In ClearSketch’s last blog post, I shared an announcement about our product development efforts. What I didn’t include was the fact that we’re launching that product on Kickstarter. We’ve already bootstrapped the product development and marketing efforts, and have a product that’s 98% ready for market. So why crowdfund? I grappled with the decision for a while, but ultimately, the decision to crowdfund proved to be a no-brainer.
There are a number of reasons that crowdfunding is the right next step for a product startup. For us, they boiled down to:
- Market validation
- Community involvement
- Reduced financial risk
In an ideal scenario, anyone who creates a product would be able to validate their idea in the market before making a significant investment to produce and market the products. Crowdfunding platforms allow that kind of exposure and testing, and we’re using it as part of a hybrid approach to launching our product. While we’ve spoken to many people in our target market to get input during the product development and prototype phases, there’s really only one way of knowing for certain that the product will be a success. Crowdfunding platforms provide a ready testbed for the type of product we’re creating, and the velocity at which it gets adopted (or doesn’t) gives us the data we need to make our next major decision.
As a lean startup (read, not enough people), we rely heavily on the power of an interested and engaged community to help us spread and amplify our message. We tried to engage our community as early as possible in the process, both so we could refine our product, as well as to gain their support when we finally do launch the campaign. While the results are still to be determined, we’ve found it really powerful to have the type of grassroots support that companies and brands constantly seek. The direction of our design efforts reflects the many voices we’ve talked to, as will our pricing decisions, and if all goes well, those same voices will help spread the message along an exponential arc - far further than we could ever hope to accomplish ourselves.
Reduced Financial Risk
When we exclude the time we’ve dedicated to this project, tooling is the single biggest line item on this project’s cost spreadsheet. The tooling expense is a huge financial bump pre-launch, and hence, the single biggest risk factor we’re encountering on our way to bringing our product to market. Crowdfunding helps us to defray the cost of tooling, while giving our backers a steep discount off the retail price of the product. Discounts as high as 50% off the retail price for “early bird” backers are relatively common, so there’s a form of quid pro quo exchange in place - backers get a product that they want to see on the market at a reduced price, and the company they support gets to take the next step towards becoming a legitimate business story by removing a major hurdle in their path.
There are many other reasons for crowdfunding, and this article provides a more well-rounded view of the whys. We’ve supported over 30 crowdfunding campaigns ourselves, and we’re excited to finally be a part of one. We’re launching at the end of April, so stay tuned.