Innovation is often described as a new idea that can solve new or existing problems. One thing is certain: whatever the innovation is, it has to be both original and to serve a practical purpose, either by solving a problem or by fulfilling a need that has not yet been addressed.
Since innovative ideas are, by nature, unfamiliar, they are the ideal candidates for crowdfunding. It is easier and far more beneficial to connect directly with would-be consumers and sell the idea to them, therefore convincing them to be part of the financing process, than it would be for the innovator to seek backing from larger companies with all the red tape and hierarchies the latter involve.
Crowdfunding and its benefits
Crowdfunding campaigns, as the name suggests, centre around the crowd that will eventually be using the product or service being marketed. It is essential, therefore, to maximise the direct contact with the people being asked to fund the project.
There are many benefits to crowdfunding, especially in the case of innovative products or ideas. The most obvious is the ability to gauge the potential market’s interest in the product. Crowdfunding campaigns are a kind of market research and can provide a clear picture of what the market wants, as well as help fine-tune the target market. Since backers are essentially the first consumer base, their feedback and ideas are also extremely valuable in guiding the research and development of a new product before it hits the general market.
If done properly, a crowdfunding campaign can provide valuable visibility without breaking the bank since, apart from being a plea for financial backing, it is also a marketing campaign of sorts. The backers’ feedback is a way to attract more backers and potential consumers since people tend to trust the opinion of others and their reviews when looking at new products or ideas to spend their money on.
Last but not least, the very nature of crowdfunding offers a benefit that other ways of raising capital do not: the fact that crowdfunding is conducted online levels the playing field and makes it easier for smaller entrepreneurs to compete with larger ones. Of course, the idea has to be presented in an attractive way to the consumer, preferably by engaging them on a personal level and by not overwhelming them with endless options.
The most successful crowdfunding campaigns are those that keep the consumer in mind. If an innovative idea – one that solves a problem in a new and original way – is at the heart of the project, then the crowd being asked for backing will be the one to help you put out the best possible product. Backers are the test market, the ones to point out any flaws and to give new ideas, as well as the investors all rolled into one. And because the backers in a crowdfunding campaign feel involved on a personal level, they are bound to go beyond what is expected of them. They are more likely to spread the word about the campaign and the product, and they are more willing to give valuable feedback.
Finally, the online nature of crowdfunding offers two other advantages which traditional fundraising doesn’t. There are no geographical limitations, so consumers can be found and enticed wherever they are in the world. Timing is also of the essence. With a quicker availability of feedback – be it positive or not – adjustments can be made in a timely manner, making the final product available to the market more quickly.
It is safe to say that crowdfunding is the ideal way to promote innovative ideas or products. It is the best way to share the power of innovation with the people who matter – the consumers.