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At a time when banks often refuse to support startups and small business, crowdfunding may become the only option.
Indeed, many Startups don’t even think about going to the bank, but see Kickstarter and Indiegogo as the only viable options to raise funds.
But it’s not only about the money. Crowdfunding sites enable business owners to get instant validation – and I think we all agree that the market itself is far more qualified, as compared to the average banker, to judge a product concept.
I think Crowdfunding is fantastic. It’s the future of business financing.
So, let’s assume that you get enough backers to pledge your project. What’s next?
Most likely, a year of frustration, delays and possibly even failure.
You’ve probably heard the stories of Kickstarter projects failing spectacularly, only within months of raising for beyond their pledging goal. According to a Kickstarter’s own assessment, that fail rate is 9%.
In this article, I will first explain why I think that is the case, and what you can do about.
What can go wrong after raising funds on Kickstarter?
Many of the products presented on Kickstarter are meant to be made in China. Getting products made in anywhere is not an easy task, and China is even harder.
There are two main scenarios:
a. Delays: The project takes much longer than expected, to the point where your backers even forget about you.
b. Costs running away: Without a properly cost calculation, you cannot estimate how much money you must raise to deliver on your promises.