Crowdfunding has become a popular social media and marketing strategy for small businesses across the globe. According to statistics cited by Forbes, the crowdfunding industry is expected to grow to a whopping $5.1 billion in 2013.
Crowdfunding allows small-business owners and designers to raise financing from the gracious people of the Internet willing to donate to the cause. While fundraising is the greatest appeal to crowdsourcing, entrepreneurs are also able to gain insight into product development and bounce ideas off one another when appealing to a Web-based crowd. Here are some pros and cons of three top crowdfunding sites to determine the best route to raise funds for a product-design project.
Everyone from comic-book designers and musicians to filmmakers and authors have found success on this crowdsourcing site, which focuses exclusively on startup financing for creative projects.
- The Pros:
- Kickstarter is a user-friendly, supportive medium for those looking for financing. The site provides tutorials for users on how to craft the best proposals, how to film video pitches, and what information needs to be included to make a proposal competitive.
- The site also brings in backers through the promise of rewards. Individuals will set up a proposal to create a product, and in exchange for funding, backers may receive a free item upon completion, regular updates, personal communications with designers, etc. That creates a loyal base of financiers who will spread the word about a project to increase the likelihood that they’ll receive their payoff.
- The Cons:
- If a project creator doesn’t hit their funding mark, they can’t collect. For example, if a project creator sets a goal to raise $30,000 in 30 days, and by the end of the month they’ve raised $29,999, they won’t be getting a dime. Project creators must be both ambitious and realistic when setting their goals.
- This site also sends project creators through an approval process—proposals must be forward-thinking and artistic enough to qualify.
This fundraising site is open to a wide variety of individuals and groups, including nonprofits and 501(c)(3) organizations.
- The Pros:
- The flexible funding option on Indiegogo is a big step up from Kickstarter. On Indiegogo, when a project does not meet its intended fundraising goal, the creator will still get to keep what they raised. If a designer isn’t sure how well their product will initially appeal to a large audience and is worried they may not reach their goal, Indiegogo is the perfect place to start.
- Unlike other crowdfunding sites, Indiegogo allows backers to make payments using credit cards or PayPal accounts, making it easy for everyone to donate.
- The Cons:
- While flexible funding option is a huge plus for Indiegogo, it doesn’t come cheap. Even though project-starters are able to collect on a fundraising total that falls below the target level, Indiegogo will charge a 9 percent fee, which can take a serious toll on even the largest projects.
This influential site brings investors and entrepreneurs together. Crowdfunder is a serious platform for businesses and even helped lead the pack on JOBS Act legislation.
- The Pros:
- Unlike Kickstarter and Indiegogo, which have a strong focus on individual and nonprofit organizations, Crowdfunder is where to turn when a small business is looking to tap into a large network of professional investors.
- Crowdfunder is a great place to network and find financial support. Because this site is dominated by businesses, product designers will find experts who want to invest in companies for the long-haul, not just for small projects.
- The Cons:
- In order to participate, a business must be for-profit. No ifs, ands, or buts. One must also have a demo-ready service or product to market. Even the most brilliant proposals will be rejected without a solid demo service.
- This may be the place for small companies, but Crowdfunder still places a high value on business accreditation. If a product designer is branching out on their own to develop a small enterprise, they can still join Crowdfunder, but it’s a major plus to have some certification.
There are many platforms popping up across the crowdfunding landscape. To determine which one is right for your product ideas, be sure to weigh the pros and cons and come up with a solid plan for your project.
Also, keep your network in mind. Do you have a supportive fan base that appreciates your work? You may come up with a brilliant design for a product in the middle of the night, but it takes a community to support your ideas. And remember to consider the time and effort involved with production and fulfilling your fundraising rewards. It’s often more time consuming and costly than you think.
One tool that makes life easier for you in the design process of a product is Autodesk Fusion 360. It’s free for 90 days, and it’s a game changer in the manufacturing industry. Combining conceptual design, engineering, and seamless collaboration, the cloud-based software allows you to bring your dream ideas to life. With the free-form modeling tool, move from one step of the design process to another and back again—creating multiple iterations of a product—without stressing your time or budget.