Cult favorite video game developer Double Fine recently shocked investors by raising over $1 million in 24 hours on Kickstarter for its new adventure title, despite the genre’s supposed death. This has led critics to opine that crowdsourcing isn’t just the hottest new thing to happen to start-ups and small business owners since Apple’s App Store. It may also present tomorrow’s most promising new source of venture capital and angel investment.
From both research and ROI perspectives, the model makes sense. Why bet the farm spending years building a better widget when you can instead find and fund tomorrow’s next million-dollar idea simply by asking potential customers. Crazy? Not so much. Wasting thousands on research and development up-front, then manufacturing thousands of unproven goods, hoping that they’ll actually align with market needs years hence is the insane approach. Through crowdsourcing fundamentals—requesting feedback or recruiting help from public donors via open calls for assistance—you can instead gauge demand for and create bankable products from day one. That’s what entrepreneurs call risk mitigation.
Under current business models, creators can only make educated guesses as to what consumers will buy and how much. By rather letting shoppers fund only ideas they like best, you know exactly what to create, and in what quantities. Repositioning up-front spends more heavily around development vs. marketing, crowdsourcing allows you to deliver a high-quality that essentially sells itself. Better still, preorders provide working capital to fuel production, and donors feel more emotionally invested in the end result.
To start the process, create just enough design samples, documents, and drawings of your product or service to convey its unique selling points. Short (2-5 minute) videos highlighting key features, and introducing team members and mission statements, should also be built. Doing so promotes viewer empathy, attractively showcases core concepts and provides a user-friendly platform made for sharing on social media services that lets you showcase your elevator pitch.
When summarizing your product or service, no more than three to four main benefits should be discussed. Short, bulleted text descriptions, screenshots, photos, and 90-second maximum film clips can be used to dive deeper into supporting topics. Don’t forget to dress for success either. Regardless of available capital, always double down on visual presentation: People tend to judge on first impressions, and a picture’s worth a thousand words.
Worth noting too – from an investor’s perspective, working prototypes and vertical slices are far more convincing showpieces than tech demos, sketches and sunny PowerPoint presentations. To this text, mock-ups and prototypes should always be used to showcase proposals where possible, and preferably assembled before public announcement.
Equally important as preproduction and marketing is defining required funding levels, broken into tiers to attract spenders of all budgets. Associated rewards must also be assigned to each. Payouts can be physical ($50 nets a copy of the DVD and signed poster) or personal ($500 earns you an executive producer credit and thank you call from the director) – either way, the more value-adds, the merrier. Lest you feel stingy here, remember: They’re ultimately cheaper than giving up a piece of your company.
After building presentation materials, you can introduce your designs to the world through your website, or the following services:
Such online hubs act as both product showroom and public forum where everyday buyers greenlight projects by voting with their wallets. The beauty: You own the end-product, minus any optional payments or royalties awarded to collaborators or contributors who’ve submitted original designs for inclusion. Profits from every sale, starting with the first one, help keep the lights on and new ideas flowing. Win or lose, you not only retain all rights to your creations – you’ve also begun generating buzz for them and connecting with potential backers and fans.