Data from the Startup Genome highlight how cash poor many startups are around the world, and could last just a few months with reduced income during the coronavirus pandemic. Crowdfunding isn’t as popular as perhaps it was a few years ago, but it might be an increasingly interesting route taken by startups looking to drum up some cash.
New research from the University of Oregon highlights how important it is for startups to generate momentum during any successful crowdfunding campaign.
“We all know creating a buzz matters, but how do you successfully do it?” the researchers say. “We wanted to understand the processes, such as who you get involved and when, that help make it happen.”
Creating a buzz
The researchers analyzed the strategies used by eight companies that had raised money via Kickstarter between 2012 and 2014. The eight companies were paired to enable comparisons to be made using pour prototype categories: board games, 3-D printers, household gadgets, and smartphone camera lenses.
Three key steps required for success emerged from the analysis: building community to establish a bond with backers who are knowledgeable about the product; engagement that engenders social identification with these backers; and engagement that establishes and leverages proof points with others.
For instance, one of the successful ventures established a relationship with a National Geographic photographer to gain their input into their smartphone camera lens prototype. The photographer took the prototype on a field trip, and spoke about it with other photographers, which provided not only useful feedback, but also valuable publicity material for the crowdfunding campaign.
A second venture contacted end-users, or potential end-users, with the communications leaning heavily on basic descriptions of the potential of the prototype. They replied to some responses privately, but they didn’t really encourage feedback, nor make use of it, and perhaps unsurprisingly, their campaign was unsuccessful.
Passive communication
Almost universally, the ventures that failed in their campaigns relied heavily on their own descriptions of the product to generate interest. They seldom engaged with people and built up interest among key people in their domain.
The most successful campaigns revolved around the development of relationships with key stakeholders, and the factoring in of their feedback into the early prototypes.
“Generating interest in the domain of an early prototype is critical,” the researchers say. “We found that when companies generate feedback and excitement early on, the people with whom they engage will, in turn, evangelize about the product in their networks and that will grow interest in it.”
