27 Dec Crowdfunding & Protecting Your Idea
One of the biggest surprise investment stories of the last ten years is the rise of crowdfunding or crowdsourcing as a way for people to get the investment money they need to start a business. But what is crowdsourcing? Simply put, crowdsourcing is when a hopeful entrepreneur uses a website service, such as Kickstarter, to pitch a product, service, or another project to the public at large and see if people would be interested in contributing money as “public investors.”
But of course, running a Kickstarter campaign or pitching to any other crowdfunding service has one big risk: you’re making your idea public. So how do you protect your idea when it’s out there for all to see?
The Copycat Danger
One of the undeniable issues with crowdfunding efforts is that if you come up with a great product, and you’re seeking public investment to get it off the ground, you’re exposing that idea publicly. If other companies with bigger “war chests” of money see your idea, like it, and already have the infrastructure in place to begin manufacturing, then you may have given up your idea to more powerful forces who will move to create it, distribute it, and profit from it faster than you can.
Chinese manufacturing, for example, can move very quickly after seeing a promising idea. So what can you do if you don’t have the money? Is there a way to protect your idea while still going to crowdfunding?
Seek Angel Investors
One way to keep things under control before going to Kickstarter is to seek as much prior angel investment as possible to protect business ideas. If your idea really is that good, you may be able to secure some funding through traditional investment channels.
Doing this limits how much money you may need from a Kickstarter campaign, and thus lessening the time you need to run the campaign.
Use Only Proof of Concept
When pitching on Kickstarter, stay away from details! Do not lay out exactly how your product works. Kickstarter is all about building up excitement and curiosity. It doesn’t have to be as comprehensive as a standard investment proposal.
Advance Your Prototype As Much As You Can
The perfect scenario for you is if you already have a working prototype, have all the “kinks” worked out, and just need investment money to secure manufacturing. If you can eliminate as much development time from the equation as possible, you make it much harder for people with first mover advantage to get the jump on you.
If you seek out manufacturing facilities as quickly as possible and take all the appropriate legal precautions for non-use and non-disclosure before turning to the public via crowdfunding, then that will go a long way toward preventing rivals from stealing your idea.
Starting a business means learning a lot, and we can help you through the stages of getting your business off the ground. Just follow Innisfil Invests In You on social media like Twitter, Facebook, Instagram, and LinkedIn to start learning more.