Successfully raising capital through a crowdfunding campaign — seeking contributions from many people, usually via the internet — is harder than it looks, an executive of Indiegogo told an audience of Nassau County inventors and entrepreneurs in Mineola Monday night.
Sarah Meister, hardware and design outreach manager for San Francisco-based crowdfunding website Indiegogo, said that high-profile campaigns are the product of months of effort.
“People have a lot of preconceived notions of crowdfunding,” Meister said. “I just want to emphasize all the work [that went into ] those blockbuster campaigns you read about . . . It is incredibly grueling launching a crowdfunding campaign.”
Speaking before an estimated 60 people at a meeting of the Nassau County Inventors & Entrepreneurs Club at the Theodore Roosevelt County Executive and Legislative Building, Meister said that crowdfunding entrepreneurs should figure on running a campaign for one to three months at minimum and spending 20 percent of the amount they plan to raise.
Crowdfunding is an alternative method of financing a business or charitable project by raising money from many people. Entrepreneurs often seek money before a product is launched. In return, the contributors typically get a discount or other incentive once a product is launched. Contributors don’t get equity stakes in the company raising the funds.
Indiegogo, which competes against other crowdfunding sites such as Kickstarter, takes 5 percent of the funds raised by entrepreneurs, Meister said.
Before an Indiegogo campaign is launched, Meister recommended, the startup needs a working prototype of its product, an “engaged, excited audience,” and a deal in place to manufacture the product.
She also said that before the crowdfunding campaign launch, the entrepreneur should consider the skills that will be required. Those include: copywriting, graphic design, Web page setup, product photography, social media, video, media outreach, email and customer acquisition and campaign management.
Though there are challenges, Meister said that using crowdfunding to secure capital has clear benefits.
“Customers pay for your manufacturing,” she said. “You don’t have to put all your money on the line.”
In addition, Meister said that entrepreneurs can get valuable feedback from their customers. “Your crowd tells you so much about what isn’t working and what is,” she said.
The crowdfunding format also lets entrepreneurs gather email addresses of customers and prospective customers. “Your email list, when you launch, is your most valuable product,” she said.
For those who decide to take the plunge, Meister said data indicates the best months to launch an Indiegogo campaign are March through October and the best days are Wednesday through Friday.