Crowdfunding is best used after building a prototype product (Step 3) to validate market interest, as it allows gathering feedback on whether people want to actually buy the product. It is important to have a working product and video before crowdfunding, to prove the concept and that some people want the product. Crowdfunding then determines how many people want to purchase the product, which can range from 100 to 1000 buyers or more. It lowers barriers for new businesses compared to traditional options like loans, grants or investors that require paperwork, time or large ownership stakes.

1. Market Validation with Crowdfunding
A few things happen when you think of an
awesome idea!
You think you are the first one

You think everyone will love it


2. The reality is

You might not be the first one

Everyone might not love it

3. So after you have your idea, the next
three steps are usually
1. Research
2. Build a plan
3. Build a product

4. The question is when should you use
crowdfunding to validate your
product? After which step do you
think?

After Step 1?

After Step 2?

After Step 3?

5. The correct answer is after:
Step 3

6. Crowdfunding ≠ Market Research
You’re going to need some proof that:
1. You have an actual product or prototype
2. That you know what you’re doing
3. That some people actually want to use
your product
4. A kick ass video

7. You have a product and some people
actually want it, now this is where
crowdfunding comes in.

Now you get to see how many people want
to actually buy your product via
crowdfunding

It could be a 100, 1000 or none

Be prepared for anything

8. Why is crowdfunding a
big deal?
It lowers entry and growth
barriers for new businesses by
A LOT.

9. Continued

A Grant
−

Requires a lot of paperwork and takes a
while to go through
Family and Friends
−
They only have so much money to give

10. Where would you get startup capital
5 years ago?

Bank Loan
−

They don’t usually place risky bets and
you have to be in business for at least 2
years
Venture Capitalist
−
They are hard to get a hold of and might
ask for a big chunk of your business

11. Don’t get anything wrong, these
options have their place in the world.
Crowdfunding provides a way for
new businesses to jump start that
initial process and gain their first
customers.