production – or your startup may have a great idea that just needs some extra funding to hire on the extra hands needed to make it a reality.
No matter what your needs are for these funds, Kickstarter is a great way to generate them without giving up a piece of your company to do so.
Here are a few ways startups can prepare for your first Kickstarter project.
Overestimate Your Needs
Offering rewards for various donation levels is great, but it could set you back more than you think. A lot of project founders use Kickstarter with a goal in mind that will just meet their needs, but forget the amount Kickstarter, Amazon, and the rewards take away from that total.
You don’t want to ask for $1,000 when you really just need $500, but you do want to make sure that what you’re asking for is enough to meet your needs. Failing to deliver on a promise made in a project can have a long lasting negative impact on your reputation. It would make it almost impossible to successfully launch another Kickstarter project in the future, and could result in legal action.
Every interaction you have with Kickstarter backers will have a direct impact on your reputation. Your first customers are the ones that pre-order whatever it is you’re putting on Kickstarter, and that means you’re pulling double duty as both a PR and customer service representative.
If you can’t meet the estimated delivery date, explain why in a video and combat pushback with transparency. Kickstarter is a very social experience, and so you definitely want to control the message.
Under-promise and Over-deliver
If you make your project look like the best thing since sliced bread, but know that it won’t realistically be as amazing as you claim, then you’re probably going to end up with a lot of disappointed customers which will be more hesitant to back your project(s) in the future.
Imagine the buzz that would surround your product when it comes out in stores (thanks to the Kickstarter funding) and pre-order customers are eagerly showing their friends and family what your product can do.
You Have to Spend Money to Make Money
Don’t be cheap with your rewards, and spend a little money producing a decent pitch video. This is the first time your company and/or project is being introduced to the world. First impressions is everything, and very few people will be inclined to back (or spread the word about) a project that has no visual representation beyond a few photos and rewards backers poorly.
Let’s face it: A bumper sticker is a terrible reward for someone willing to cough up $25. Consider your needs and calculate the reward into the project total. See if you can’t sweeten the deal with additional content and information. Offer a digital download, exclusive bonuses, and cut the price on your product from what you would expect to get out of it retail. These customers are your front line in generating buzz once the product launches.
Indiegogo is an increasingly popular alternative to Kickstarter. Not only can you start a project and receive funds if you don’t actually hit your goal, but many users reluctant to back Kickstarter projects (for whatever reason) may be more inclined to do is in the socially-rich environment of Indiegogo.
Not every project has to be funded by the crowd. There are still plenty of wealthy investors out there willing to invest in your project, and perhaps even help your startup get on its feet. Kickstarter isn’t (and should never be) used as a startup funding source. It’s intended to fund projects, and that’s a limitation many startups have a tough time working around.
No matter what your reason for seeking this additional funding may be, consider Kickstarter as a lot more than a source of revenue. It could very well be the catalyst that allows you to generate the buzz you need to make your project the next big thing.