Kickstarter is one of the best tools currently available to entrepreneurs and really does enable anyone to come up with an idea for an invention, service or product and then make it a reality. By getting the very audience you are designing for to crowdfund your ideas, you can avoid the difficulties normally associated with finding backers and not have to worry about debt or giving away large chunks of your business before you’ve even thought of a name for it.
Of course just because you aren’t selling your soul to the banks, doesn’t mean that you are free to do whatever you want or that you are completely free from obligations and complications. It’s crucial to remember that you are still entering into a verbal contract of sorts with your backers and if things go wrong you will still have them to answer to. The danger is that you don’t take having those backers seriously or extend to them the same courtesies as you would to a single investor – and that’s when things can start going wrong.
In fact here are two recent examples of Kickstarter projects that didn’t have fairy tale endings, or that have met their share of adversity.
Joyride was a relatively simple project in theory – a transit app from a non-profit organization that was asking for $25,000 and accomplished that goal. Why a non-profit organization would need anywhere near that amount of money to launch an app (last I checked there are essentially zero overheads for app development) is one cause for concern, but that never even became an issue as early in December they were forced to refund the full amount (they raised $26,280) due to a ‘change in staff’. Again, why the app would need much staff is something I find confusing (though to be fair it does need to work alongside several up-to-date data feeds which would require some organization), but the company at least released the code freely for other users to develop.
Code hero was a rather more ambitious project – a 3D game that would teach players how to code games. The project asked for $170,000 and managed to reach that aim, but several months later backers still hadn’t received the game and began to threaten legal action. Lead developer Alex Peake responded to the complaints with a statement explaining the technical difficulties they were facing and pointing backers in the direction of an alpha copy, but all eyes will be on the team over the following months to see if they deliver on their promises
So how do you make sure that your Kickstarter story doesn’t go this way and avoid this kind of fate? Well the first and most important tip is simply to treat your Kickstarter backers as you would treat any investors – stay in constant communication, explain yourself and recognize that there is a chance of legal action if they lose faith in you.
Likewise this means looking at your project in a real business sense and really thinking of every contingency and coming up with a sturdy business model. If you were going on Dragon’s Den to get funding you would need to be able to demonstrate how your business was likely to be profitable, and you would need to have proof of concept before you even began which would mean doing market research, working on prototypes and demonstrating your business experience. Crowdfunding sites don’t always demand these things – your backers aren’t businesses – but that doesn’t mean you shouldn’t still do them.
Make sure you are passionate about your project and that you really are willing and able to see it through to the end. If things go wrong and you end up having to put in another year of work, are you willing to do that? What are you willing to do to make this a success?
Most importantly don’t make unrealistic claims to try and get backing and instead make sure you follow one of the golden rules of delivery – promise little and deliver lots. That’s how you make happy customers and backers.
Author Bio: Sara Brown is a celebrated author having knowledge about all aspects of business. Apart from spending time on the beach, she also provides contract manufacturing in California.