Helping big ideas become reality

Online crowdfunding can kick start your venture. But it takes a professional approach to move the crowd, says Kate Murphy

Mike Whitehead’s big idea was to design a better cast-iron skillet. Stephanie Turenko’s big idea was to make an animated short film about her Ukrainian grandmother. Colin Owen’s big idea was to manufacture a hard-to-steal bike light.

Many of us have ideas like that, hatched while staring out the window or doodling on a cocktail napkin. And that is where the dream ends, stunted by a lack of capital, credibility and confidence. Not anymore. Online crowdfunding is helping better cast-iron skillets and other big ideas become reality.

What started as a handful of websites promoting people’s pet projects has turned into hundreds of platforms that serve as vehicles for not only fundraising - the record is $10.2 million - but also product development and market research. But succeeding at crowdfunding is not as easy as raising your hand and saying you need money. It demands strategy and stamina, though a sincere appeal can still trump the slickest competitor.

“A lot of people think if they just put their project on Kickstarter, money will start rolling in,” said Whitehead, who used the popular Kickstarter crowdfunding platform last fall to raise $211,027 (Rs 1,32,27,172). “It’s not as easy as it looks.” Successful crowdfunding campaigns, most often 30 days long, take several months of preparation.

With the help of an industrial designer, Whitehead first spent six months developing a prototype skillet in his Portland, Oregon, basement so he would have something to show potential backers. He then spent another four months reaching out to friends and family as well as culinary, technology and design publications, alerting them to his coming Kickstarter campaign.

While Kickstarter is to crowdfunding what Kleenex is to tissues, there are many other highly trafficked sites that perform similar functions, like Indiegogo, RocketHub and Crowdtilt. There are also niche sites like PubSlush, which caters to aspiring authors, and Appbackr, which is a home for hopeful app developers. Regardless of which platform you choose, keep in mind that people don’t back projects randomly.

“The crowd is quite rational and sensitive to signals of quality,” said Ethan Mollick, an assistant professor and crowdfunding researcher at the Wharton School of the University of Pennsylvania. Many in the crowd are early adopters of technology and enjoy watching as a big idea turns into an actual product that they, as early backers, often receive first as a reward for their donation. Crowdfunding platforms do not like to call this preordering since there are no guarantees, but that is essentially what it is.

“We don’t present products that are already completed and sitting on some shelf in Iowa shrink-wrapped and ready to ship,” said the Kickstarter co-founder Yancey Strickler. “You actually have a role in something coming to life. You know the creators and see the process from the beginning.” Not surprisingly, a clear and concise presentation of your idea through video, illustrations and text is essential. Put yourself in the place of a would-be funder scrolling through projects. You have maybe 30 seconds to grab their attention and less than that to turn them off.

There is an entire crowdfunding support system of video producers, editors and other consultants listed on sites like CrowdCrux if you need help. “A single spelling error reduces chances of success by 13 percent,” said Mollick at Wharton. Oddly, his research also indicates that mentioning how nerdy you are, and referring to Star Wars, seems to help - a clue to the type of people trolling the more popular crowdfunding sites.

But your audience is also venture capitalists, who view a successful crowdfunding campaign as proof that your big idea is viable and worthy of their attention. Owen said he did not consider starting a crowdfunding campaign for his theft-resistant bicycle lights until a venture capitalist said he would not consider investing until he did.

Rachel Gant and Andrew Deming, on the other hand, asked the crowd for $20,000  (Rs 12,53,600) because that was precisely the amount required to manufacture their big idea: tote bags that unzipped into picnic blankets. They raised $25,765 (Rs 16,14,950) on Kickstarter and now, two months later, they are shipping totes to their funders as promised.

“We didn’t go to a bank because we decided we wanted to build a community around our new company so people would be more interested and invested,” said Gant, who lives in San Francisco. “It was also sort of like research to see how people would react to the product.”

She said she got suggestions for colours and also learned the product appealed particularly to mothers with small children who could use it as a toy bag and play mat.“We never would have thought of that because we aren’t parents,” she said. “If you just got money from a bank you wouldn’t have that kind of interaction with people.”

Crowdfunding experts and veterans of the process agree that such engagement with potential funders, together with a clear vision and a sincere belief in a product, are hallmarks of successful campaigns. But more than anything, your big idea has to be a good idea.

“If you don’t have a good idea, even the slickest crowdfunding campaign won’t fly,” said Whitehead, a self-described serial entrepreneur who is currently overseeing the manufacture of the 1,550 iron skillets he presold on Kickstarter. “You can sit through marketing classes, you can get an MBA, but put it out there for the crowd and you will learn the physics of bootstrapping real fast.”