Crowdfunding campaigns for hardware products
Today, crowdfunding seems to be the solution for everything, and that’s a good idea for hardware products. It’s usually the first idea that project owners have when they think about how to raise money. But being a good idea doesn’t mean it’s an easy one.
It’s not necessary to mention that a campaign is a big effort in marketing and PR. It will probably affect the whole team, and this work needs some preparation. As an indicator it’s very convenient to start the campaign with about 20% of the amount covered. Of course devices and cool things are better for crowdfunding than services or less good-looking products.
Part of success is to be the first one in a category. I guess there are not many opportunities for the same product to make noise. You can have success and repeat it, especially if you create a family of products pointing to the same group of people. That’s so important because you can increase your LTV by not adding a lot to the CAC.
A lot of effort in PR and marketing is needed. Being sure about the milestones and the promises you make is not easy. It’s so common and embarrassing that many hardware projects need to delay delivery dates, due to complications in the process. It might not break the company, but it affects the credibility of the brand and also how much people believe in startups, hardware, and crowdfunding platforms.
Short timeframes compromise viability and very long ones decrease customer interest. Personally I would buy many gadgets in crowdfunding campaigns if I could receive the product the next day, but it’s complicated for me make an impulsive purchase with the letdown of 9 months delivery.
If you fail the first time, it’s so complicated to launch another campaign with the same brand. Media and people probably will not pay attention to it again. Also you’ll be tired and your community and early adopters probably burned out. You can always change the brand and start again.
Some details such as world wide sending could complicate your campaign, perhaps limiting it to some areas is better. Also taxes are involved, VAT in Europe, or import tax in some countries, and that affects the total price and your real income (as well tax declarations…).
If you launch the first release with an attractive price it’s difficult to cover your costs: CE certifications, manufacturing molds, and of course crowdfunding platform fees and marketing costs, like professional video.
So maybe you’ll need to add some investment to this money. At least for investors you will ask them already having a market validation of your success. Probably if you’re under 100k€ there’s no chance to cover costs, but it’s better if you can get 200k€ or more.
The validation comes from a really special group of people. Success is a really good indicator, but it doesn’t mean you know how to convince all future customers. You will also need to learn about what kind of marketing works when you’re not in a crowdfunding campaign.
And it’s common that when you finish your campaign you feel like going back to the beginning, a lot of effort, a nice product, investment raised, but not a huge profit. That’s the moment to use what you have learned and made and use them to build a company.
