Call us: (800) 490-1476 | Email us: Hello@ChopDawg.com

Schedule Your Free 60 Minute Consultation
Free 30 Minute Consultation

You’re not going to kickstart your startup

Customer Service & Sales

Joshua Davidson wrote this article

11 Comments

We’re huge fans of metrics. We try to collect as much data as we possibly can, on whatever we can. We pretend that we are the Billy Beane of startups (we’re not… but there’s no harm in pretending).

I know that some individuals are not huge advocates of this mindset. They only want you to collect data on what you can make sense of. What I’ve learned though, is that over time, data that has no value for you today, becomes useful not only overnight, but easily shows correlations to things that you couldn’t have even imagined. I would rather have more than enough data, than not enough.

So why am I bringing up data when talking about crowdfunding? As of the date that I am writing this blog post, a little over 782 different entrepreneurs/startups this year have reached out to us at Chop Dawg looking for us to provide them with assistance (we’re truly blessed to have received so many applications). Out of this number, 319 have informed us, right off the bat, that they would be looking to secure funding to work with us through crowdfunding on a website such as Kickstarter and Indiegogo. Do you know how many of these companies ended up working with us —  even the ones who told us that they are dead-set in using us? The answer is so simple; I wouldn’t even need any of our collected metrics to tell you.

The answer is 0.

Little over 40% of those who reach out to us at Chop Dawg have expressed interest in using this method to raise funding, but have had no success rate. Meanwhile, those we do have the privilege to work with, are self-funded (bootstrapped), have raised angel rounds, secured funding through friends/family, found a partner (or partners) to split the financial burden, went out there and figured out a way to pay the bills. So why is it that crowdfunding, a method that the majority of individuals that reach out to us want to use, has little to no success rate?

I want to start this off by saying that I actually love the concept behind crowdfunding from an entrepreneurial point of view (seriously, who does not love raising money without giving up equity or adding additional individuals with voting power to your team without you carefully hand-picking them) — but it is a flawed concept that you should not bank on as an entrepreneur (or inspiring entrepreneur).

Crowdfunding became popular roughly two/three years ago. I know that Kickstarter was founded back in 2009, but just like any startup, it took time to grow. In fact, Fast Company did an article about Kickstarter and how it has remained true to its roots. They created an entire new business model, an entire new platform for entrepreneurs (and those with great ideas) to have a medium to raise funding. Less risk than ever before. You don’t have to give up an ounce of your equity. You do not have a board to tell how your progress (or lack of progress) is coming.

The media quickly fell in love with it. Who doesn’t love a great underdog story? When these small, scrappy ideas start raising thousands of dollars, reaching 800% or more of their goals, you’re going to get attention. Quality is there, sure…. but with the attention, the hype, the newness, the quantity quickly follows. The noise rapidly adds up.

For every success story, thousands fail. This is even truer for crowdfunding. Success creates imitations, trying to replicate the same success. Ideas flood the market. Crowdfunding is hard. Getting attention, trying to win people over. It also does not help when something like a potato salad is now second on Google’s search results for a Kickstarter page because it raised over $55,492.00. It is a flooded, over-hyped, saturated market. You’re trying to stand out in the crowd by using Kickstarter? Good luck.

Crowdfunding offers a false sense of security. You aren’t risking rejection by getting your idea out there, pitching to investors, to your friends and family, finding a colleague, a partner to share the risk with you and make something become a reality with your own hard-earned money. Ever heard of the term put your money where your mouth is? If your crowdfunding campaign fails, everyone is quick to blame that it was a crowded category on Kickstarter, that they didn’t get it taking off on social media, that people just ‘did not get it’. We hear all of the (many) excuses. This is false. Sometimes you have a great idea. You just didn’t believe in it enough to go with something that had more of a risk, more of a reward.

The biggest issue though, in full honesty, is that most of these individuals are heading onto these crowdfunding websites without anything concrete to show. Who wants to invest in someone who doesn’t have any wireframes, high fidelity designs, branding, prototypes or minimal viable product to display? Someone who hasn’t put a single dollar down on his or her idea that they are suppose to truly believe in — but asking you to put down your hard-earned dollar. You’re being asked to trust an entrepreneur, who is asking for your money to make their idea happen, without giving you any equity, nor any of the reward if it takes off — and with no proof of concept. That is rough. If you were an investor, would you jump on this? Not going to happen.

Metrics tell us the story when our eyes and our ears cannot connect the dots. In this situation, metrics, our eyes, and our ears are all on the same page. Crowdfunding a new startup is possible, but it is a fool’s game. Take the true path. Create a pitch deck. Get your hands dirty. Fund yourself a prototype, create an early concept of your app. Get in front of your friends, your family, your colleagues. Face rejections. Be a real entrepreneur. The numbers are more on your side and above all — you have full control of your destiny.

Educate yourself to become an innovative thinker

It takes a different mindset to successfully run a business. Get a weekly email to read what's happening around you that thrills us.

Always free. Unsubscribe anytime.

Are you looking to hire an experienced app developer?

Look no further. Schedule your free consultation to see how our technical team can help turn your app idea into a real product; on-time, and on-budget.

Schedule your free consultation
There are over 11 comments. on this article. Join in on the discussion!
  • Kyle Grishin said:

    Very good write up. This was educational and also proves that it is unlikely to raise money for your idea unless you already have something to show for it, proof of concept, business plan, some type of prototype.

    • Joshua Davidson said:

      Appreciate the kind words Kyle! You’re 100% right 🙂

  • Jonathan Teller said:

    I really want some potato salad now. Great article though. Really informative in regards to how none of those startups came back to you guys. Almost shocking really. Thank goodness for the traditional route of raising money through investors!

  • Daniel Cardenas said:

    Love it man. Good read, and interesting personal numbers to point out.

  • Rebecca Miller said:

    I really think you nailed it in regards to crowdfunding being a ‘safety net’ for people to not face rejection. Odds are, they do not truly believe in their idea which is why they instead go that route. Low risk, high reward. Unfortunately though, that reward is probably never going to happen. Factor in that these are mostly nontechnical entrepreneurs going this method, who in their right mind would ever want to invest via a crowdfunding campaign? Just is not realistic. Great article!

  • Mark Winstead said:

    I guess I’m one of the crowd funding hopefuls. But isn’t good to want to pay a company like yours to help initiate a launch where you can get instant response to your product? Does bootstrapping mean I have to build a pour quality landing page myself to prove my devotion to my idea?

  • Brett Carr said:

    REALLY good piece of writing. Thanks!

  • Very true. There’s more passion and risk to succeed when you take the traditional route than with the ‘new style’. I think many people (including entrepreneurs) are to quick to hop onto the train of new trends and they end up forgetting how long-lasting and profitable traditional means have been and will always be.

  • Jim Haleschuk said:

    Great article and an eye opener to a crowd funding hopeful like me. It is true though, why put money into something for a t-shirt or a pen with logo. I am one of those entrepreneurs who believe in my products and wished I could offer partnerships on the crowd funding platforms but they don’t allow it. I have no idea how to market an idea but I do want one or more of my products to provide me with the income to spend my time where I do my best work and that is innovating and inventing.

  • Manny H. said:

    I love this article! When i first started my company i was so lost when it came to brainstorming ideas on funding it’s startup.

    I told my team that I would rather put in 40 hour shifts at my minimum wage job than to have others donate to something I wouldn’t invest into myself.

    I feel way better knowing that I worked hard for the company before it had even started. Now we have enough funds to begin development and hire the correct team to get us to the next level.

    It’s good to know others can become successful from having a little faith in themselves.

  • Pat said:

    Crowd funding isn’t publicity. You get the attention and following, THEN you crowd fund.

Join in on the discussion! Leave a comment and get involved.

Recently Released Content

Leadership & Inspiration

Resources for Tech Entrepreneurs and Startups in Philadelphia

Operations & Management

Why You Shouldn’t Be Afraid to Talk About Your Idea

Web & Mobile

How Mobile Apps Are Transforming the Construction Industry

Web & Mobile

How to Plan Your App Before Approaching an Agency