There are many different ways you can fund development of your invention. Many of the inventors I have interviewed have self funded their inventions, some have licensed their ideas, but a much more new way to raise money for your invention is through crowdfunding.
Crowdfunding is where you pitch your invention (via video) to the public and offer an incentive for people to pledge money towards getting you product made, pledges can be as low as a few dollars/pounds. This is often in the form of pre-selling your product (the investor gets one of your product when it is made). What is great about this is you can also see if there is any demand for your product before you make it, of course a lot is down to awareness of your pitch and product as well as the product itself. Crowdfunder.co.uk a relatively new UK crowdfunding site has been kind enough to answer some questions about crowdfunding.
Crowdfunder.co.uk answers some questions about crowdfunding
Tara: In laymans terms please could you describe what crowdfunding is?
Crowdfunder.co.uk: Crowdfunding is getting alot of people together, requesting/enticing them each to give a small amount of money to enable a large amount of money to be raised. the practice has been in use for years but recently the term “crowdfunding” has been coined
Tara: What stage would an inventor need to be at with their product in order to use Crowdfunder.co.uk
Crowdfunder.co.uk: Ideally when the product is ready to be rolled out, either in beta stage testing or at the final finished stage, as it will be easier to entice people to fund it if there is a nice, new, shiny product to be had. However, saying that, if an inventor wants to crowdfund their product to get the idea off the ground, as long as they write an enticing pitch as to what this invention will do, it’s USP’s and benefits to it’s target market, then crowdfunding is a great way to raise the necessary capital.
Tara: How would and inventor go about posting their project on Crowdfunder and how much investment can they ask for?
Crowdfunder.co.uk: They would have to go through an approval stage first, they need to submit the idea, how they would promote it and what they would give for different levels of rewards. if that looks satisfactory, we approve it and they then have to write a pitch, providing as much relevant information that backs up their pitch as possible – a video works well plus photos to give the project credibility – links to their own website as well to provide further information and a bit of history about themselves. If a person has already successfully invented a few products, this makes the pitch more saleable.
There’s no limit to the amount asked, but you have to remember that our crowdfunding model is based on “all or nothing” – if the target amount is not reached then the pitch owner will not receive any of the money raised, it all goes directly back to the funders, therefore people need to be realistic about the amount of funding they require and not be greedy.
Also, although we are UK based, we welcome pitches from all over the world,
Tara: What can an inventor offer its investors in return for their investment?
Crowdfunder.co.uk: They can offer anything! they need to think about what is financially viable for them to offer out and what would be enticing as a reward – they could offer the product once it has been brought to market, a credit on the product website, a talk by the inventor – the more useful the reward, the better. In some ways, you could look at the reward as payment for a product or service.
Tara: Once an inventor has posted their project on Crowdfunder what is the best way for them to try and gain interest in their project?
Crowdfunder.co.uk: Emailing and notifying their friends and family, using their social networks – Tweeting and Facebooking about it, joining and followng relevant social media groups and promoting it that way. A press release, getting the attention and backing of prominent people within their industry, contacting journalists and bloggers. A pitch owner who already has a large social media following is in a good position to get their pitch promoted.
Tara: Will Crowdfunder help promote an inventors project?
Crowdfunder.co.uk: Yes! we do what we can to help by using our social media network to alert people to the pitches and sending out newsletters to our ever growing list of members.
Tara: Have any inventors had their projects succesfully funded by Crowdfunder.co.uk
Crowdfunder.co.uk: No, not yet, but we have a great one on at the moment – the Bubblescope, a 360 degree camera for smartphones, launched by a British inventor Tom Lawton, which is going well
Tara: What happens if an inventor reaches their target investment and what happens if they don’t?
Crowdfunder.co.uk: If an inventor reaches their target investment, the necessary paperwork is raised (statement and invoice) and the amount is transferred to his bank account.
If they don’t reach their target amount, all funds are released back into the investors crowdunder account, where they can withdraw back into their PayPal account or use to fund another project.
Tara: What fees does an inventor have to pay for using Crowdfunder.co.uk
Crowdfunder.co.uk: Only successful pitches incur charges, so a pitch that raises it’s full target amount (and perhaps more) would be subject to 5% fees and VAT
How the The Oona was funded by Crowdfunding
Sam Gordon one of the inventors of the Oona www.theoona.com has been kind enough to answer a few questions about how they managed to achieve such great success with their crowdfunding campaign on Kickstarter (one of the US based crowdfunding companies).The original target for the crowdfunding campaign was $10,000 but they vastly surpassed that with a total of $131,220 raised
“We wanted to make a stand that can do as much as your smart phone does. A “stand” in name only, The Oona can help you utilize all the functions of your smart phone”
Tara: What made you decide to use crowdfunding to fund production of the Oona?
Sam: We had an idea of The Oona, and we liked our idea. Before we invested heavily in the concept of The Oona, we wanted to see if other people believed in it. We were big fans of kickstarter and saw many project on the site that we admired, so we put The Oona on there to gather feedback and hopefully raise some funds to help us make The Oona a reality. The feedback was overwhelmingly positive and more than we possibility could have anticipated and we’re excited to be putting the Oona into production and shipping to our backers.
Tara: How many Oona’s did you presell through your crowdfunding campaign?
Sam: 4,000 give or take a few
Tara: You had great success with your Kickstarter campaign, please could you tell me a few ways that you created awareness of your crowdfunding campaign that helped it to do so well?
Sam: Open communication with supporters was incredibly important. Getting to know the people who supported us and letting them get to know us. Secondarily, we all read a lot of blogs and publications that are geeky/techy – so we reached out to those that felt appropriate and told them what we were doing. Many of them were gracious enough to write about us and link to the site, so that certainly helped get the word out.
Tara: What tips would you give to an inventor who is thinking about using crowdfunding to fund their invention?
Sam: Be prepared, and know the market. Don’t just jump on kickstarter, check out other products to see how you can distinguish yourself from the field and if they are doing anything innovative that you can build on.
Specific to kickstarter – make a great video. A great video doesn’t have to be sleek, it is most important to convey who you are, what you are trying to do. Some of the most successful project just have a video of a couple of guys explaining their idea, but their story and/or their product is compelling.
Communicate with your backers as much as possible. This has been a blessing for us. We’ve gotten great ideas and feedback from our backers and have made some friends and business contacts.
Finally, let people know about what you’re doing. Friends, family, coworkers and any blogs or publications you read. You’ll be amazed how many people are looking to support you and help you succeed in something you are passionate about it. If you are passionate about it, people will recognize that, react and act.
Crowdfunding Sites for your Invention
- Kickstarter – read how two inventors funded their project on Kickstarter
- Get it made – to find out more about Get it Made listen to my podcast with one of the founders Nick Ager
- CKIE – read my post about CKIE here
For more tips on creating a good crowdfunding pitch also check out this article 11 Tips for Crowdfunding: How to Raise Money From Strangers
What are your thoughts on Crowdfunding? Please leave a comment below