Crowdfunding
Launch your product on a platform s.a. Kickstarter to measure intention-to-buy whilst leveraging the crowd to raise funding.
What is Crowdfunding?
Crowdfunding validation is a powerful lean methodology that allows startups to test market demand while simultaneously raising capital for production. By launching a campaign on platforms like Kickstarter, Indiegogo, or GoFundMe, entrepreneurs can gauge genuine purchase intent from real customers who put money behind their interest. This technique transforms traditional market research by creating actual pre-sales rather than hypothetical survey responses.
The process involves creating a compelling campaign that showcases your product concept, setting funding goals, and measuring backer engagement over a defined period (typically 30-60 days). Success metrics include funding percentage achieved, number of backers, social sharing rates, and conversion from views to pledges. This method is particularly valuable because it tests three critical aspects simultaneously: whether people want your solution (desirability), whether they'll pay enough to make it profitable (viability), and whether your business model aligns with social and environmental values (responsibility).
When to Use This Experiment
- When you have a physical product or innovative service concept that can be clearly demonstrated
- Before investing significant capital in manufacturing or full-scale development
- When your target market includes early adopters and tech-savvy consumers active on crowdfunding platforms
- If you need both validation and initial funding to move from prototype to production
- When your product has a compelling story or social mission that resonates with crowds
- For consumer goods, gadgets, creative projects, or social impact ventures
- When you have at least 3-6 months to dedicate to campaign preparation and execution
- If you can handle the public scrutiny and potential failure that comes with public campaigns
How to Run This Experiment
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Develop Your MVP and Campaign Strategy - Create a working prototype or detailed mockups, define your funding goal based on production costs plus platform fees (typically 5-8%), and research successful campaigns in your category to understand best practices.
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Create Compelling Campaign Assets - Produce a high-quality campaign video (2-3 minutes), professional product photos, detailed descriptions, and reward tiers that offer genuine value to backers at different price points.
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Build Pre-Launch Audience - Spend 4-8 weeks building an email list through social media, content marketing, and networking. Aim for 100-300 committed supporters before launch, as the first 48 hours are critical for platform algorithms.
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Launch and Execute Campaign - Go live on your chosen platform, immediately notify your pre-launch audience, and execute daily promotional activities including social media updates, press outreach, and backer communications.
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Monitor and Optimize Performance - Track key metrics daily: funding percentage, traffic sources, conversion rates, and social engagement. Adjust pricing, add stretch goals, or modify messaging based on real-time feedback.
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Analyze Results and Extract Insights - Whether successful or not, document what worked and what didn't. Survey backers about motivations, analyze demographic data, and assess market segments that showed strongest interest.
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Execute Fulfillment or Pivot Strategy - If funded, deliver on promises to maintain credibility. If unsuccessful, use learnings to refine your product-market fit before attempting other validation methods or relaunching.
Pros and Cons
Pros
- Real Purchase Intent: Backers commit actual money, providing the most reliable validation signal possible
- Simultaneous Funding: Successful campaigns provide capital for production while validating demand
- Market Education: Campaigns build awareness and educate potential customers about your solution
- Rich Feedback Loop: Comments, messages, and surveys from backers provide detailed market insights
- PR and Media Opportunities: Successful campaigns often attract press coverage and industry attention
Cons
- High Time Investment: Campaigns require 3-6 months of intensive preparation and execution
- Public Failure Risk: Unsuccessful campaigns are visible failures that may damage credibility
- Platform Dependencies: Success partially depends on platform algorithms and policies beyond your control
- Significant Upfront Costs: Quality videos, prototypes, and marketing require substantial investment before validation
- Fulfillment Obligations: Success creates legal obligations to deliver products, adding complexity and risk
Real-World Examples
Pebble Smartwatch raised over $10 million on Kickstarter in 2012, validating massive demand for smartwatches before Apple entered the market. The campaign demonstrated that consumers wanted smartphone connectivity in a watch format, leading to acquisition by Fitbit and helping establish the entire wearable technology category.
Exploding Kittens became the most-backed game in Kickstarter history, raising $8.7 million from 219,000 backers. The campaign validated that there was huge demand for irreverent, easy-to-learn card games, leading to retail partnerships with Target and other major retailers.
Coolest Cooler raised $13.3 million on Kickstarter by combining a cooler with features like a blender and Bluetooth speaker. While the company ultimately failed due to production challenges, the campaign successfully validated consumer desire for multi-functional outdoor products, inspiring numerous similar products in the market.