Universities are natural incubators for ideas and innovation. Some of the most world-changing companies and ideas - including Facebook, Google, Dell and Napster - were spawned in the hearts of college campuses. While it may be natural for college students to think of ideas, seeing those ideas come to fruition is not as easy. Without deep pockets or angel investors, how can college students take an idea for a creation or product and see it become a reality? Part of the answer to that complicated question may lie in crowdfunding – a method of financing where a collective of individuals network to pool their money together over the Internet in support of an individual’s or organization’s ideas.
Crowdfunding websites, such as Kickstarter, Indiegogo and GoFundMe, are platforms that allow anyone with an idea for a product or creation to create a campaign in hopes of receiving funding from visitors of the site. A campaign has a predetermined length and an overall dollar goal. To reward donators, most crowdfunding websites have a perks system, which awards different things to contributors based upon how much they donated.
Instructor of Marketing for Western College of Business and Economics Dan Purdy said that while crowdfunding applications can be useful tools for aspiring entrepreneurs or creators, they are not silver bullets and should not be viewed as an end-all solution.
“A Kickstarter campaign does not fix other problems that arise,” Purdy said. “If you’re a student who doesn’t have any money, it’s fine to a point as a way to get some investment, but that doesn’t mean it’s going to work.”
Christian Harkson, co-founder of the Bellingham-based clothing company, Disidual, realized this after a Kickstarter campaign in February for a new fleece jacket, soft-shell jacket and fall 2013 line failed to meet its goal. With Kickstarter, if a campaign does not meet its goal, the creator does not receive any of the donations. Harkson’s company wished to raise $25,000, but at the end of the campaign, around $14,000 was pledged.
“I think we had the potential to make it, but it was just a matter of a lack of communication between people,” Harkson said.
People often would think they could donate later, but then the end date came up too quickly, Harkson said.
KVIK Coordinator Robert Bojorquez said establishing and maintaining this communication with potential backers is the hardest part about running a crowdfunding campaign. Bojorquez has been part of two successful crowdfunding campaigns for film projects that together raised over $2,000 in donations.
“Where the work comes in, is doing the outreach and getting people to hear about what you’re trying to do, and explaining what you’re going to do with their money,” Bojorquez said. “It comes down to some marketing tactics and social media awareness, and that’s where the main work comes out, not so much on the backend of managing a campaign.”
Purdy said before anyone decides to crowdfund a project or idea, they should have a clear plan in place. The plan should cover everything from how the donations will be allocated toward the project to how donators will be repaid. He said before any of the planning, the product or idea to be crowdfunded needs to be compelling and be a solution to a problem that people are willing to pay for. He said that early money in a business model could be worse than no money at all, because when you have no money, you are forced to solve problems, whereas if you have early money, you are more inclined to spend money trying to temporarily fix the problem.
“If you try to execute before you know what you’re executing, you’re just going to run faster towards the cliff,” Purdy said. “What you want to do is you don’t want to accelerate yourself toward the cliff. You want to search around and figure out where the road is. Once you’ve found the pavement, then you say ‘okay, now lets go pedal to the medal.’ That’s when you go out and you get the big money.”
Despite not meeting their goal, Harkson said Disidual’s Kickstarter campaign was not an absolute failure, and the company networked and learned a lot through the experience. He said the video they made for the campaign was able to portray the company and the direction it is heading.
“We’ve actually gotten so busy now where we are now able to do a lot of the stuff without investors, which is cool,” Harkson said. “We met a lot of people through [the Kickstarter campaign] who were interested in our company, and I think it just gave our fans and customers a view of what’s next.”