Fundraise with finesse: 5 crowdfunding best practices for the budding entrepreneur

During my most recent trip to Hong Kong, I visited IoT startup accelerator Brinc where I was introduced to late stage startup, Soundbrenner. After chatting away with founder Florian Simmendinger about the path he has followed in developing his product, we touched upon the subject of crowdfunding and its importance to the startup economy.

“I guess the biggest surprise for me was how professional most successful crowdfunding campaigns are executed. Today a whole ecosystem of different service providers and companies exist to help startups with crowdfunding and they are making a lot of money on it,” Simmendinger said.

I’d have never thought. I was of course aware of some of the mega successes of Kickstarter, but I instinctively imagined that they were projects that were largely helmed by people who either managed their success by happenstance or through sheer superiority of product design. Simmendinger went on to explain that in today’s competitive fundraising climate, the importance of scrutinising every facet, every detail of a campaign cannot be over emphasised. “It’s not just something that a bunch of people throw together. There’s really a whole science behind it,” he said.

After doing some digging, here’s a list of best practices for all you prospective crowdfunders out there.

The original Kickstarter success story. Pebble’s e-ink watch managed to raise US$10 million back in 2012.

1. Do your research

Understanding your target audience and the community that you see yourself fitting into, is essential in attracting the backers and supporters you will need to succeed. Try to visualise where your product might fit in the marketplace. Investigate your audience, their interests, the campaigns they follow, the social media groups they belong to, the websites they visit and start participating in these groups.

Nick Ramil, head of validation at Brinc, suggests using social media tools to get a clearer profile of a potential supporter. “One of the greatest benefits of crowdfunding – outside of the capital – is the ability to conduct market research with your supporters. Your early contributors all have characteristics, different ages, interests, and these should be categorized on a frequent basis to see if you can identify trends in your ‘perfect consumer.’”

What many crowdfunders attempt to do is replicate a successful campaign and tweak a few things to have it fit their product. While this can help you save time, Simmendinger suggests, “you shouldn’t forget to adjust it to your particular product and audience.”

Soundbrenner’s Pulse has raised US$163 thousand on Indiegogo.

“If you make a 3D printer, yes, look at other 3D printer campaigns and you will learn a lot. But if you make let’s say a smart bicycle helmet, you really need to understand how bikers buy their equipment, what exactly they value and what information they are looking for,” he adds.

Ramil also stresses the importance of thinking through a viable pricing strategy. “It’s of utmost importance,” says Ramil, “As an example, a vital step for startups who receive the Brinc Certified seal is to have our teams figure out their estimated BOM [bill of materials] before they launch as one of the worst situations for any startup is to find out they can’t run a sustainable business because they can’t make their product for the price the offered.” One way to achieve this is to simply add a significant buffer to your cost estimates, that way ensuring there’s little opportunity for overextension.

2. Get ahead with communication, be consistent and stay on top of it the whole way through.

Why start pushing ahead with brand development without even having fully formed your product? The answer is simple: you need to shore up demand and test the waters. “Many entrepreneurs believe they can simply put their product on a crowdfunding site and consumers will find it on their own,” says Ramil. “These people often fail.”

3. The importance of design

4. Multi-pronged marketing

5. Upkeep