Successful Crowdfunding Is About More Than Money
If you’re launching a crowdfunding campaign solely to raise money for your business, you’re missing the point, says Danae Ringelmann, co-founder of the popular San Francisco-based crowdfunding platform Indiegogo.
“There is not a better indication of the market than people actually voting with their dollars,” says Ringelmann. “It is so much stronger than any Facebook Like button or focus group could ever provide.”
For example, the campaign for the Ubuntu Edge smartphone raised over $12 million during its Indiegogo campaign, which ran from July to August. Despite the success of raising the most money on the platform, the Ubuntu Edge still fell short of its $32 million goal and founder Mark Shuttleworth had to return all of the money to pledgers. But was the campaign a failure? According to the Ubuntu Edge team, no. They determined that consumers were interested enough in the product to spend money on it. It was a validation of demand.
“All of the support and publicity has continued to drive our discussions with some major manufacturers, and we have many of the world’s biggest mobile networks already signed up to the Ubuntu Carrier Advisory Group,” wrote Shuttleworth in a blog post published after the campaign ended.
Other Indiegogo campaigns got the best of both worlds: Cash and market design advice. The entrepreneurs behind the MisFit Shine activity tracker, raised $847,000 over two months ending in January of 2013, blowing well past the goal of $100,000. The Misfit Shin, a device that clips onto your clothing and sync with your smartphone to track your activity for the day, also landed at number 42 on our 100 Top Crowdfunded Companies list.
“They actually used Indiegogo not just as a way to raise money but also as a way to get smarter faster — and those are literally the campaign owner’s words,” says Ringelmann.
The team learned that customers were willing to pay as much as $50 more for a black version of the device and that his customers really wanted accessories, like a necklace and a bracelet, with the device attached. In response, founder Sonny Vu added a perk in the campaign for a necklace that was claimed by 125 funders. “He literally partnered with his customers to develop a better product,” says Ringelmann, which, she says, is the best way possible to use crowdfunding.