Yesterday I spent 36 hours in New York City, talking to fashion startups about ways to finance their brands.
Needless to say, crowdfunding (specifically Kickstarter) has been on my mind.
If you’re one of those entrepreneurs currently weighing your options about how to launch your company or new collection, keep reading.
Today I want to go over four of the major misconceptions about launching a crowdfunding campaign.
MISCONCEPTION #1: Kickstarter = “donations.”
This might be my biggest pet peeve when I hear people talking about crowdfunding or Kickstarter. Do not, I repeat do not, refer to your campaign as a place to “donate” or “accept donations.”
Kickstarter is not charity. And it’s not even fundraising in a traditional sense.
When it comes to raising money for your fashion brand, Kickstarter is a platform for pre-selling your product before you go into production.
In other words, your customers are financing your first production run for you by pre-ordering what you’re selling. Instead of using your own savings, you’re receiving the money upfront to go into production and deliver your product to your Kickstarter backers.
I repeat, it’s not a donation.
MISCONCEPTION #2: If you build it, they will come.
I estimate that about 75 percent of the work that goes into launching a Kickstarter should be focused on building an audience before you launch.
When campaigns fail it’s usually because the project creator didn’t put enough work into building their email list and social media following.
Will random people discover your project because they are browsing Kickstarter for cool brands?
Probably, but you can’t count on it.
Make sure you have a dedicated following of potential customers before you click that launch button. If that means waiting a few more months to build up your list, then do it!
MISCONCEPTION #3: Most Kickstarter projects succeed.
The majority of Kickstarter campaigns fail.
(That’s part of the reason I’m so proud of the success rate coming out of Factory45 and Market45!)
Kickstarter’s Fashion category has one of the lowest success rates, coming in at 25.46%.
I don’t tell you this to discourage you. I still believe that crowdfunding is the absolute best way to launch a new fashion brand.
I tell you this to emphasize how much work and advanced planning needs to go into launching your campaign.
I estimate that you should spend 6-18 months preparing for your campaign and again, building your audience before you launch.
MISCONCEPTION #4: Crowdfunding is dead.
Is Kickstarter saturated? Is social media noisy? Are email lists hard to grow? Yes.
But what’s the alternative?
If you want to launch a successful fashion brand — without wasting your own money and without going into debt — then crowdfunding is still the most low-risk and efficient way to do that.
Because you’re able to test the market before you launch.
You’re able to ensure that you won’t have unsold inventory sitting in your basement for years.
And you’ll know that you have a product people actually want before you invest the time and money into production.
There is no venture capitalist, bank loan or angel investor who can tell you that.
The moral of the story? Building a business takes a lot of time, thought, patience, hard work, creativity and persistence.
There’s no getting around that.
There is, however, a way to market and test your brand with very little risk to you personally.
And that’s where Kickstarter comes in.