What should I keep in mind when making this decision?
Remember that crowdfunding for hardware products is pre-sales. You must deliver on it. You must know exactly how much it costs you to build the product before you crowdfund. Designing and manufacturing at volume will take you much longer than you think. Finding a contract manufacturer, establishing a relationship, and getting ramped will take some time. It’s not impossible as many people have done it. Many new hardware startups make the mistake of thinking things will proceed quickly.
If I don’t want to crowdfund, what other options do I have?
General observation here, but crowdfunding works best with consumer products. Not sure if I’ve ever seen it work well with B2B products, mainly due to IP ownership issues and the likes.
It also depends on how far along with your development you already are. If you are just starting out (e.g. just have a very simple prototype), then the cone of uncertainty associated with how much money you’ll actually need becomes quite wide, and the same goes for the time line estimates that you’ll be presenting to backers.
It’s an interesting paradox as the earlier your crowdfund the more useful it is, but the greater the risk you expose yourself to (in terms of being able to deliver on your promises). The later you leave it the less valuable crowdfunding becomes (not, not-valuable, just a bit less), but you have less uncertainty regarding delivery, manufacturing, design issues, etc.
In another post I commented on the value of crowd-funding as a market/customer validation technique.
Another important point is to recognize crowd-funding as a potential marketing campaign stream. Even if you are not depending on crowd-funding for start-up money, it can still be a useful way to generate publicity, awareness of your company and product and build mind-share in your target market.
This allows early-adopters, strategic parteners and friendly supporters to feel like they are a part of something big and exciting, something worth talking about!
Unleashing the marketing power of CF platforms is a great way to build big buzz with minimal dollars. One of the big takeaway’s from this is the creation of good original content. Developing good marketing content is an essential part of selling your HW product.
The reality though is that CF does not generally favour HW products. This extremely informative info graph shows that tech based companies (many of which are hardware based) have extremely low rates of success.
For anyone looking to use CF platforms, it would be incredibly prudent to ask yourself other then money, what else am I looking to get out a campaign. Creating new content and using CF platforms as viral marketing tools can sometime be just as valuable as cold hard cash.
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Note that most of the comments here talk about crowdfunding as a great platform for pre-sales and creating market buzz. This goes right in line with my philosophy that crowdfunding should never be used to try to fund research and product development. There are too many unknowns in hardware development and too many risks that can lead too serious failure. Only go to crowdfunding once you have your design done, prototypes debugged, pilot production qualified and you are ready to ramp up to volume. Then you can use the pre-sales and buzz generated by the crowdfunding to feed into setting your build quantities.
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Crowdfunding is a great way to kickstart your business. Here are some tried and true methods.
Here is another interesting article from Forbes.