Crowdfunding has become the go-to method of fund raising for hardware startups in their early stage of production. And it’s no surprise; it allows you to raise the necessary funds, receive media attention, and access customer feedback before mass production.
However, what most do not realize is that hidden behind the buzz and glamour, there lies the dark realities of the countless smartwatches, 3D printers, drones, and other innovative gadgets that never make it to market.
So what makes campaigns like the Oculus Rift, raising $2,437,429 in 30 days and go on to become acquired by Facebook so successful, while most other campaigns like Kolos …not so much?
“All you need is an idea”
Crowdfunding sites make it seem all so easy. However, the truth is that you need much more than just an idea to start a crowdfunding campaign. What no one wants to talk about is the intense amount of preparation and the enormous amount of work needed to even once after your campaign becomes live. I can speak from my personal experience of crowdfunding $7,000 for travel fees for a blog project that it was hard and tedious work.
So just imagine how difficult it is for hardware startups that, in addition to the rigorous campaigning any crowdfunder has to go through, have to create, sell, and mass-produce high quality functioning electronic devices.
However, no matter how arduous it is, theres no doubt that if carried out properly, crowdfunding can in fact lead to a bright and successful future.
We don’t want all the blood, sweat and tears you’ve put into your project to go to waste. That’s why we at BRAIN PORTAL Journal are starting a series of articles to provide you with expert advice and information your hardware startup needs to succeed in crowdfunding.
Our first article is a checklist that will help you keep track of what you need to do to prepare for a successful crowdfunding campaign and what to expect during the campaign.
Crowdfunding Ultimate Checklist
- DFM prototype
- Seek advice from manufacturers
- Multiply manufacturers’ estimates by 3
- Set up detailed timeline of each stage (utilize Gantt chart)
- Give each stage some extra time; not everthing will go according to plan
- Determine realistic shipping date
- Compare with other products
- Market research
- Online A/B testing
- Add some more extra $$ (for the unpredicted issues you WILL run into)
Add the costs of the following:
- Assembly cost
- Shipping and handling
- Warehousing cost
Add amount needed to hit 50% gross margin.
- Travel fees
- Prototyping costs
- Videography, photography, marketing costs
- Product Shipping fees
- Cost of Goods × Minimum order quality
Then add an extra 25-50% of that amount
Community building on SNS
- Back other campaigns on Kickstarter/Indiegogo
- Start a mailing list
- Personal Network
- PR Outreach
- Campaign Story
- Main campaign video 2-3 minutes
- Descriptive video
- Photos of product in different situations
- Updated contents
During the Campaign:
- FCC if selling in US
- SRRC/CCC if selling in China
- CE if selling in Europe
- UL if device includes outlet plug or has potential for injury
You can use sourcing services like BRAIN PORTAL where they do all the work for you. If you decide to directly work with a supplier, you will choose to either work with local or foreign manufacturers.
- Large order
- Multiple custom parts
- Complex assembly
- Product allows for easy shipment
- Small order
- Off-the-shelf components
- Product is high-end quality
- Multiple materials used
Community building/customer service
- Upload fresh contents
- Reply to backers within 24 hours
Stay true to the schedule
- Make sure both you and your manufacturer understand all the deadlines
- Notice and analyze any mishaps in the schedule
Stay true to the budget
- Use a spreadsheet to organize all expenses
- Make sure to get quotes for anything beforehand
This is just a brief summarized checklist, so make sure to check our follow-up articles about that will feature each section in detail coming soon!
This work is licensed under a Creative Commons Attribution 4.0 International License.