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Crowdfunding for startups: A guide to successfully navigating a crowdfunding campaign

Several hands holding money in the air.

Raising money for your startup is a rite of passage for entrepreneurs everywhere. Whatever stage of growth your business is in, you need money to finance each aspect of your operation, from staffing to manufacturing.   

Crowdfunding is a great way your startup can raise capital and receive critical market feedback about whether there’s a need for your product and enough demand to support moving forward with production.

On the surface, it’s a straightforward proposition. Share your product on the crowdfunding platform of your choice, set your fundraising target, offer rewards to entice backers to your project, and away you go. 

Of course, it’s not quite so simple. Successful crowdfunding requires focus and dedication, with numerous factors to consider. How do you devise an effective campaign? How do you manage the campaign for maximum impact? And, once your crowdfunding campaign closes, how do you deliver on your promises and get your product shipped on time? 

Let’s take a deeper dive into things to consider when preparing to crowdfund a product, as you forge ahead in your startup journey. 

Planning your crowdfunding campaign 

How does crowdfunding work? There’s a selection of crowdfunding platforms available, such as Kickstarter, one of the original and highest profile companies. Launched in 2009, Kickstarter is well-known for supporting creative projects and hosting a range of campaigns for products from food to fashion. 

Once you’ve decided to crowdfund, it’s time to start planning your campaign. Not only can crowdfunding bring in much-needed funds to your company, it is a great way of getting the word out and kickstarting sales. A crowdfunding campaign will also supply you with valuable market feedback about your early-stage product. 

Given this, plan to invest time in devising the best campaign possible, from sharing your story with your target audience to refining your product prototype. Here are some key points to keep in mind when planning your campaign: 

  • Be specific in what you are seeking to achieve, and make sure you have full agreement among your management team around this point. A crowdfunding campaign that tries to be many things to many people runs the risk of falling flat. 
  • When setting your revenue target, be realistic about what you need. Don’t undershoot or overshoot your number.
  • Know your target buyer. What kind of messaging will get their attention? Brainstorm ways of engaging them through the campaign.
  • Establish your reward tiers. Make your rewards attractive but also practical. Offering discounts on preorders is a proven way of building demand for your product, for example.
  • Decide on the timeframe. Your campaign needs a defined start and end point.
  • Generate ideas for contests, such as a poll that invites your backers to vote on a bonus color for your product offering. 

Once you have settled on the main elements of the campaign, you have the opportunity to get creative. This is where your pitch video comes in. Pitch videos are highly scrutinized elements of crowdfunding, and in certain instances they may make or break your campaign. Make sure you’re asking the right questions before you start filming. 

Narrative: How will you tell your story? Perhaps you introduce your product from the perspective of your founder, explaining what drove her to start up the business. Another approach is to focus on your target user and the problem you are trying to solve for them. Consider your brand voice. What tone do you wish to convey?  

Format: What video techniques will you use? From direct-to-camera talking heads to demonstrations of your product in action, there are dozens of approaches for developing your video. Depictions of your target customers and B-roll of your startup team hard at work are other favorite options.  

Production: Who will write the script and who will approve it? Will you need to recruit video talent? What about voiceover and on-screen captions? There are numerous practicalities to bear in mind when producing a video.

Costs: How much will you spend? Set a realistic budget for your video (one that you can afford), and then work hard to stick to it. 

Besides video, there are other marketing elements to remember. For example, a well thought out social media strategy is essential to support your crowdfunding initiative. Pick one or two social channels and do a great job with those, rather than spreading yourself thinly across platforms. Draw up a schedule for daily and weekly social promotion, and then stick to it.  

Have a plan for building out your web pages with appealing design and copy. Is your website updated with the latest product information? Research what marketing approaches other campaigns have taken. Are you ready to take orders through your site? 

Finally, follow trends and get advice from crowdfunding campaigns featured on blogs from Kickstarter, among others. Identify who is successfully shipping product and reverse engineer how they ran their campaigns. Access resources on how to crowdfund, and seek out crowdfunding examples that appeal to you. 

Shipping your product  

Crowdfunding success can create problems if you do not have a shipping system in place at the early planning stages. Startups that bring in large amounts of money through crowdfunding but do not have a logistics plan ready risk missing out on the upsides of success. Sign on with a carrier six months prior to your designated ship date, and make sure you have a system in place to handle batch processing. Nobody wants to manually process labels at scale.

It’s also essential to proactively develop a logistics plan around how to deliver the product you promised. You cannot be overprepared when it comes to the practicalities of getting a product out the door—your backers will be expecting your product on time and ahead of new customers. 

Product manufacturing. Have your manufacturing plan in place before the campaign goes live and develop your crowdfunding campaign with these parameters in mind. Don’t leave key manufacturing details to chance. This will hurt your ability to ship the goods you have promised. Need help? Companies like Dragon Innovation, an Avnet company, specialize in helping startups achieve manufacturing readiness.

Research shipping costs. Will you offer both domestic and international shipping? How will you package your product? How much will your product weigh? When it comes to estimating your shipping costs, UPS’s Calculate Time and Cost tool is a great way to crunch shipping costs, and it automatically calculates for dimensional weight.   

Packaging design. Make sure your packaging can handle the rigors of transportation. What packing materials will you include inside the box to guard against damage in transit? Also consider the design aspects to make best use of the branding opportunity that packaging offers. 

Returns strategy. Who will handle the cost of return shipping? Research the policies that companies similar to yours have in place. Make sure your returns policy is established and operationalized before the calls come in. A good returns strategy will minimize mistakes, help you adjust staffing, and maximize recovery of high-value goods. Being prepared is not only good for the customer experience but also helps manage the costs of reverse logistics. Plan for returns and avoid unpleasant surprises.

Fulfillment. Many startups make the mistake of thinking they can handle the rigors of order fulfillment themselves. The reality is often quite the opposite—there’s a reason why the vast majority of established companies rely on third-party logistics partners to handle everything from warehousing and inventory management to picking and packing. For your product shipping needs, consider the UPS® eFulfillment program, which supports purchases from a variety of online marketplaces and offers small and medium-sized businesses around the globe streamlined fulfillment and shipping services to customers in the United States and Canada.  

Crowdfunding for business success 

With a well-planned campaign and a robust approach to logistics, crowdfunding can give your startup the boost it needs. You’ll be able to tell your story, showcase your idea, and see if there truly is demand for your product. Remember, taking a product from idea to reality occurs in stages, and at each stage UPS offers solutions that go hand-in-hand with your business needs.

Email us at startupteam@ups.com or sign up for a virtual consultation, and let’s work together to turn your product roadmap into startup success.  

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