Crowdfunding has long been established as the popular practice of funding a project or venture by raising small amounts of money from large numbers of people. Typically, crowdfunding occurs on the internet and offers a chance of success for startups and entrepreneurs by presenting the opportunity to showcase businesses and projects to the world.
Crowdfunding for inventors is just as successful in launching inventions with added financial support from others to provide a greater means of capital. By providing added financial support, there are a wide range of benefits through design, manufacturing and distribution of the product.
• Market: Aside from the financial benefits, crowdfunding allows inventors to evaluate the marketplace to see how their product is received. Based on feedback and funding, inventors have the opportunity to tailor their product while gaining valuable insight into the consumer market’s interest, feedback and needs.
• Money: Essentially, crowdfunding is free money donated by contributors or backers. While there are options for equity-based backing or investment crowdfunding, the process is simple and highly beneficial when you meet the minimum requirements within the deadline (more on this process below).
• Resources: While crowdfunding gives inventors market insight, it also serves as a great tool for gathering resources to finance the design, manufacturing and distribution processes. With successful campaigns, inventors find that they have a network of backers waiting in line for the first run of the product, which is motivating as it establishes a demographic interested in the invention.
As with any process involving your invention, before deciding to launch your idea on a crowdfunding site, ensure that your idea is protected. Because the internet is vast and crowdfunding allows the world to access your invention, having a patent in place better safeguards your ideas so that it remains just that, yours.
Provisional patent applications are a great place to start as a way to protect others from immediately copying your idea. In the same sense, having a provisional application is also an attractive marketing tool that shows your commitment to the process, something that goes far in attracting both traditional and crowdfunding investor capital.
Before making a crowdfunding commitment, do your research and know the different models and focuses to determine the best site for your needs.
Here’s three of the leading crowdfunding sites to jumpstart your search.
• Kickstarter.com – One of the original crowdfunding sites, Kickstarter welcomes creative projects seeking to raise donation-based funding. With strong growth and many break-out campaigns, it is one of the most popular sites.
• Indiegogo – With a tighter project focus, Indiegogo approves campaigns without many restrictions, leading to international growth and wide industry presence.
• Crowdfunder.com – One of the largest and fasting growing investor networks, Crowdfunder is the platform for raising investment. Success on Kickstarter or Indiegogo often leads to the opportunity to invest at Crowdfunder to take your invention and investment to the next level.
After selecting the right crowdfunding site for your needs, you’ll create a campaign to describe your project and needs. (Please note that some sites require a project review and approval prior to beginning the campaign.) With options to select your project category, define your fundraising goal, and outline rewards or perks for backers, you will then launch and promote your campaign, which can typically last between 30 and 60 days.
Generally, backers are not charged until the campaign is over and, as a result, there is a delay in receiving the money with the appropriate fees deducted. In addition to financial support, you also have the opportunity to build your customer portfolio as you will receive your backers’ contact information for distribution of rewards or product updates.
Fees are based on a variety of options the inventor chooses in creating the campaign and cannot be changed once the campaign is launched. In addition, there are credit card processing fees which, in addition to the other fees, total anywhere from 6 to 12% of your raised funds.
Crowdfunding is a great way to launch your invention (patented) for a multitude of reasons from market evaluation to raising necessary funds to move through the design, manufacturing and distribution process. Inventors not only gain valuable insight into consumer behavior and product engagement, they also build their client database while earning funds to support their invention. Even products who fail to meet their crowdfunding goals are successful in that they gain valuable market insight on how their inventions can improve to better serve consumers.