Every day, hundreds of entrepreneurs launch crowdfunding campaigns on Indiegogo to raise money and awareness for their businesses. As CEO of Indiegogo, I have been in touch with potential entrepreneurs from all over the world with a wide variety of business ideas. Across this wide spectrum, I have realized that many entrepreneurs are misguided by the same myths, time and time again.
Here are the five most common myths about starting a business — and how we’ve seen them get blown out of the water at Indiegogo:
Myth #1: There’s a “right” time to start.
We started Indiegogo months before the financial crisis of 2008, and when the economy took a hit, most people advised us to shut down. However, my co-founders and I were each so passionate about our efforts to democratize fundraising that we pressed forward at all costs. It wasn’t easy, but every time we spoke with someone who was denied a loan from a bank, or couldn’t find a way to raise money for his or her cause, it reinforced our commitment to the mission of Indiegogo — empowering anyone, anywhere in the world, to raise money for anything.
We learned that there is no “right” time to start a business when basing that timing on external market factors. The only “right” time is when you’re passionate about an idea, product or service.
Myth #2: You NEED venture capital.
Believe it or not, you don’t usually need venture capital to start a business, especially now that crowdfunding platforms allow you to raise money and attract a global audience that includes potential customers.
We saw a group of product designers from California present the Satari Star Swivl, a camera-mounting device for smartphones that automatically follows you as you move from side to side, eliminating the need for an old-fashioned tripod. The designers pitched their product to multiple investors and VCs, and were rejected every time. On the other hand, their Indiegogo campaign raised over $20,000, validating the demand for their product and enabling them to gather feedback and make their product even better. In 2012, the Swivl was the highest-rated device in the Last Gadget Standing competition at CES and is now available for sale in the Apple Store.
There are many ways to raise money. Even if conventional means fail, find the one that’s best for you — and get your product or service out there.
Myth #3: You need a detailed business plan.
Too many entrepreneurs spend months locked away, creating the “perfect” business plan with scenario planning and detailed financial projections. These days, markets change so quickly that you never really know how customers will react to your product or service, or what new technologies will emerge that may significantly change the business environment.
For example, the two Columbia students who developed the LuminAID inflatable solar light had no idea how fast their product would take off. With the simple but ambitious goal of making portable light affordable, sustainable, and available for everyone, they developed their product, launched an Indiegogo campaign, raised five times their goal, received valuable customer feedback and got their lights produced. LuminAID lights are now being distributed to in-need communities all around the world.
Don’t get caught up in the minutia of a plan. Focus on getting your product or service in the hands of potential customers, get feedback and iterate quickly.
Myth #4: It’s all about the idea.
Actually, it’s less about the idea and more about listening to your customers and evaluating the data. Your idea may be great, but if you aren’t able to recognize and adapt to new trends and meet the demands of your customers, you may not be in business for very long.
When we initially launched Indiegogo, we decided to handpick our favorite campaigns to be featured on the homepage. Although this seemed to be the best practice at first, we learned that our customers wanted an equal opportunity for their campaign to be discovered and featured. This led us to develop the proprietary “gogofactor” — our algorithm that constantly evaluates key characteristics and activity on each campaign — that alone determines which campaigns make it to our home page. Our users love that Indiegogo provides this merit-based promotion, and it also has enabled us to grow the business more rapidly.
Don’t get too stuck with your idea or method being the right one — listen, monitor, and adapt as needed.
Myth #5: If you build it, they will come.
The concept of growth for any business is similar to what happens with a crowdfunding campaign — you will need to reach out to your networks and get them enthusiastic about your goal. Once you reach approximately 30 percent of your goal, it provides the social proof for “strangers” to get excited start contributing — and nearly 40 percent of our active campaigns receive money from multiple countries!
We learned this one ourselves as well. In the early days of Indiegogo, we reached out to our personal and professional networks to encourage them to try out the platform. After a while, word started to spread through friends of friends and customer referrals. I remember how exciting it was when we saw the first international campaign launch. Today, Indiegogo distributes millions of dollars each month to people in nearly every country in the world.
Once your product or service is out there, you must continually work to get the word out. Keep marketing your product, and always make sure your customers, friends and communities are updated on your progress.
BusinessCollective, launched in partnership with Citi, is a virtual mentorship program powered by North America’s most ambitious young thought leaders, entrepreneurs, executives and small business owners.