Crowdfunding on sites like Kickstarter or Indiegogo can be a lucrative way to get the money you need to grow your business. Analysis of successful crowdfunding campaigns shows the average campaign raises around $7,000.
[Read more: Everything You Need to Know About Crowdfunding]
Of course, some crowdfunding campaigns go viral, striking gold in the process. Here are some wildly successful companies and products that started out on a crowdfunding site.
Oculus
Oculus, the massively popular virtual reality headset, was purchased by Facebook for $2 billion in 2014. But before that, the company launched on Kickstarter seeking $250,000 to develop the Oculus Rift headset. Within four hours, the campaign reached its target; the campaign eventually raised $2.4 million.
Glowforge
Glowforge broke Pebble’s crowdfunding record, raising $27.9 million in one month. This high-tech, 3D laser printer lets people use everything from leather to plastic to make products. Not only is the product neat, but the company offered it at a significant discount during its crowdfunding campaign. To date, the company has raised $183 million from investors, undergone significant restructuring, and taken a step back from growth to focus on rebuilding.
[Read more: Does Your Business Need Funding? Do These 5 Things First]
Flow Hive
Flow Hive is a beehive box for your home that makes it easy to extract honey from the hive without disturbing the bees. In 2015, Flow Hive started a campaign on Indiegogo seeking $70,000 to bring their product to market. The page went viral: Flow Hive raised $250,000 on preorders and broke a number of Indiegogo’s records, becoming the fastest campaign to reach $2 million. Eventually, the product raised over $13 million.
Exploding Kittens
Exploding Kittens bills itself as “a game for people who are terrible at charades.” The game became the most-backed Kickstarter of all time in 2015, with more than 219,380 backers. A pledge of $20 or more included a copy of the card game, which features magical enchiladas, burned-toast ghosts, and murderous kittens. The game basically markets itself; eventually, Exploding Kittens raised over $8 million on Kickstarter and earned an additional $30 million from investors in 2019.
[Read our full story on Exploding Kittens’ crowdfunding success.]
The most successful campaigns have clear, persuasive descriptions of the problem, solution, and unique value of their business idea.
Veronica Mars
Successful crowdfunding campaigns aren’t always cutting-edge products. Sometimes, fans get excited enough to relaunch their favorite nostalgia project. The television show “Veronica Mars” was brought back to life seven years after going off the air when fans raised over $5 million to make a “Veronica Mars” movie. The movie opened in 2014 and grossed $6 million worldwide.
Tile
A boon for forgetful people everywhere, Tile is a Bluetooth-connected device that helps you find misplaced items. The toggle, which can be strapped to a keyring or attached to a phone case, connects with the app to send a beacon for your hidden item. Notably, the company didn’t rely on a third-party platform like Kickstarter or Indiegogo to raise money. Instead, Tile used Selfstarter to create its own crowdfunding site. This allowed founders Mike Farley and Nick Evans complete control over the campaign and to retain more of the revenue it generated.
The Coolest Cooler
The Coolest Cooler fundraiser is both a success story and a cautionary tale. The cooler, which features an ice-crushing blender, a Bluetooth speaker, a USB charging port, and more, raised $13 million in its Kickstarter campaign. But demand far outpaced the company’s capacity to deliver. The company needed to raise an additional $15 million, part of which was needed to fulfill orders from the crowdfunding effort.
Allbirds
Popular eco-friendly shoe brand Allbirds started as a Kickstarter campaign in 2014, attracting early enthusiasm and, more importantly, investors. The original design by former soccer player Tim Brown was featured on Kickstarter, where it attracted the interest of Co-Founder and Co-CEO Joey Zwillinger. Together, Brown and Zwillinger grew Allbirds into a $33 billion public company.
BrewDog
BrewDog, a craft beer company, used a slightly different model: equity crowdfunding. Its “Equity for Punks” scheme offers small amounts of ownership shares in BrewDog in return for relatively small levels of investment. Between 2009 and 2021, Equity for Punks raised nearly $100 million (£75 million) and attracted more than 200,000 small-scale investors. In total, about one-third of BrewDog is owned via the Equity for Punks program.
What made these campaigns successful?
Successful crowdfunding campaigns share a few elements in common. First, they have a strong story or compelling presentation that showcases more than a product to purchase. The most successful campaigns have clear, persuasive descriptions of the problem, solution, and unique value of their business idea. Campaigns that use visuals, such as videos, tend to receive more engagement.
A strong community element also contributes to the outcome of some of the best crowdfunding campaigns. BrewDog’s equity crowdfunding model brings people together in support of their favorite beer; Veronica Mars fans also connect over their favorite shows. Not only do supporters connect with one another, but they also gain direct access to the company through their investment.
“In connecting creators and entrepreneurs directly with customers and funders, it transforms the opaque and oligarchical market for early-stage fundraising into a more democratic, open one,” wrote Harvard Business Review. “Rather than relying on venture capitalists and marketers to try to project nascent demand for new innovations, creators can directly reach out to customers and communities to refine ideas and gauge interest.”
Finally, crowdfunding offers a transparent rewards structure. Using mechanisms similar to customer loyalty programs, crowdfunding builds customer loyalty with a clear action/reward dynamic. Successful projects offer understandable reward tiers with tangible value and limited “early bird” slots to spark urgency.
Crowdfunding mistakes to avoid
Crowdfunding is not a silver bullet for growth. There are many ways to raise capital for your business idea that are less risky. Many founders make the mistake of launching a campaign without any additional promotion. Get the word out about your crowdfunding campaign by sending a notice to your email list, posting on social media, and adding links to your website.
[Read more: Crowdfunding Mistakes to Avoid]
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