Many people I talk to are curious about the prospect of using crowdfunding to scale their startup, but aren’t entirely sure how it can fit in with their current business plan.
They already have a business with a few product SKUs. They already have an online store. Heck, some even already have a retail footprint.
But let’s be honest here, entrepreneurs are sleeping on the most underrated launch tool: Kickstarter and Indiegogo. Let’s take a look at the four reasons that makes crowdfunding a no-brainer for startups:
Access To 60 Million+ Monthly Visitors
Websites like Kickstarter and Indiegogo have a combined traffic rate of 60 million (and quickly growing) monthly visitors. Just by being on the platform, and launching in the right way, you’ll expose your new product and existing business to a vast, very attractive audience (more on that later). Even a sliver of that 60 million monthly visitors means a ton of new eyeballs to your brand.
And that’s just talking about traffic and awareness. When it comes to funding, Kickstarter and Indiegogo provides an even more impressive resume. In 2019, $25 billion was raised using peer-to-peer lending on rewards-based crowdfunding platforms. To date, our friends over at Kickstarter has raised over $4 billion, and Indiegogo has raised $1.5 billion. Again, just a tiny slice of that pie would be an incredible cash injection for any startup.
Customers With An Early Adopter Mindset
Marketers rarely ever get the chance to have direct access to their customers and investors at the same time. With crowdfunding, however, you’ll be in the trenches alongside your investors and customers, developing a deep understanding of what their needs are, and how your product or service can better address their pain points.
Whether they contribute $10 or $1,000, these backers are vocal. The community is inherently more receptive to new concepts and testing them before they’re fully baked than the average consumer. They’re early adopters who want your product to do well, and are more than happy to provide you with invaluable feedback to do so. Early-stage startups who may not have a fully fleshed engineering/marketing/finance team will especially benefit from the feedback given by crowdfunding backers of all backgrounds.
Quickly Build Credibility
When you’re early in your business, it’s crucial to get a few “wins” under your belt and begin building credibility as soon as possible. Kickstarter and Indiegogo creates a network where products that are getting some buzz are spotlighted, and the ones that are doing well will continuously be promoted.
From a technical standpoint, both platforms have a “trending” page where high-traffic projects are featured. When others (PR, influencers, investors on-the-fence, would-be customers, etc.) see that you have some traction and momentum, they’ll be more inclined to tune in, contribute, and engage with your product and brand.
The ability for a product to quickly gain credibility and momentum in the market (even before it is produced!) is what drives even large brands like Philips, P&G, and General Electric to hop on the crowdfunding bandwagon. Obviously, these giants don’t need more funding per se, but the access to an engaged audience and being able to harness the market through popularity on crowdfunding websites is almost like the seal of approval from the startup community.
For startups, the clout of closing a successful crowdfunding on Kickstarter or Indiegogo makes for some bragging material and even better momentum for future success. Peloton, a $450 million company that specializes biking experiences at home, humbly started its fundraising on Kickstarter.
Gain Crucial Insights
Audience emails and contact information is digital gold for any business. Even after the crowdfunding campaign, this information will help build out audience personas and provide further insight into what your customers look like. These are contacts who have already believed in your product so much that they’ve spent money on it before it even exists. As early adopters and online buyers, they’re the perfect place to start gathering and leveraging product and marketing insights to quickly scale and grow.
Crowdfunding Is Priceless For Startups
Thanks to platforms like Kickstarter and Indiegogo, businesses and entrepreneurs no longer have to rely on begging for funds from friends, family, and professional connections for months on end. Instead of packing up a proposal, business plan, and protocol to recite the same pitch, businesses now have the ability to manage and track fundraising progress, consolidate the specs of their project, and advertise – all through one centralized platform.
Crowdfunding is a niche monster in itself, but the results are truly priceless for your business. There are very few instances in the business life cycle where marketers have such pointed access not only to crucial feedback, but also a forgiving and receptive audience to take the product for a “test run”. In short, your startup needs to launch a crowdfunding campaign, and you needed to start yesterday.
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