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At some point in time, we all have wanted to have an enterprise of our own, or have at least dreamt of one. If you have an innovative idea, but don’t have enough money to develop it, you can choose to raise money from the general crowd, known as crowdfunding. 

The idea / concept can be pitched to people on crowdfunding platforms requesting them to invest in it. In return, they expect you to give them a product once the development is complete.

So before we get into the technicalities of pulling off a successful crowdfunding campaign, let’s get you acquainted with some terms first through this article.

Who is a backer?

A backer is any individual who decides to invest in your crowdfunding campaign, and thereby back it till its completion.

Why do backers invest in your idea? 

– They get the product at an early stage. (These people are early adopters)

– They get the products at a highly discounted price

– These people want to help individuals develop new and innovative products

Key crowdfunding platforms:

– Kickstarter

– Indiegogo

However, there are some location specific platforms as well. E.g. Japan has Makuake & Camp-fire 

Duration of a crowdfunding campaign?

Usually a crowdfunding campaign can run from 1 day — 60 days. However, 30 days or less is considered to be a good duration. One must not schedule the campaign to be too short for people to miss out or too long which may result in falling interest.

Key benefits of doing a crowdfunding campaign:

Proof of concept: You can test the potential demand for your product in the market.

Raise funds: You can raise money for your idea. 

No equity distribution: Though people invest in your idea, they are not entitled to receive any equity. You will continue to hold 100% of the equity in your company.

Free PR / media attention: All press companies are looking for new content. They spot new and innovative ideas on crowdfunding platforms and write about them. This publicity is a great source of marketing.

Low investment: A crowdfunding campaign can be done with a fairly low investment. Your major expenses will be the cost of prototype, creating a main video for your campaign, marketing & ad budget and a small miscellaneous fund.

Low risk: The risk involved is fairly low. Apart from the finances, you end up spending only a little time on the campaign. There is nothing much to lose.

Key challenges around a crowdfunding campaign:


Trust: Establishing trust amongst the people so that they invest money in your idea. 

Product pricing: Setting an optimum price for your product can be challenging. You need to incorporate all costs including shipping, taxes, duties and any other extra cost. You will not be able to charge anything extra to the backers once they have contributed or the campaign is over.

Shipping: You need to consider the countries you want to sell in. Difficulties are faced in understanding the shipping cost, tax & duty structure of different countries.

Setting a delivery time: You need to promise a delivery date when you are running a campaign considering the R & D time, manufacturing time, shipping time, factored delays, etc. Usually you can schedule a delivery time of 4–6 months. Please be realistic with timelines. Timely delivery will give you and your brand a good reputation in the future.

Marketing: Choosing the right marketing avenues due to low budgets.

Theft: Protecting your idea from idea thieves.

Key pointers to keep in mind:

– Individuals will invest in your idea at a concept or prototype level.

– You don’t give away equity. All you have to give is a product to your backers once you have manufactured it.

– If you are not successful in your efforts to develop the product, no one can hold you responsible for not delivering the results. However, you do lose credibility.

So before you get started with your crowdfunding campaign, make sure to have all these above points in place, with a detailed research and analysis done on each and every prospect.

The above blog has been collaborated on by Neel Jain from our Marketing Team. For more such articles, stay tuned to Square Off’s Blog space.

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