Typically many new products and companies entering the markets may struggle to find the proper funding and exposure needed for success. Crowdfunding is becoming increasingly popular form of gaining funding, validating true ideas and increased exposure with brand recognition. This can be achieved via the reward structure and actually taking preorders as the campaign is running. In addition there are also equity and debt models within Crowdfunding, which can drive projects as well.
Let us start from the beginning and see how Crowdfunding can drive innovation if utilizing rewards model for products. Raising money from complete strangers through the internet has just recently, in the last five years or so become a true concept. It is not just individuals with completely new ideas presenting their projects to the public, it’s also established companies looking to market new products. Once a plan is in place and idea is viable, the community can further validate if it can be a success. Essentially they can become stakeholders in your project and valuable information can be exchanged to further solidify ideas. This means both funding and extremely valuable information would be received.
This concept we cannot find anywhere else. The internet itself and the established platforms allow us connect with people throughout the world. You will also find a need for ones product, sometimes may be greater in other parts of the world. The relationship between the creators and backers has to be represented as well. Essentially the backers become very interested in the products itself, providing feedback, refining ideas maybe and of course becoming backers with funds. Later they become valuable customers which you may rely upon in the future as well. This community that you build out, can further make recommendations and create more brand awareness as well.
We can certainly say that Crowdfunding has spurred product innovation itself. Many projects have become realities directly related to the concepts of Crowdfunding itself. There are now millions of ideas and projects being put together each year. However this does not mean they are all successes, projects sometimes are not planned out properly and we see some fail at certain stages. There is even cases of fraud as well. So the backers are accountable for proper due diligence and taking on some risk as well.