How to crowdfund your product idea: querying Indiegogo
Using data to put assumptions to test is empowering. At CoolWares Lab, we like to question constantly: to challenge existing methods and to ideate new ones. Earlier this year we decided to do a small study on crowdfunding which has since helped us refine our perception of this phenomenon and hence improve the intelligence we pass on to curious entrepreneurs and inventors who turn to us for advice.
The numbers
We looked at a sample of 104 campaigns in the category of Technology, all of which (except for one) ran during the last couple of years. In the way of a disclaimer: The statistical drills carried out on this sample might not have satisfied the strictest standards of scientific enquiry but rather were intended to affirm or refute simple lines of deductive logic.
Status: 56% were closed, while the remaining 44% took advantage of Indiegogo’s useful preselling option by going “InDemand”. Mind you, you need to have closed your campaign successfully to be able to activate this feature. In this case, a good 63% of 104 either reached or topped their money target. (Some of these have migrated from other platforms, mainly Kickstarter.)
Country of origin: More than half of all campaigns were launched from the US, with Hong Kong (surprisingly), Canada and China each giving origin to a respectable number. The US being at the fore had been expected, although it should be noted that multiple clearly non-American teams took the US route given the convenience of payment (and withdrawal) options as well as the notion of quality and trust that supposedly comes with being US-based.
Total number of campaigns, Country of origin
Currency: Naturally then, 97% of all campaigns were denominated in US dollars. Curiously, the USD had been chosen by campaign owners from 22 different countries other than the States. And justifiably so seeing that this did not seem to affect their profitability: out of 46 USD based campaigns originating outside the US, only 16 did not reach their funding goal.
Category: Smart home and office has become a leading trend in recent consumer electronic product launches (24%). Numerous inventors still find innovative opportunities to play around with smart phones and their accessories (17%); many of these products were relatively low-risk which appealed to nervous first-time campaign owners. Wearables – for health or fitness or both – are still buzzworthy in the realm of crowdfunding (14%). Given the ever-growing popularity of travel (be it for recreation or work), related gadgets have proliferated (10%). Honourable mentions go to audio/video (9%) and camera accessories (7%).
Category, Total number of campaigns
The most funded campaigns among all categories were drones (702%), albeit represented by a group of only three. Much fairer averages were yielded by sample leaders travel products (618%), audio & video equipment (439%) alongside smart home & office contrivances (439%).
Category, Total number of campaigns, Average percentage funded
The subjective
Although we fancy numbers, a deeper slower analysis of qualitative factors is what we feel paints a true picture of campaign performance. And another disclaimer at this juncture: For the sake of diversity, a few concept-stage campaigns were included in the sample; because the judgement criteria for them should be somewhat different, we will omit them from our probe here.
Features and user experience
Products introduced from the top ten most funded campaigns amaze by their multiplicity of features. And yet it is never overwhelming; instead, they come together in a harmonious fashion and weave a convincing story, relating to backers, identifying their pains and struggles and, importantly, realistically promising to remove them.
On the other extreme, there is the depressing case of zero percent funded products (although we suspect at least few of them must have been zeroed after a refund of backers by owners of unsuccessful campaigns). A large group of them were concept stage campaigns – a relatively new feature on Indiegogo – which clearly was associated with a very high risk of failure; after all, convincing backers to back a mere idea, no matter the degree of excellence, when the market is flooded with attractive conventional offers, is a tall order. Few projects looked clearly fake – in best cases when the owners bothered, complete with glossy computer graphics and sleazy descriptions.
Unique value proposition, or positioning
A lot of times successful campaigns build on what is familiar to users, introduce a single essential twist or two and a sprinkling of extra goodies. The essential, however, exudes quality and evokes trust. Imagine, for example, a smartwatch that features common GPS: add tracking and video calling capabilities and, with the touch of a designer’s hand, it becomes a must have for kids, to ensure their safety outside the house. Only on rare occasions, we come across offerings that are truly different; a microwavable reusable notebook is a case in point.
Those campaigns that ended with positive funding percentages but did not reach their goals fall across a wide range of classes. First, there are those products that were obviously underthought and hence lacking proper positioning. Then there are the campaigns scrolling through which was strongly underwhelming, bordering painful, experience. In the middle, we found several decent projects which unfortunately did not make it because their offerings were competing head on with those of mightier teams, in terms of finances, experts or marketing.
Target market
We noticed that it helps when the target market is not defined dryly in terms of categories of people who could use the product (with stock images to boot) but when the campaign vividly describes the uses of the product, for an interested reader is sure to relate to one or more of them. In terms of best practices, there do not seem to be any. Some well-doing campaigns define their target market very loosely (e.g., iPhone owners), while others try to capture the whole gamut of possible user groups.
Choosing too narrow of a niche target market is a gamble which works amazingly in some cases (remember Flow Hive that amassed millions of dollars from beekeepers around the world?) but can wreak havoc with others. What helps in every case though is accurately capturing the pain points of people and reaching their hearts through intimate storytelling and crafty PR.
Team
The most accomplished teams are multidisciplinary and have some sort of product development experience behind their backs, either individually or as a group. Small newly formed teams of young experts might also stand a chance if they just get with each other. Whichever it is, good teams are always bounded by a common past or a vision of future that helps them stick through the uncertainty and setbacks along the way. And almost invariably, they are supported by advisors who dole out advice, make useful introductions or act as influencers adding a layer of authoritativeness to campaign in the eyes of backers. An increasing number decides to partner with professional marketing firms to run campaigns, although with variable success.
An unforgivable sin in our book is the absence of any team description on the campaign page. This leaves projects faceless, and it is not a neat feeling to walk away with.
Unclassified other
One thing that stood out among other things is good design and prototyping. On the former, it is worth remembering that design as important as technology when it comes to crowdfunding, where you are competing for limited backer money among stiff competition. On the latter, well-built prototypes speak for themselves; previous successful experience of product manufacturing makes an even better impression.
More than two thirds of unsuccessful campaigns that nonetheless fundraised were Flexible which meant they would collect all available money regardless of the status at end date. Because choosing to be Flexible seems to throw off quite a lot of backers, most of these campaign owners felt obliged to explain their decision: few put it through as something unavoidable due to the platform’s withdrawal issues outside of the US; others tried to assure crowdfunders of their ability to deliver irrespective of the final funding amount. While it is difficult to say if these claims were trusted and accepted, what is certain at this point is the heightened risk one must be ready to assume together with malleable funding ambitions.
Takeaway
While the set of data we have collected can be used for reference and comparison in countless individual cases, we walk away knowing that these four are just few of the features a campaign with good potential is ought to have:
A practical solution to a real need
A unique angling of problem-solving
A team that gels
A compelling story to bind it all together
And still there will never be a guarantee you will pull through. But at least you will know you have done your best; regrouping and trying again – with even a slightly different approach – sometimes does wonders (as many with repeat campaigns attest to).