Historically, business owners and other professionals have relied on bank loans and angel investors to fund their enterprises; however, the Internet has introduced an alternative source of capital. Crowdfunding allows people and organizations to seek funding from anyone in the world who wants to give to their cause, service or product.
Crowdfunding has become so popular that experts expect the revenue derived from it to exceed venture capital funding by 2016, according to Forbes. If you hope to take advantage of crowdfunding, learn from the following organizations that have succeeded in their own campaigns.
Pebble Earned $1 Million in Less Than Two Days
Though several companies have entered the smartwatch space, Pebble designed an elegant, intuitive model and quickly funded the project via crowdfunding, as Entrepreneur reports. Within its first twenty-eight hours on Kickstarter, the Pebble team raised $1 million toward the Pebble smartwatch's production and, in the next few weeks, added more than $10 million in contributions.
Pebble's success demonstrates the importance of directly addressing consumers’ needs. According to the Harvard Business Review, companies need a "social media mindset" to make crowdfunding work, especially because the process introduces a human element to the process of raising capital. Essentially, connecting with potential donors means both having a personality and using it to show them how the product can make a difference in their lives. Pebble succeeded because its product solved consumers' specific problems, and because the team behind the smartwatch focused on promoting the practical benefits of the product.
Once Rejected, Misfit Shine Persevered
Like smartwatches, activity trackers that strap on users’ wrists like watches have become increasingly popular. According to The Fiscal Times, Misfit Shine launched a failed Kickstarter campaign. Undeterred, the Misfit Shine team shifted their sights to Indiegogo, where they raised $846,675. Perhaps Misfit Shine’s decision to pivot to a more cause-oriented platform that was less saturated with like products is what led to its success.
As Misfit Shine’s efforts reflect, the first attempt at fundraising may not work (a fact that is also true of traditional venture capital fundraising). Determined business owners could follow Misfit Shine's example by continuing to seek outlets for funding and pursuing all possibilities.
Community Ties Helped a Ferguson, Missouri, Store-Owner
Crowdfunding success stories are not limited to commercial projects. After rioters in Ferguson, Missouri vandalized her shop, entrepreneur Natalie Dubose started a GoFundMe campaign to get her community involved in rebuilding. The activism of Dubose’s neighbors garnered attention from public figures and eventually resulted in a fully funded project worth more than $100,000 to restore her bakery, according to Inc. magazine.
Dubose's triumph suggests that community involvement can propel a crowdfunding attempt to its successful conclusion. Executive MBA graduates can leverage not only their skills and education, but also their relationships with others to create buzz around crowdfunding campaigns.
Saving Lives Can Motivate Crowdfunders
According to Entrepreneur, early adopters and cutting-edge developers often have a competitive edge in crowdfunding campaigns. Consider the company Scanadu and its product, Scout. Scout is a medical device that detects a user's vital signs and communicates them to a smartphone. This unique product greatly exceeded its Kickstarter funding goal because consumers saw the need for the device and appreciated the innovation behind its creation.
Crowdfunding benefits inventors, creators, entrepreneurs, and philanthropic causes. However, not all crowdfunding campaigns succeed. Business leaders can build successful campaigns after learning from the successes and failures of those who have already tested crowdfunding and produced results.