How to Crowdfund into the Millions

How to Crowdfund into the Millions

Crowdfunding has provided an opportunity for entrepreneurs to raise thousands or millions of dollars from anyone who has money to invest in a product. Here is a recap experts, including Sandy Diao and David Mandelbrot of Indigogo, Raggy Lau of Cowise Marketing Agency, and Brian Hirsh of Oomi, sharing their insights on crowdfunding and the future of hardware.

 

Q: In your opinions, what are the “hottest” products or industries in hardware right now?

A: Drones, Bluetooth speakers and keyboard capabilities, Development of AI-integrated speakers.

 

Q: Where do you see the hardware industry going?

A: Industrial Design. Companies are not only building products that function well, but are also aesthetically pleasing.

Innovation. China is really hot right now.

Value. In the US, the most valuable hardware company is Apple. It is a reflection of the value that hardware companies are creating. Also, the worldwide economy we live in is a reflection of a successful hardware industry.

 

Q: Regarding marketing in the US and western markets, why would a company based in China not put a more concerted effort into doing so? What barriers are there?

A: Marketing from east to west is to two very different markets. Patent barriers are a big reason why we don’t see the cross-border reach, but we are starting to see a bridge, as more Chinese companies are understanding how to market to the west. It is also a reflection on how products are historically brought to market – a different distribution process for each market. Crowdfunding can help by eliminating the “middle man.”

The method of choosing a product also differs from east to west. In China, the market consideration for a new product is often based on data. In the US, it is often solution-driven.

Q: How has business in Shenzhen changed?

A: Factories are seeing their profit margins squeezed by big companies, so many are starting to build their own brands. They are using market and user-research to build new products and supporting it through crowdfunding.

 

Q: Is it difficult to hire talent in China?

A: It costs a lot of money to find and hire great people. Because of the close proximity to Hong Kong, freelancers are a great way to get good talent and minimize costs.

 

Q:  What are the next opportunities for hardware?

A: By far, the biggest opportunity right now is for manufacturers and startups right here in Shenzhen to launch products here and make them popular across the globe very quickly. Product manufacturers are able to connect directly with customers in ways they never could before.

And it’s not just the rapid development of hardware, but there is rapid development of startups quickly shipping thousands or even millions of units across the globe.

AI and Blockchain are big players in the industry right now.

 

Q: What comes after crowdfunding? What are the next steps for companies after the campaign and first launch?

A: Development of their ecommerce and retail distributers are key. Crowdfunding lets you know early in a product’s life cycle if it will be successful. A successful crowdfunding campaign will help get the product on the retail shelves. There is also a nice community developing that provides new ways for companies to reach new markets and expand.

 

Q: Before launching a crowdfunding campaign, what is essential to have in place?

A:  Your audience. You need to go into any crowdfunding platform with your audience and email lists in hand.

Prototype units. Having this ready is important and will be much more likely to gain funding.

Marketing strategy. Make sure to think through your marketing strategy ahead of time so you can keep the momentum going.

 

Q: What are some tips for building your audience and email lists?

A:  Preparation and Pre-launch are critical. These are great opportunities to gather emails early on. Companies can offer their earliest backers the best price. Then, incentivize them to share with others to get more emails.

 

Q: How much of a markdaown should you give on a product to your early backers?

A:  What’s really important is to make sure you understand ALL costs associated with developing the product before setting a pricing strategy. As for a discount, in reality, no one is going to pay MSRP, so you need to decide what you expect to sell your product for a retail. For the first wave of customers (backers), use a lower price as incentive, but make sure to include it in your pricing strategy.

 

Q:  What are some key components to setting a pricing strategy?

A:  You need to benchmark price against competitors already on the market and set a price lower, as you are still in the crowdfunding stage. Also, remember that the first backers should be at a price that is the lowest you can go and increase the backer price throughout the campaign.

 

Q: What costs are associated with running a crowdfunding campaign?

A: Crowdfunding is an ongoing process and you need to be active the whole time. Budget for expanding your team, as well as advertising. Rule of thumb, advertising should be 10% of your internal goal, not the public goal.

 

Q:  How can you protect your IP in early-stage development and crowdfunding?

A:  If you are actually doing something innovative and not obvious, than it is a worthwhile expense to look into getting a provisional patent filed.

 

Q:  How can startups compete with larger enterprise companies who are also crowdfunding?

A:  It’s important to remember that many large companies are using a crowdfunding platform to test new products in their pipeline, not necessarily sell. Also, many crowdfunding backers are looking for innovative, new products, not brand name. Often, big enterprise company crowdfunding is not more successful than smaller startups.

 

Remember, crowdfunding isn’t just raising money for your product. It is truly getting your first customers!

To check out pictures from the event, click here.

About The Speakers

Sandy Diao

Sandy Diao

Director of Strategic Programs at Indiegogo

Sandy is a full-stack marketer with experience driving consumer adoption for emerging technologies. Previously, she led global expansion for a Sequoia-funded startup and pioneered a native advertising platform on Pinterest.

David Mandelbrot

David Mandelbrot

CEO, Indiegogo

Raggy Lau

Raggy Lau

Founder, Cowise Marketing Agency

Brian Hirsh

Brian Hirsh

Interaction Designer, Oomi

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