Tradition has been thrown out the door. Innovators used to have to build products and prototypes to take to the world. The old adage of “build it and they will come” is no longer supported by new world reality, calling for lean principles from the outset, and to engage with the market early, even before the entrepreneur has started to “cut wood”. Startup Weekends are testimony to this dynamic way of thinking, and showcased how innovators could avoid slow commercial death, and succeed fast, in a manner that fits perfectly with crowd funding.
Startup Weekends and other pitching contests mirror the real world in which investors and supporters want to be convinced that the product has been thought through, that there is a business model in place, and (most importantly) that there is market validation for the product. “Solve the problem and the money will come” has never been so true. Show that you are meeting a market need (whether the market knows they have a need or not) and that demand will translate back into sales. Show that you can do it profitably, and you will have every astute investor knocking at your door.
It is more important to have the concept well developed and have it ready to present to the market for their validation rather than have it polished but with no support. The market will respond to the concept and the problem it solves more so than just the product itself. Focusing on developing the concept, then engaging with the market makes for more agile development, allowing a business to be faster and more flexible to respond and react. They are not encumbered by the time and cost invested into prototypes which may be outdated before they have had a chance to even see the light of day.
The MVP or Minimum Viable Product concept allows the market to engage at the ground floor. Some entrepreneurs want to boil the ocean, but need to realize that over-thinking and over complicating just confuses the market. Keeping the concept simple, concise and easy to explain allows for the market to engage easily, or offer feedback on how the base product can be manipulated to better address the problem it was created to solve.
The product may be the biggest, fastest or shiniest of its type, but unless the market wants it, it has little commercial value to anyone other than the innovator. Often the inventor is too close to their innovation, so it pays dividends to “get out of the building” and validate that their view is shared by the market that will ultimately decide where the product ends up. If listened to, the innovator will know if they are on track, or if they shouldn’t waste any more time, effort and money.
“Sustainability” is the catch-cry of our times. It is determined by whether the business model is able to start and then carry on trading through growth and tough times. Entrepreneurs need to consider how the business will be monetized, what revenue streams will be available, and how the MVP will be developed over time. Developing in the conceptual stage allows for agile thinking, allowing the entrepreneur to “pivot” quickly, both in relation to the product concept and the business model before considerable time and dollars are lost.
What crowd funding offers
Many think of crowd funding as simply providing an avenue of raising the cash required to get ideas off the ground. Whilst this is indeed correct, crowd funding offers much more to start-ups.
As a communications platform, crowd funding campaigns allow a project creator to describe the concept in word, pictures and video. They are able to outline the problem that it is they are solving, and show their passion and sincerity in doing so. The innovator can explain how their concept is new-to-world or differs from what else might be available in the market. Transparency is the key, and it is important for the message to explain exactly where the project is up to, even if it is early stage or speculative. Project creators are able to provide an outline of their aspirations as well as the business model that will take them there, and potentially engage with a worldwide audience.
A crowd funding campaign allows for feedback, comment and interaction with your potential market. It can be the main pillar of an engagement strategy, not just a soapbox on which the project creator stands to promote to the crowd. Crowd funding allows for connection with the innovator’s “first tier”, and provides the first tier an effective tool to pass the message on to the second tier, eventually facilitating buy-in from the (potentially global) third tier should it get traction.
Most of all, a crowd funding campaign can provide substantial social or market proof. For example, a campaign owner hopes to raise $15,000 in 30 days but may end up raising over $100,000. More impressive than raising more money than anticipated, the campaign may attract the support of over 5,000 people who provided social proof or market validation, demonstrating that there is a demand for the product, even whilst in its conceptual form. Supporters are people who are prepared to put their hand in their pocket to prove how sincere they are about showing their support. Such validation brings investors, partners, distributors, suppliers, and like an extra roll of the dice in a board game, allows the entrepreneur to scoot ahead considerably in the commercialization game.