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Feasibility of starting company as a crowdfunded project? Or is it a bad idea?
Posted by Miyuki on 16 Oct, 2021 16:48 -
Hi folks.
I want to ask if is there anybody who started a company with some form of crowdfunding?
I'm thinking about it but it is far from a single-person job especially when I do not have business experience. And finding a reliable partner might be an issue.
I'm not expecting it will generate massive revenue, it is targeted to a specific market/need.
I know the success of most crowdfunding stuff is mostly dependent on the presentation itself rather than on the product and it tends to have a bad reputation. -
Hi folks.
I want to ask if is there anybody who started a company with some form of crowdfunding?
I'm thinking about it but it is far from a single-person job especially when I do not have business experience. And finding a reliable partner might be an issue.
I'm not expecting it will generate massive revenue, it is targeted to a specific market/need.
I know the success of most crowdfunding stuff is mostly dependent on the presentation itself rather than on the product and it tends to have a bad reputation.
Thar's yer problem. As a veteran of more start-ups than I care to remember I can tell you there is a huge amount going on. There's dozens of things to organise, nothing ever goes to plan and everything takes twice as long as you expected it to. Adding "learning how to do all this" at the same time will probably be more than you can bear, and you'll make rookie mistakes that make things take longer and be even harder.
Having done start-ups with other experienced people to share the load I can tell you it was hard. I've done enough now that I might, just might, consider doing one on my own if and only if I already financing, including generous contingency provisions, in place. The thing that will kill a start-up faster than anything esle is running out of funds at a critical juncture, usually when one more thing goes wrong than you'd ever expected could go wrong simultaneously.
So, briefly, and I don't mean this unkindly, someone with no business experience that wants to do a start-up, and at that one with unreliable financing needs their head examined. To be clear, you've got to be crazy to do a start-up of any kind, it requires a certain type of highly resilient personality in the first place. It can be great fun, it can be hell.
If you want to go down the start-up route I'd say find someone you can trust with prior experience to work with you, and find a source of finance with prior experience of financing start-ups to fund it.
Crowdfunding is for social causes, pipedreamers, chancers, crooks, or highly experienced people. For a first timer I would say that it's not a wise route. The only thing in its favour for a first timer is that you won't have a self-interestedvultureventure capitalist floating about in the background all the time. -
Thanks for your opinion.
I know it will be bad to start alone without experience.
Do you have any experience with Co-founder search platforms like a Starthawk or so?
Is that a good way to find a reasonable partner to start a project?
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Do you have any experience with Co-founder search platforms like a Starthawk or so?
Not personally, no. -
Be aware that things in Europe are a bit different than say USA.
Founding a company just for the fun of it with little prospect of making any money is a full waste of your and others people time.
Just the WEEE registration alone will let you grow grey hairs, plus all the tax and regulatory stuff - if you don't have any experience with that, it will be very costly, as people with enough experience will not work for nothing.
Some projects better stay a hobby
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I've started the company and our brand Sunday Robotics and we will have a Kickstarter campaign on January 2022 with our product ProBUDDY.
Building a company on crowd funding campaign is not a good idea IMO but the other way is a good one. This is not my first attempt on building start-ups and let me tell you the first one went bad So, what we are doing right now is to have Robotics & AI goals for the medium-long term and for short-medium term we have the products to fund our start up, our team. Team is very important. Now we believe that ProBUDDY is a nice product (we know it because we are using it in our lab and it really helps) and for for the first commercialisation cycle Kickstarter is a good way to do it.
So what I am trying to tell you is that better to create a route first, create products that really helps, prototype them and try to sell the prototypes to the people that really needs, if it works then go create a crowdfunding campaign. But we wouldn't never ever forget that people in crowdfunding platforms are real people, valuable ones I must add, they must be satisfied by the result.
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While not the experience you want, I took a quick course via the SBA / SCORE (forgot the specifics there) and frankly they scared me off. This mainly because you need a significant amount of cash to get started that has nothing to do with your product. You have lawyers, insurance agents, incorporation fees and a bunch of other stuff right out of the gate. In the USA anyways you don't even want to think about a business until you have factored in liability / errors insurance. Just figuring out the best way to setup your business takes a lawyer and varies highly with location. You need some form of incorporation, and may have local and state license fees.
As for kickstarter I think it is pretty much useless for development. There re literally thousands of attempts at doing development this way. Now you may have success after getting established securing development funds this way, without a track record though there will be little interest. What may happen is that kickstarter will help you pay for that initial production run. The big IF here is having a product and the marketing that brings in enough interest. That nasty word marketing showed up and frankly this is a huge issue all alone. If you can't market the product well you will not succeed and that in itself will cost money and or time.
Now I'm not trying to discourage you but just make you aware. Elon Musk is a good example of what it takes, you often have to impose brutal work schedules on yourself and be a jack of all trades. You can have hundreds of people working for you and still struggle to get a product out the door. So while it has been years since taking that little course, I'm still not sure I'd would want to startup a business. I'm just not that organized. -
Kickstarter is probably the worst way to start any kind of hardware product. It looks like it will give you the capital to get the product made and shipped but without any experience, how will you set a subscriber price. Too high and nobody will buy in, too low and you will run out of funds. In addition to this, the subscribers will deluge you with messages and woe betide you if you miss your delivery target! I have subscribed to only one hardware Kickstarter and that was a low-cost laser scanner. The project was in trouble before the makers even had the prototype running. There were issues with the app and the units I paid for arrived a good 2 years late. When they did, they were non functional. One was not assembled correctly and when the one that partly worked was connected to the app, it just rotated back and forth as if it was self-testing. The old saying "hardware is hard" is very true. Complicate hardware with a software component and you're really sticking your head in a noose. I agree with the other posters here, if you must use Kickstarter, use it to gauge interest in your product and the price-point but don't rely on it for capital.
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I took a walk and found something useful. Although the information may already be outdated.
A few more questions arose.
Here's the first one.Kickstarter is probably the worst way to start any kind of hardware product.
What methods are there and which one is the best?