Crowdfunding is a way to generate the much needed finance for a particular project. Many entrepreneurs take this route to fund their business, products and programs. But it is not all the time that a crowdfunding venture can be successful. Entrepreneurs still need to sell and pitch their subjects in order to gain support.
Which is why a man named Hiral Sanghavi successfully raised more than $11.5 million. According to reports, he raised the money for a travel jacket that had everything a traveller needs. Think inflatable neck pillow, a drink pocket and more pockets with nifty features.
His campaign succeeded on Kickstarter and Indiegogo. Ultimately, Sanghavi was able to sell 65,000 jackets to 45,000 customers. All of them based in 120 countries globally. Keeping the success in the family, his wife Yoganshi Shah launched a product line in BauBax where clothings made up of interchangeable pieces contain wireless smartphone charging pads.
So what is his secret to crowdfunding success? Here are the things Sanghavi learened that made his campaign successful.
1. Build in time for unexpected production delays:
"We ended up working with 10 factories instead of three that we originally planned," Sanghavi says. Initially they only expected to raise $20,000 but they raised more than expected which means they need to manufacture a whole lot more jackets. He also needed to factor in holiday times for outsourced products, delay in transport, import regulations and more.
2. Communicate obsessively with campaign backers.
The BauBax team had to field a number of complaints from customers who were upset that their travel jackets weren't delivered on time. This is understandable and Sanghavi explained that backers sometimes do not understand that this is a startup and there are unforeseen circumstances that causes delays. "We need to set the expectations right from day one," he says. "'Hey, this is not an ecommerce store, this is a startup, and every penny that we get from you goes into manufacturing with fairly minimal profits. So we can't just accept returns and exchanges easily. It's not like Amazon, it's crowdfunding.' We will have this for the second campaign for sure."
3. If you mess up, compensate your backers. It is important they know you care.
Communication is essential. Because there was a four month delay to his backers, he included a free water foldable water bottle with every jacket delivered that were meant to be Christmas gifts.