Many of us have “Tiles” attached to our keys and in our wallets so that we can locate our important possessions by using the Bluetooth on our phones. You may not realize, however, that Tile began as a side project. One day, the developers started a Kickstarter and raised $200,000 in the first 24 hours. They worked to spread the word about the product and campaign and eventually, they raised $2.6 million.
Tile is far from the only startup to become a million-dollar company through crowdfunding. Many people with startup ideas wonder whether crowdfunding may be the right choice to get their business off the ground. In one article, a startup owner gives the opinion that every startup should utilize crowdfunding platforms – not only to raise funds but also for exposure and to build an initial client base. This can be helpful even if you have other sources of funding for your enterprise already. Crowdfunding can help you gain loyal users instead of passive viewers, as well as some extra cash.
So how do you go about crowdfunding? It is not as simple as throwing information up on a website and hoping the money starts flowing in. The following are all important:
- Know every inch and aspect of your product
- Know who you want as your client base
- Develop a perfect sales pitch
- Seek out a diverse group of investors
- Assure your investors, then reassure them
- Use email, social media, and word of mouth to spread the word about your business and campaign
- Network and advertise
- Be innovative, as originality attracts investors
- Protect your intellectual property
- Develop and business plan
- Know that companies of all sizes have benefitted from crowdfunding
While crowdfunding can be beneficial, it is often most successful when used in conjunction with other sources of funding, such as angel investors or venture capitalists. Also, continually distinguish yourself from other companies, as innovation is always key. You may want to remain open to the possibility of having your company acquired, as even an offer of purchase can give power to your startup.
It cannot be stressed enough that startups should always innovate, innovate, innovate. Google has a self-driving car, Apple is getting involved in healthcare, and Facebook is constantly rolling out new advertising platforms. These major corporations do not rest on their laurels, and neither should you. Your loyal fan base from your crowdfunding campaign will likely ride the waves of innovation with you.
Consult with a Houston Startup and Business Lawyer Today
Deciding to start a business involves many issues, including formation, funding, and intellectual property. Crowdfunding can be an essential tool for your business from the start, and it is important to understand the legal considerations you’ll need to address. To discuss the pros and cons of crowdfunding regarding your specific situation and more in-depth, please call The Weisblatt Law Firm at (713) 666-1981 or contact our office online to schedule an appointment. We can help you start your company on the road to success.
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel.