There can be little doubt that the plight of the everyday inventor has had its challenges for a long time, with difficulties in obtaining funding to get the project off the ground being an oft-repeated cause of sleepless nights. The recent economic plight in the UK and throughout the globe has done little to help inventors unlock capital with investors’ purse strings on the whole becoming tighter than ever. However, the increasing prevalence of crowdfunding initiatives is offering hope for social entrepreneurs and inventors alike.
First of all, the question on your lips may well be “what is crowdfunding?” In essence, crowdfunding, (sometimes known as crowdsourcing or crowd financing) does exactly what it says on the tin. The basic principle is that you place your business or product idea into the “shop window” of the crowdfunding platform with a request for a proportion of equity or certain rewards in exchange for a donation from multiple investors. For example, from your business planning process, you may have established that to get your next big order financed, you will need an additional £70,000. Your start-up revenue streams may not yet have generated this, and as such you realise that you will require external investment. This is where crowdfunding can play its part. You can pitch your idea with a request for a certain level of investment, backed up by an explanation as to what you would do with the funds if and when raised. One of the main advantages of crowdfunding initiatives are that anyone can invest. If an investor likes the idea but has limited funding ability, then they can donate £1. If an investor looking for a new product or business to invest in falls in love with your idea, then they can invest the full amount. Crowdfunding really is a huge opportunity for entrepreneurs to look into, but it is by no means the solution for everyone and there are a few bits of advice that should be taken into account before you load up your project into one of the many platforms out there….
As seen with the likes of Dragons’ Den, savvy investors will not just invest in an idea, albeit a good idea that could benefit the marketplace. If any sort of investment is going to be made, in the vast majority of cases, a strong business proposal is going to need to be put together. In order to establish how much capital you are looking to raise, genuine cost forecasting is needed. A figure cannot just be plucked from the sky based on vague ideas as to manufacture and retail costs etc without having completed full and detailed business plan and strategy development. This will take time and development. One of the golden rules for an inventor or entrepreneur is not to try to rush to market. From our experience, this is one of the biggest errors that innovators make, in trying to get that first product on sale before in reality maybe the product, the market or the business infrastructure as a whole is ready.
Crowdfunding offers opportunities for ideas that inspire, excite and intrigue potential investors. The likes of Kickstarter, Crowdcube and WeFund have helped to raised millions to help inventors, entrepreneurs and innovators in general but the value in having the idea researched, developed and protected should not be underestimated. For those who want to take their product to market, crowdfunding should certainly be seen as an avenue to explore and is a less intimidating forum to pitch to than the likes of Dragons’ Den, but our advice would still be to take your time. With any new product idea, as an inventor, you need to take your time. By developing your idea over time and following the advice that we try to offer, you will exponentially increase the chances of your product becoming the next big thing, rather than just another unfunded damp squib.
One of Innovate’s clients, the Gigwam, who appeared on the most recent series of Dragons’ Den is pitching for investment via Kickstarter. Why not pay his page a visit and if you like the project as much as Theo and Deborah did, then support the project: http://www.kickstarter.com/projects/1850255840/gigwam?ref=live
If you have any questions about crowdfunding or if you have a new idea that you are looking for help with, then why not drop us a call on 0207 354 5640 or ping us an email to email@example.com