Let's be real. Crowdfunding campaigns are hard and usually are not the best way to raise money for a technology startup. However, I am getting more and more questions about crowdfunding through websites like Kickstarter. My advice is to consider this as merely one tool among a wide variety of tools that could be used to raise funds for a new startup. I would prefer Tampa Bay to have an innovation seed fund, and Irv Cohen and others are working with me to help make this a reality. In the absence of a professionally managed seed fund, there are networks of angel investors and individual angel investors that will consider investments in startups. The recent publication of final rules for Reg D by the SEC, allowing general solicitation of investors, should make finding accredited angel investors easier, while remaining within one of the safe harbors. More about this later. But here is some information on crowdfunding.
Crowdfunding is usually successful only if you can tap your own network for up to 80% of the amount that you need to raise. Typically, strangers account for no more than 20% of a campaigns total funding. There are exceptions, but usually a successful campaign starts with a large network of existing friends, supporters and fans. It takes work to reach out to your network, and social media can help with this.
The various crowdfunding sites provide invaluable information about having a successful campaign. So, do your homework. Remember, also, that you must determine what makes a campaign a success. Are you looking for presales before going into production or are you looking for funds to develop a product? Make sure that the total costs of raising money are considered. How much is shipping and handling going to cost, if you are providing promotional items to people funding your campaign? Is the cost of funding too much? Can you fulfill the orders if you are offering presales?
With these questions in mind, here are some popular crowdfunding sites to consider.
- Indie gogo (worldwide): http://www.indiegogo.com/indiegogo-faq
- Kickstarter (US and UK): http://www.kickstarter.com/
- Crowdfunder.com (US): http://www.crowdfunder.com/p/crowdfunder-basics/#a-5
- Rockethub.com (world): http://www.rockethub.com/education/faq#use-
- RocketHub App Specific: http://www.appbackr.com/
- Charity Specific: http://crowdrise.com/
- Start your own crowdfunding site: http://invested.in/
- Circleup.com targets existing consumer products companies for crowdfunding.
- Prosper.com connects borrowers and lendors (crowdloaning?).