Crowdfunding: How Awesome Kickstarter is for Entrepreneurs
One of the first things that fascinated and enticed me so much to be an entrepreneur was my exposure to crowdfunding. My first year at Utah State University I enrolled in an entrepreneurship leadership series class - MGMT 3550 - also marketed as “The one most valuable 1-credit class you will ever take” (and I would certainly agree with that). Every week a successful entrepreneur or business leader, but usually entrepreneur, would come and speak to students for one hour about their business venture and then answer questions. The experience, stories, and successes are incredibly diverse as are the people who have spoken. I’ve heard from Altra footwear, Enve Composites, JJ Cole Collections, Denik, Malouf, Rachel Parcell, Peter Huntsman (CEO of the Huntsman Corporation) just to name a few (although these were the presentations I particularly enjoyed). The creative, determined, and tenacity filled ways that these companies and entrepreneurs started their business, raised capital, and got funding were and still are nothing less than both amazing and inspiring to me, and it was when I learned of stories like these, I knew I wanted to be an entrepreneur. I was, and still am, enticed by the unique challenges a business owner or leader faces.
Crowdfunding is a particular practice of funding in which a project or venture raises small amounts of capital from large numbers of people. But what distinguishes it from other forms of funding is that it’s typically done through the internet. Crowdfunding platforms across the internet (which we’ll talk about in just a few) have given entrepreneurs, inventors, thinkers, and creatives more access to funding and exposure to the world than ever before. If you’re an entrepreneur, this just might be your stepping stone to get your idea off the ground and running. I wish you could feel my hands shaking your shoulders right now and hear my voice rattles in your ears saying “THIS IS SOOO COOL!”, because it is! It is so cool! So the question is, can you think of one of these online platforms?
Kickstarter is the world’s largest funding platform for creative projects. This isn’t just unique business ideas - it’s ideas. Children’s books, community projects, retail, board games, cooking books, community and social projects, and so many more, are all included. The amount of different types of creative ideas on here are staggering!
How it Works
If you have an idea you want to take the market, you can set up a campaign on Kickstarter that then opens it to the market for funding. This campaign is somewhat similar to a business plan, but much shorter, because most of the readers are everyday normal people looking for a product they want!
You’ll set up a time frame (usually around 30 days), and specify how much funding you’re looking for to accomplish what you want to accomplish (perhaps that is to set up a new manufacturing system, launch a new product, or create a store). You’ll also offer different funding options, like $10, $20, $50, or $100. To each donation, you will offer a different reward. For example, in return for a $10 donation you might send them a product, if you reach your funding goal. For a $50 donation, you will send them 3 of product in exclusive 1-time packaging. Then, you launch.
Once your Kickstarter is open, it’s open for funding. People (or businesses) may choose to fund you just for the heck of it because they like what you’re doing, or, they may fund to get something in return. In the latter case, all they’re doing is buying your product in advance. Let me clarify this.
You’re just selling your product or service in advance; that is, if you reach your funding goal with the money people gave you, you’ll in turn reward them whatever you promised according to the donation packages you set up.
So if you’re goal is to raise $30,000, and you raise $30,000, you have to follow through on the returns to each donation you received. In other words, people are buying your product before you’ve made it. It’s an outstanding and brilliant way to test your idea against the market. If you hit your goal, then good! You probably know that you have a marketable creative idea, and that people want it! And, through Kickstarter, you’ve proven that! You have people who have bought your product and are waiting for it!
If you don’t hit your goal, you get none of the money, and it’s all returned to the donator’s pockets. So Kickstarter is an all or nothing, and you better believe it, figuring out what to set as your goal and properly structuring your KickStarter campaign is a difficult thing.
This is one reason why I think Kickstarter is the most popular creative idea funder in the world. You aren’t selling ownership in your company. Instead, you’re selling product in advance, as long as enough people pay for it so that you can make it.
What an incredible and innovative way to get funding for your idea! If you’re considering using Kickstarter, do a thorough analysis of how your idea stacks with Kickstarter’s audience. Some ideas tend to do much better than others, as do some products. You’ll definitely want to search for others who already attempted something similar to you, and then perform a proper evaluation.
If you’re seriously thinking about starting a business venture, marketing a new product, or sharing any other creative idea that you think people might support or use, Kickstarter might offer you great potential for funding.
On that note - what do you think of Motilek Wood Bowties doing a Kickstarter?
Let us know!