Have a great business idea or inventive product that needs funding to get launched? Crowdfunding and micro-finance platforms, like Kickstarter, may be the answer to your new businesses financing needs. For some entrepreneurs and new business owners, crowdfunding or micro-finance may not be the way to go. But, as our Chicago business lawyers has recently seen first hand, many entrepreneurs, start-ups and small businesses are pursuing this innovative financing route and are acquiring significant funding from these community crowdfunding platforms.
For the majority of new entrepreneurs and new business owners, launching a new idea, product or service can be a risky endeavor. This is especially true if the business or launch of a product is financed by the entrepreneurs own personal savings. More often than not, the financing or investment dilemma can be a prohibitive barrier to entry in the business marketplace. From a business law perspective, the initial legal cost of a business organization, developing the appropriate legal documents and agreements with vendors, resellers, distributors and other third parties, and protecting the intellectual property (trademarks, copyrights and patents), can often cost between three and ten thousand dollars in attorneys fees – even for the simple start-up or small business.
What is Kickstarter ANd How does it work
In brief, Kickstarter is a funding platform that attracts people from all over the world to potentially donate or contribute to creative new ideas and products of all kinds, including films, albums, custom clothing, new communication technologies, iPhone and iPad devices, just to name a few. In return for the contributors donations, they receive a product or experience once its manufactured, produced or otherwise launched.
Kickstarter and other crowdfunding platforms work like a pre-order for new creative products and services. The entrepreneur or business owner submits an idea or product, also called a project, through the Kickstarter website, hopes that it gets a viral reaction within the community and it presented to several thousand people within its community, and those contributors within the community ultimately fund the project. The contributor or backer of the project is rewarded when the idea is launched or the product is manufactured by receiving it before it hits the shelves or is offered in the public marketplace.
Create A Clever, professional Video
One tip for those entrepreneurs and business owners looking at the Kickstarter platform to raise the necessary capital. Create a clever, professional video. In our experience, every project that has been fully funded (most often funded in excess of the funding goal), the entrepreneur or business owner has produced very clever, professional video to pitch the creative idea or innovative product. This will be the most essential element to a successful campaign and is worth the additional investment, both time and money.
As noted above, crowdfunding or micro-finance may not be the way to go for some entrepreneurs and new business owners looking for additional financing. Although Kickstarter is open to everyone, Kickstarter is restrictive in the projects that it accepts. This can be a prohibitive barrier to entry for many creative, innovative ideas and products. Highly inventive products and business ideas are generally accepted; however, if you have already raised adequate funding, the project will likely be denied. Make sure to thoroughly read Kickstarter’s guidelines before investing too much time into launching a creative project. See Kickstarter Project Guidelines. We have seen too many entrepreneurs and new business owners get their hopes up for the funding of their project only to get shot down by the Kickstarter evaluators.
Kickstarter Prohibitive Projects
Also note Kicktarter’s prohibitive projects:
» No Charity or Cause Funding
» No “Fund my Life” Projects