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CROWDFUNDING PLATFORMS ARE WORKING HARD TO MINIMIZE RISKY CAMPAIGNS

Crowd FundingJanuary 19, 2022


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It’s a routine story: A crowdfunding campaign whips up excitement, receives
funds, and then collapses without a trace. Central Standard Timing managed to
raise more than $1 million to produce the thinnest watch in the world before
filing papers for bankruptcy in 2016. A Kickstarter-backed company called Taxa
just closed shop and ended its dream of bio-engineering glowing plants.

Source: Pexels

A campaign raised $13 million to produce the smartest cooler till date,
requested backers for even more funds, years after their campaign was over.
Platforms like Kickstarter and Indiegogo had previously promised to democratize
and easy funding processes for entrepreneurs. Anyone with great ideas could
raise capital and build a product. A decade later, the platforms’ high-profile
failures balance their successes. Improving the hit rate of very risky ventures
is a top priority. Kickstarter has offered inventors, access to experts in
design and manufacturing while Indiegogo hosted a similar program later. These
services included detailed design reviews of electronics, manufacturing, global
sourcing of components and assistance with branding and distribution,
information jealously guarded by major multinationals.


SOME EARLY STEPS

These platforms must harness their creativity with credibility and their
enthusiasm with acquired expertise. Crowdfunding platforms can transform the
economy by de-centralizing entrepreneurship and laying down a safe growth path
for enterprises to grow up. Many high-profile projects fail as the entrepreneurs
never possessed the skills or experience needed to pull off their project.
Anyone can have a great business idea. Even putting together a prototype with 3D
printers is easy these days. Translating that genius vision into hundreds and
thousands of affordable reliable products and before a bigger company or even a
Chinese imitator steals your ideas, remains complex.

Source: Pexels

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Indiegogo tried to bridge that gap in partnership with Arrow, an electronics
design and engineering firm. Arrow provides all its associated electronics
product creators a review of their design free of cost and bill of materials,
the full list of components inside, checks their availability and estimates
purchasing and manufacturing costs. In return, Arrow would like that some
projects will turn into future purchases through their platform. Indiegogo also
announced a similar partnership with Riverwood Solutions, where they connect
creators with off-shore manufacturers in Mexico, China, or other Southeast Asian
countries.


MANY A SLIP BETWEEN THE CUP AND THE LIP

From a working prototype to a manufactured product is a long way. Parts in a
prototype may be different from the parts needed for a mass-produced item. A
hardware campaign can use online toolkits with webinars and tutorials from Avnet
and Dragon engineers, Kickstarter staff, and those who made successful campaigns
in the past. These services are free to creators and companies expect others to
sign up for paid services as their products come to life. Existing partnerships
can only ensure that if a project fails, it won’t be badly designed or poorly
made. Crowdfunding platforms are extending advice beyond design and
manufacturing.

Source: Pexels

Kickstarter and Indiegogo have multiple retail partnerships to help innovators
sell products if their financial backers are satisfied. Indiegogo also offers
digital marketing services. We transition from a world dominated by a few giant
electronics multinationals to one with a diversity of brands built upon a
similarly small number of platforms: Apple, Samsung, and Sony to Kickstarter,
Foxconn and Amazon. Ultimately, today’s market leaders may seek crowd validation
before launching a new gaming device or smartphone. When this happens , it will
surely be a slow transition, and we can expect plenty of future crash-and-burn
crowdfunding campaigns to come.

by Taboolaby Taboola
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