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Starting a business

Using Kickstarter to Create an Investment Opportunity

Kickstarter is often seen as a way to sell products by getting the money you need for manufacturing and operational costs, usually based solely on a prototype. But as crowdfunding gains more widespread attention, smart entrepreneurs have begun to see it as a means to a different end. In addition to the benefits of selling products directly to customers, businesses can take the information they gather from a campaign to potential investors.

If you decide to pursue this end, however, it’s important to carefully plan your Kickstarter campaign to get the results you’ll need. Then, once you approach potential investors, they’ll expect the usual things. They’ll want a detailed business plan, an impressive pitch and a strategic plan to meet your business’ future goals.

Here are a few ways Kickstarter can help with all of that.

Learn Your Story

The best thing about Kickstarter is that it forces you to think carefully about your target audience. What will they expect to see when they click over to learn more about your campaign? To even be approved to the site, you’ll be required to submit your project for review. This means creating a project page with a video that tells the story behind your project.

Kickstarter walks you through each step of this process, but accurately describing your project both in video and text form requires some work on your end. That might mean getting a second opinion from someone whose writing and marketing skills you respect. At the end of your submission, you’ll have a stronger knowledge of the “why” behind your product—and be able to tell the same story to potential investors.

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Gather Documented Customer Interest

Once your project has been approved, customers should start backing your project. As people move from potential customer to backer, you will begin to accumulate a digital “paper trail” of documented customer interest. To help you get that documentation, it’s best to set your funding goal a bit low for a couple of reasons.

First, backers are more eager to get behind a winning project. The lower that goal is, the quicker their faith is affirmed. Others will see the support from everyone else and want to take part as well. For those still on the fence, they’ll also have the certainty of knowing that your project is fully funded and therefore they’ll actually receive something, since a purchase on the site only proceeds if the project meets its goal.

Later, when it comes time to show potential investors how your project performed on Kickstarter, the fact that your $5,000 project raised $10,000 will look much better than a $10,000 project that only raised $5,000.

Generate Buzz

As your campaign goes live, you’ll likely spend time getting bloggers and high-profile publications to cover your existing new project. Even a small amount of coverage can help generate buzz for your brand. As your project is shared across social media and reviewed by experts, you’ll be able to save that coverage as proof of market interest in your project.

You’ll also receive feedback that can help you improve the product before you ever start shipping en masse. All of this could be information you take to potential investors to show the possible attention your product will get once it goes mainstream. This is in addition to the extra backing that all of that attention brings to your product, which can provide sales figures that will inevitably play a significant role in your pitch meetings.

Formulate a Plan

Some of the most well-known crowdfunding campaigns of all time succeeded because their creators planned their campaigns in advance. One great by-product of all of that planning is that you’ll start to think about where you want your business to be several years down the line. This long-term planning is essential during your pitches to investors, since it shows that you’re fully committed.

A huge factor in this pre-planning is how you will manufacture, fulfill and ship your items, and this information is crucial to landing investment dollars, as well. For best results, document your strategy on paper so that you can look back on it when you’re ready to seek funding.

Crowdfunding is a great way to generate interest and sell products. The process can also be a great way to start thinking about how you’ll approach investors for funding. Sites like Kickstarter can give you the market information you need to successfully pitch and answer questions from the toughest investors in the business.

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