Steinberg recommends proceeding carefully before setting up a crowdfunding campaign, because you only have one chance to succeed. Unlike venture funding, there is no stealth mode. If you fail with a crowdfunding campaign, your brand and reputation will take a hit and it will be very hard to go back to investors after that to convince them there’s a market for your service or product.
In addition, Steinberg emphasizes the importance of having a brief pitch that can be communicated very quickly and compellingly. Ideally, investors like to feel like they’re helping to fund a movement, something bigger they can identify with. On the other hand, a complex technical product, which requires a detailed explanation, isn’t well-suited to crowdfunding.
Finally, crowdfunding isn’t easy. Nor is it a panacea that will solve all of your funding and product development problems. Successful crowdfunding campaigns need to be supported by a strong social media and marketing campaign in order to be successful. Do your homework and plan for as many eventualities as you can up front, Steinberg warns. Study campaigns that have succeeded and campaigns that have failed. Know what resources you’re going to activate, and when and how you’re going to activate them.
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