CARTOONS BY CHRIS BRITT

Momentum. The more backing and investors that you get, the more people will want to
invest. You can use your results from this campaign as further advertising if you meet or
exceed your dollar amount requested. You may even get a little press coverage.
Investor loyalty. After backing your pitch, your investors can end up becoming your most
loyal customers.
Alternative to bank loans. It can end up providing the necessary funding (and then
some) when more traditional methods of financing dead end.
DISADVANTAGES
Difficult to build an effective campaign. You will need more than just an iPhone video
or selfie of you in front of your store to get support. You will need to invest in a truly
compelling marketing campaign so it will take time and effort as well as some money if
you want the pitch to look and be professional.
Significant resources are required. Free is not always free. You will earn the money
through sweat equity as you maintain, monitor and promote your campaign to reach
your stated goal.
Funding not guaranteed. If you don’t reach your funding target, any money that has
been pledged will usually be returned to your investors and you will receive nothing.
Potential negative impact if you fail to deliver. If your project does not make it to
market, you may damage your reputation and the reputation of your business and your
fan base may be less likely to invest in other projects you post.
Rewards can be costly. Rewards can take more time and money if not properly managed
and distributed. Getting the rewards or returns wrong can mean giving away too much of
the business to investors.
REWARD CROWDFUNDING EXAMPLE
The first Pebble Technology watch broke all records when Kickstarter donors funded
its first smartwatch in 2012. The brainchild of founder and CEO Eric Migicovsky, 400,000
watches were sold in the first year alone. Not to be outdone, the company did a second
Kickstarter campaign for its Pebble Time watch. Talk about customer loyalty. The watch
raised $20.33 million, the first million of it in less than an hour. The watch not only
shows the power of Kickstarter, but also shows that in a world dominated by Apple and
Google, a David can best a Goliath with a little help from his friends.
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