Here in North America we spend 7 billion dollars on speeding tickets every year. My partner Bryce North and I found a way to reduce the number of speeding tickets with a hardware product we call TrapTap.
It’s a little device that sits on the dash of your car and blinks different colors to remind you to slow down when you are near a school, are approaching a red light camera, or are driving towards a police speed trap. TrapTap syncs with your smartphone via Bluetooth and collects and shows your average speed, travel distance, and the number of hazards you have passed. Our journey started with crowdfunding. We ran a Kickstarter campaign and raised $500,000 CAD in 90 days.
Why Start a Campaign
Before you even think of starting a crowdfunding campaign, you need to figure out what it is you are trying to accomplish. So, to start you need to select a goal. It’s not just about raising as much money as you possibly can; you need to have a realistic goal in mind. We decided to have a $85,000 campaign goal to fund specific things to start the TrapTap business. If we didn’t achieve that goal we wouldn’t make any money, so we would have send the received money back. That is one of the rules of the platform, which is why it is important to set a reasonable funding goal.
In addition to raising funds, the campaign offers several opportunities:
Market validation. You have an idea, but do people actually care about it? Will your idea be profitable?
Price test. If you would have talked to us when we first started the campaign we would have told you that we sold TrapTaps at about $65 USD. We ended up selling them at $90 USD. We did that because we used crowdfunding as a mechanism to try figure out the price people were willing to pay.
PR and distribution opportunities. Hardware startup success is difficult and you need to be able to execute this campaign well in order to turn it into a real business that makes money. We used PR to increase people’s interest. What it turned into was plenty of distribution opportunities.
Sales and pre-sales.
Is It Possible to Run a Campaign On Your Own
The first thing that I think everybody needs to know is that running a campaign is an incredible amount of work. It’s not as simple as having a great idea, building a Kickstarter page, crossing your fingers and watching the money come in. The reality is we needed 4 people full-time, 60 full days and then beyond to run that busines. So be prepared: if you want to do it right, you will need at least two full-time employees.
Types of Crowdfunding
Depending on what the backer — the person who supports the project — receives in return for their money, determines the type of crowdfunding platform.
Donation-based Crowdfunding: Essentially, this is for when you are giving money to help support a certain cause.
Equity Crowdfunding: This is when you are giving money in small increments and receiving equity in a company in return. It’s like an investment.
There is a debt form of crowdfunding, which is similar to equity crowdfunding, but with receiving back payments plus interest.
Reward-based: When people give you money in exchange for some product. Typically the product is something you are trying to build or some variation of that.
Defining a Platform for Crowdfunding and Campaign Duration
We chose Kickstarter to start which may or may not have been the best option. Kickstarter is well-known for being really good for art projects, games, and things of that nature. Indiegogo is much better for technical projects like hardware and gadgets. Fortunately for us, we were successful.
Discover: How We Were Developing the TrapTap app
You need to think about how long you want to run your campaign for. You can run Indiegogo or Kickstarter campaigns for 30, 45 and 60 days. It’s important to think through why you are choosing your campaign length. For TrapTap we chose 60 days, but it’s not necessarily the best option and here is why. This is our sales during the campaign:
During the lowest day somewhere in first two weeks we made $600. We were averaging around $6000 per day throughout the campaign.
When you know which platform you are going to use to start your crowdfunding campaign, the duration of your campaign and how much is enough to start your business, it’s time to create a landing page.
Creating A Landing Page
Landing on Kickstarter or Indiegogo serves as a product site and allows a backer to decide whether or not to support your project. In order to attract users of the platform to your project and explain all the aspects of its work, make a video that is as detailed as possible. Do not think about the duration of the video. TrapTap’s video is quite long, over three minutes, but it is dynamic and informative.
Show backers why your idea is worth spending their money on, what the media writes about it, and why other backers appreciate it.
Unfortunately, we learned the following truth when the campaign was in full swing: people do not necessarily understand how Kickstarter works. Explain to users how to support your project.
Preparing a Kickstarter Campaign for the launch
Develop a pre-launch strategy in order to prepare the audience for the presentation of your idea and pique their interest. Collect a database of emails you can work with to spread the information. For that purpose we used Kickbooster.
Choose the right time for the campaign launch. Do not start a campaign on national holidays or popular events like Black Friday, because the information space will be crowded and your message will get lost.
What really stimulates sales is a time crunch. The early proposals like early stage pricing, super early bird pricing, several unit packs and things like that were very successful. As you progress through your campaign, people have to go to the next stage and pay slightly more and slightly more; that creates the effect of urgency for people to act.
The first 160 backers got our device for $90, then we warned about increasing the price and raised it. We were selling 5 units for $425 and 10 for $734.
We communicated with our backers throughout the campaign. We were sending newsletters, posting photos on Instagram, and conducted a kind of reporting to increase our credibility. To increase the reach we collaborated with other projects in terms of cross-posting. That helped to reach new audiences.
What if you get more money than you expected? Tell the audience what you will do if you exceed the goal and how you will improve the product. We needed $80,000 to build TrapTap, and we said that if we could get $150,000 we will add sound notifications. If we could get $230,000 we were going to add different colors among other things.
Also published on Medium.