Crowdfunding Essentials: Hardware Startup
Crowdfunding through sites like Kickstarter, Indiegogo, and Patreon are very attractive options for creating a product in 2015, especially one for enthusiasts. This is why so many of the past few years’ most interesting, and successful new ideas have come to fruition through this kind of funding model. The oft romanticized trajectory of the Oculus Rift, an 18 year-old’s garage tinkering turning into a company purchased by Facebook and run by John Carmack, has become the dream of crowdfunding, and many strive for that same success. While it’s possible, the Rift was lightning in a bottle, and it almost certainly won’t be as easy for your, or anyone else’s hardware startup. Here are a few simple things you should know before crowdfunding your idea.
1) Have a proof-of-concept
Even with the most professionally produced Kickstarter video, awesome concept art, and every perk tier meticulously crafted with value-to-donation in mind, nobody is going to take your project seriously until they see the actual product. This could be, and often is, a barebones prototype: probably not the prettiest looking or most efficient display of your end goal, but proof that it can be done, and more importantly that you’re able to do it. Going into crowdfunding with zero preparation and work done is going to potentially ruin a project. There are only around 30 days in most Kickstarter projects, so having done your homework and showing off a prototype at the launch of the campaign with attract attention, establish credibility, and give you something to work off of.
2) Contingency, Contingency, Contingency
While your crowdfunding campaign is underway and steadily moving towards its goal, it is imperative to have a plan B. Think of it as a choose-your-own-adventure book: what will I do if we achieve our goal? What will I do if we don’t? What will I do if we make four times our goal? Crowdfunding is unpredictable, and the Internet’s tendency to build either massive amounts of hype or massive amounts of hatred will never be calculable. That’s why being prepared for every situation and knowing what to do in case of catastrophic failure isn’t just necessary, it’s everything. If you’re working with other people on your project (in the case of a hardware startup you likely are), talk about contingency plans, draft a constitution in case the project takes off, and think of ways to mitigate risk.
3) Transparency
When you’re giving backer incentives and waxing poetic about stretch goals, be sure to check yourself. Yes, it may be funny and draw a few eyeballs to have a $20 million dollar launch-your-product-into-space goal for a $15,000 project, but don’t make any claims you can’t actually realize. Additionally, don’t work on an unrealistic timetable. Backers won’t get mad if you take your time, but they will if you say your project would be done by September 2014, and it's almost a year later and still in the prototyping phase. When the crash detection sensors on your drone prototype fail and it crashes into a wall (and a million pieces), don’t pretend like everything’s going according to schedule. Your backers are humans, and while humans on the Internet can be a little more pushy, they will understand if you have a few setbacks in the name of experimentation and perfecting the product. The key is to have a dialogue about what’s going on, and not leaving your backers in the dark. That’s when crowdfunding nightmares happen.
These general rules of crowdfunding are applicable in any kind of project, not just a hardware startup. They are important, however, for hardware startups because these project often demand lots of money, time, multiple people, and obstacles to overcome. Work on your project, but keep in mind that you need to have something workable, a plan B just in-case that prototype fails horribly, and the dialogue with backers as the project moves along. Do all that, and if your product is good, you’ll be just fine.