Posted on June 26, 2013 By iPledg With 0 comments

Crowd Funding – One Small Step for Man, One Giant Leap For Business

final logo new small-01All businesses started with a concept. The first thought was the seed that needed fertile ground on which to germinate, and an environment of conditions just right to help it to grow and continue growing in a mighty corporate oak. But it is the small things – the drop of water or the small bed of soil – that allowed business to start the change from concept to action. And it is now crowd funding that allows ideas and passions to take the first steps to actualisation by providing the seed funding to germinate and start to develop and grow.

In the pipeline through which businesses usually pass, the catalyst is a concept or a dream. It has often been said that it is not the money that starts the idea, but the idea that starts the money. But once the idea has been conceived, the next (early) step usually involves some form of funding to give it the necessary inertia to bring concept to reality.

Prototyping is often the reason for inventors to engage with crowd funding. The cost of building the first models or making tangible versions of the concept is frequently beyond the reach of the project initiator. Crowd funding offers project creators a quick and relevant way in which to not only raise the funding, but to build the band of “first followers” in the long journey to commercialization.

Crowd funding can also be used successfully to engage the necessary expertise to take the idea to fruition. Most inventors do not have the full complement of skills or experience required to take their product or idea to the next step, let alone move to full scale operation and commercialization. Accessing skills and knowledge from an industry, technical, productisation, or commercialization perspective allows the model to be further fleshed out and developed to a working reality. Again, this sort of advice and expertise costs money – not large sums of funding, but capital that stands between pipe dreams and achieving success. Banks and traditional sources of funding are becoming increasingly risk-averse and less likely to support such initiatives, leaving crowd funding as the best option for those who (until recently) only had close friends and family to approach (cap in hand) for funding.

In an interesting trend of late, the traditional formula of “concept – define – build – market” is now moving toward “concept – define – market – build”. The astute realize that building first then going back to the drawing board is costly, especially when the exercise has to be repeated time and time again as market feedback rolls in. Getting assistance to define early, then to market before productisation becomes a far more efficient option, as the market will guide the inventor before he starts to “cut wood”.  However, even with this “lean startup” model, funding is required, and again it is crowd funding that is leading the way as the primary source of funding in this area.

With the requirement to fund the move from concept to mass production, crowd funding is again perfectly placed as the option of choice. Smart project creators have cottoned on the realization that offering the product (once production is achieved and products start rolling off the production line) as rewards is a great way to entice potential project supporters into pledging their support for the campaign and the venture. Through the reach of the internet and social media, project creators with great ideas and the ability to articulate these well, in addition to their ability to offer sought-after rewards can potentially experience global reach for their campaign. With this sort of exposure, funding is virtually inevitable.

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