You’ve come up with a brilliant idea--it could be the next Facebook social network, the next Tesla automobile, the next Half-Life videogame--but you need seed capital to get the project off the ground, and venture capitalists won’t give you the time of day. What’s an aspiring entrepreneur to do? You could give crowdfunding a shot.
What the heck is crowdfunding, you ask? It’s a means of raising capital, usually over the Internet, from people who believe in what you’re trying to accomplish. Technology consultant Scott Steinberg co-wrote the The Crowdfunding Bible to guide could-be tycoons through the process, and we interviewed Steinberg to help PCWorld Business Center readers emulate the success of such ventures as the Wasteland 2 videogame project, which has raised nearly $3 million through crowdfunding; or the PebbleE-Ink watch project, which has raised more than $10 million.
PCWorld Business Center: What are the key lessons entrepreneurs interested in crowdfunding should take away from this book?
Scott Steinberg: Any crowdfunding campaign is going to involve a great deal of effort and participation. It is fundamentally a consumer-marketing effort. You see the successes, but what you don't realize is that there are 100 failures out there for each success that go completely unnoticed. To be one of the success stories, you need to be able to instantly grab a backer's attention and engage in a running conversation with them.
Weeks in advance, you want to begin your preparation. Get pacing and cadence down. It's a war, not a battle. Have as much ammunition to fight with as possible. Do as much research as you can, think about who your audience is, how to reach them, and create your assets like videos, screenshots, websites and blogs in advance. A support network is essential to put into place; and if you can swing it, it can be a huge victory to get a personality to talk about your project.
If you create momentum beforehand, you'll have support for your launch on day one. If you rally support beforehand, you’ll have a plan and assets in place to conduct a running campaign throughout the duration, not just the first 48 hours.
PCWBC: Which crowdfunding sites are right for which products?
Steinberg: Pick your battles: It pays to be a big fish in a small pond. Different sites may be better suited to different products. Kickstarter has the largest audience, and products like consumer electronics or anything that would benefit from more of a mainstream audience can do well there. Micro RZA is better suited to science and technology efforts. A project that may have problems standing out on some of the larger sites may get better visibility on IndiGogo or RocketHub.
You have to think about where you'll have the best opportunity to stand out from the crowd and what your product is. This is all a part of the vital research you have to do before the campaign launches.
Next: How to communicate with backers, and more