A guest blog by John McLear, NFC Ring
The popularization of crowdfunding through websites such as Indiegogo, Kickstarter and Bitcoinstarter has left its mark on several NFC projects and this has lead to growth of interest in the area. In this blog post I will cover what I learned launching a project and some basic tips for how to be successful with your NFC product crowdfunding. Here are my top 7 recommendations for critical actions to take when you are ready to crowdfund your NFC product:
- Create Community
First and foremost Crowdfunding is about community, “Crowdfunding is not a store” is a popular statement used across all crowdfunding platforms. In the instance of crowdfunding, your community is your backers. The positive takeaway from a backer lead approach is that your backers will help you promote your project, they will forgive you for your mistakes (assuming you are humble and honest about them) and they will aid you in your development. However, there is an expectation on you as a project creator and on your project, to be open, transparent and understand how to effectively communicate and collaborate with your community.
- Communicate Effectively
Several projects that “don’t get crowd funding” make the mistake of not communicating effectively and this leads to a lack of backers and funding or in extremely poor instances, a large number of backers and funding that are furious with the way the project is being managed. These backers become your worst nightmare and have the power to destroy your product and brand. Your backers are king and communication will dictate your projects success or failure.
- Work with Backers on Timing
As a project creator you will not be giving equity away when you crowdfund your project. Backers that pledge to your project will be pledging to join your journey with the intention that you will deliver a product and provide them a narrative. Most backers are mindful of how projects evolve and will expect delays, the average delay of a technology based crowdfunded project is about one year. Delays are relatively simply managed through giving backers the choice to either provide a higher quality end-product at a slightly pushed back later date or a lesser quality end-product at a sooner date. Your backers will decide which approach they want you to take and you can modify your production schedule accordingly.
- Understand the Production Process
When planning your production be mindful to ensure you build high availability into your production schedule and ensure you do a sample production run if funds allow. Do not expect your production items to be like prototypes, this is a mistake a lot of projects make and has left several projects unable to fulfil their backer’s pledges.
- For European Startups: Understand the implications of VAT TAX
Each crowdfunding platform takes a percentage fee of all revenue generated ranging from 5% to 10%. These fees tend to include credit card fees, however they do not include VAT/TAX so you should do your research to investigate if you will have to pay any TAX/VAT or other fees on any revenue you generate. If you poorly manage your project and/or you are unable to deliver to the backers expectations you will have to refund 100% of a backers pledge including the 10% fee from the crowdfunding platform.
- Be Loyal and Listen to your Community
Should your project be successful and experience early exponential growth you will need to expand your team quickly. The majority of your time will be taken up having conversations with your community, handling press/media and sales requests. Your community will be very vocal about how they want you to modify your product during the funding phase. This is an important part of the project and must be carefully handled. You may also be approached by Venture capital funds with acquisition offers, you should pick and choose who and which companies you will be happy to work with, as your community may want to have some input on this. Several projects have made poor decisions around acquisitions and this has instantly destroyed their community.
- Hone your Message
Preparation for your project is key. Ensure you have press kits, marketing materials, a strong stretch goal plan, a strong team and a core message you want to convey. Your elevator pitch should be well rehearsed and polished. One tip here is to record one verbose interview and release it as public domain for press and media to take quotes from.
As you now know, crowdfunding has a unique set of challenges and opportunities. This journey is meant to be enjoyed. Never lose sight of the fact that you are building the next generation of world changing NFC-enabled technology.
About our guest blogger:
John McLear is an entrepreneur, open source advocate and NFC innovator who has developed over 20 apps. He is the inventor of The NFC Ring — a wearable that can be used to unlock doors, mobile phones, transfer information and link people. The NFC Ring raised ~$0.5M through crowdfunding and has grown to be one of the most popular pieces of wearable NFC technology worldwide.