The biggest obstacle for most small inventors is money. Those with great ideas can usually cruise as far as the planning and prototyping stages, after which they find themselves stalled and lacking the necessary fuel in the form of funds. Regardless of size or complexity, it’s not cheap to produce a stock of any product; and without proven consumer interest, obtaining investor funding can seem nearly impossible. This lack of money has been the cause of death for many healthy and potentially successful ideas, but an antidote seems to have emerged. That cure is called crowdfunding. It is a fairly new concept that has recently been gaining significant momentum among creative everyday individuals. The term “crowdfunding” is used to describe a network of people who pool their resources to support projects initiated by other people, usually over the internet. The concept has been used to support a variety of activities, including providing seed funding for startup projects that feature an invention or innovation.
At the moment, the most popular crowdfunding website is Kickstarter; and it has helped numerous small inventors with great ideas and crafty multimedia skills capture consumer interest and, more importantly, sufficient funding for their projects. As an example, budding entrepreneurs, Dan Salcedo and Elizabeth Ormesher Salcedo, were able to secure almost double the money they pledged to obtain for their invention, Everpurse; a fashionable portable phone charger. With a well-researched production plan, persuasive promotional videos, and professional photos of their product, the couple raised over $23,000 in just one day.
The Everpurse example proves that with slick marketing and a sound product, crowdfunding can be a viable alternative to traditional funding options for startup seed money. It should be noted; however, that it is just seed money. Kickstarter acts as a funding platform for creative projects—not businesses—and these projects must have a realized conclusion, meaning that something will be produced in the end.
For inventors, this basically means that crowdfunding on Kickstarter enables you to promote your invention and solicit the general public for investments, usually by offering the opportunity to pre-order your new product. Anyone who is interested in supporting your project will either place a pre-order or simply donate money to help you out. The transactions don’t actually go through until the pledged amount of money is received, at which point the inventor is expected to begin production. Once production is completed and initial orders have been filled, it is up to the inventor to continue running their business with whatever profits have been made or seek further funding for their business.
Even if a crowdfunding initiative is successful but fails to profit at all, securing further funding is made much easier by the proven consumer interest and product sales generated. In this way, crowdfunding can act as an inexpensive test to judge an invention’s market potential and, if successful, its results can become powerful tools for building a business.
With such excellent advantages, the effort of crowdfunding appears both worthwhile and somehow easy. But don’t be fooled by illusions. Like any attempt to generate interest and secure sales for a new product, the crowdfunding route is challenging. It takes time, effort and certain skills to invent, produce and market a product; and, if not done properly, that product may fail before a mass audience achieving nothing more than a poor public reputation. Furthermore, there is a chance of disappointing investors if proper research is not conducted and accurate production costs are not figured out beforehand.
An inventor that has done all their homework has the best chances at success with crowdfunding. Creativity and enthusiasm will further increase the odds and, as with all inventions, a good idea to start with is critical. But with all of these essentials on board, crowdfunding can be the surest route to getting around the lack of money that almost all inventors run into.
About: MAKO Design + Invent is the original firm providing world-class consumer product development services tailored to startups, small manufacturers, and inventors. Simply put, we are the leading one-stop-shop for developing your physical product from idea to store shelves, all in a high-quality, cost-effective, and timely manner. We operate as one powerhouse 30-person product design team spread across 4 offices to serve you (Austin, Miami, San Francisco, & Toronto). We have full-stack in-house industrial design, mechanical engineering, electrical engineering, patent referral, prototyping, and manufacturing services. To assist our startup and inventor clients, in addition to above, we help with business strategy, product strategy, marketing, and sales/distribution for all consumer product categories. Also, our founder Kevin Mako hosts The Product Startup Podcast, the industry's leading hardware podcast. Check it out for tips, interviews, and best practices for hardware startups, inventors, and product developers. Click HERE to learn more about MAKO Design + Invent!