The most common idea about crowdfunding is that it is a tool for raising money. It is that, but for consultant Valentí Acconcia it is a definition that does not cover everything. "We are talking about collective funding and collective validation of the project," he says. That is because it is not only about raising the necessary funds to go ahead with a project or product, but also a way of studying the market and testing whether the product is any good or whether it needs to be modified.
"We have gone from the old marketing to a scenario in which before production begins we know whether the market wants it," he insists. In fact, he thinks that "showing off" is the main player in this new game: "The investors are people who are looking forward to consuming it. We have gone from producing for a passive consumer to first having a client who tells us what to produce."
Therefore, before embarking on a campaign, the expert believes that it is vital to bear certain elements in mind: "You validate the product, you know if people want it or not; you validate its sale online, which is new different channel; and you have to know how to sell reward, because altruism is expensive, people bid for reward." And, obviously, the campaign costs, which can go from free to 5%.
A critical eye is also needed when it comes to choosing the platform. To begin with, Acconcia mentions Indiegogo as "one of the first that works best" and Kickstarter, "the current leader with almost three billion dollars raised." They are two investment funds used by five of the startups presented in an Acció Funding Breakfast and that serve as examples to understand what can and cannot be done when preparing a crowdfunding campaign.
Making mistakes at the start, getting it right later
3D Clickis a startup that from the beginning was born with the aim of becoming international, which is why it chose to work with Indiegogo. It is a platform that allows for the easy creation of product catalogues and 3D images, mainly targeted at the B2B business. In fact, this was one of its weak points, admits the company's founder and CEO, Debora Alasraki, who believes that crowdfunding campaigns "are not designed for software or B2B, generally the person who ends up investing is B2C."
In her case, funds were needed to develop the product, but they still needed to work on their potential clients and to know whether there was a real need for the idea in the market. "The campaign served to validate the hypothesis, the client, the localisation and the usability. Knowing whether there was real interest and getting the first clients, following up on them and turning them into beta-testers," she says.
They managed to mobilise 14% of the Indiegogo community, they had 61 patrons and an average contribution of 300 euros per investor. It was less than they expected, she says, but that was because they made "all the mistakes possible": "We began on Friday, we did not prepare the communication well, we did it too quickly... We should have prepared it better." But mistakes are there to be learnt from and Alasraki knows that the same thing will not happen again.
Someone else who looked back on their crowdfunding adventure and who learnt a positive lesson is the creator of WeFitter,Carlos Rodés. This application aims to activate the public through gamification so that people become less sedentary and improve their health through sport.
The fact that Rodés calls the campaign a failure is because he was never 100% convinced: "You have to be clear about what you want to do. I wasn't and it didn't work." However, the experience helped him to "put the product in its place" and prepare a solid project that ended up getting an Enisa and reaching the United States. "If I were to start a campaign now, I would be sure that it would work," he admits.
Even though he sees crowdfunding as a good tool for raising funds, he does not believe that it is a good way to validate an idea. "The investors are early adopters who will surely like it. Perhaps later it does not work so well on the market," he points out, recommending not starting with only this idea.
Too optimistic
The case of Bhoreal is another that worked on the second attempt. This control interface for open code for multimedia applications for musicians and hackers was on Goteo and raised almost 15,000 euros, a quantity that its creator, Àlex Posada, considers small for hardware.
Posada thinks that his main mistake was being too optimistic: "We had continuous problems, delays from suppliers that meant the product was not ready on time, imbalances between the design and manufacturing, a lack of human and financial resources…." This list makes it clear that everything has to be tied up well, because when it came out on the market, others had already got ahead of them.
Despite everything, they are now working on Oval, a new project on which they have been able to work on the details more calmly and that has raised 500,000 euros in funding. And all thanks to the mistakes made, from which they have learnt.
Crowdfunding to convince your investor
The underwear of Cocoro and their campaign on Verkami are very well known. The two entrepreneurs who came up with the idea chose crowdfunding after seeing that they had no guarantees from the bank and that getting a loan would be too difficult. But apart from the financial resources, they saw in the platform the option to validate their product and know whether it would be successful on the market.
"The campaign helped us to talk about the product, create a community and raise the first interest," remembers its coordinator, Eva Polío, "but also to see that before getting money, you have to invest." And they had to pay to make videos and photographs that were good enough to advertise their product or make a prototype, for example, an element that many entrepreneurs do not think about.
Yet, their history has a curious element: it was they who convinced their investor to choose crowdfunding. "We told him that it would be good because when the product went on to the market it would be validated and its success assured," she says. They chose Verkami because it is a well-known platform in Spain, the environment in which they wanted to work.
Surpassing objectives
Urna Bios is the last example showing how campaigns can work if everything is well prepared. This startup has managed to sell 85,000 urns in 37 different countries since 2013 and now has a nursery to plant the seeds so that they grow without having to worry about them. The device detects whether there is too much or too little water, so that the plants are watered when needed.
The company began a Kickstarter campaign to raise 60,000 euros to create the product and launch it on the market. After 31 days they had raised 73,000. They are another example of how a B2B project can work because "50% of the campaign is funded by professionals," points out the head of marketing, Diego Sánchez.
From his experience, he recommends beginning preparation of the campaign a few months before, having a community of followers and knowing which platform to choose. "Kickstarter is very focused on the United States, it is the leading platform there and we also want to grow there," he argues. And he concludes saying that you have to have "good engagement to attract people."