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3 Ways To Avoid Being Seen As A Fraud In Your Crowdfunding Campaigns


Crowdfunding Strategies

by Jesse Kaufman, CEO and founder of ShippingTree

Crowdfunding campaigns have gained popularity as a way to fund and earn support for a new product or project. By allowing individuals to contribute and back a project, crowdfunding has revolutionized the way many small companies finance their efforts.

Still, it’s not entirely seamless. Your company’s image depends on your ability to fulfill the promises you’ve made. Unfortunately, some campaigns run more than several months overdue on their original delivery time frame, and backers are quick to claim fraud.

The problem, however, isn’t typically mismanaging funds — it’s an issue with the supply chain process.

Too often, entrepreneurs don’t give themselves enough time to get a viable product to market. To keep their customers loyal and expand their businesses beyond crowdfunding, business leaders need to be on top of their supply chain issues.

Here three ways to manage the process and keep your backers supportive:

1. Be transparent with your backers.

Crowdfunded campaigns require a high degree of transparency. Address any concerns before they happen by keeping your audience members informed of your current production cycle stage. Update them when you enter prototyping, have a working prototype, or have made any other major status update.

Most backers lack experience with product development, manufacturing, and distribution. Allow for consumer comments on the crowdfunded platform, keep an eye on what they’re writing, and answer questions quickly. By being transparent with your audience, you build trust and prevent people from thinking you’re frivolously spending their contributions.

2. Double your forecast.

Once you’ve forecasted how long production and development will take, multiply that by two at the very least. A buffer is crucial to pad any time frame blowouts. If you are wrong and can deliver products early, you’ll look like a hero.

Zane Lamprey, the founder of Inzane Entertainment, a company that received more than $500,000 in a backed campaign, says, “Your reputation is everything.” He notes there are “no Kickstarter police making sure you’re doing what you said you were going to do, so you are on the honor code as far as fulfillment.” When it comes to your reputation, early is much better than late.

3. Avoid scope creep at all costs.

Scope creep is any extra work added on to the original plan. You can take into consideration your backers’ comments and feedback, but do your best to stay on point with what you had in mind when you launched the campaign. Resist the urge to plan second product versions or other distribution opportunities. Your goal is to get your original product out the door on time and on budget.

To avoid scope creep, it’s important to plan ahead, especially if your product involves technology. Tech limitations can force developmental delays. You also need to know exact needs upfront regarding manufacturing your product or software. Any requests for mid-cycle changes can cause delays.

There truly is no such thing as overplanning when it comes to your supply chain. Get as much of it sorted out as possible before launching your campaign. And before launching the campaign, do your research. Get referrals for — and interview — potential manufacturing and distribution partners. Establish relationships and research any issues, like tax laws, that might crop up if you’re using an overseas vendor.

Consider different scenarios, along with the possible time it will take to get your product to market. You want to hit the ground running as soon as the campaign funds, avoid any supply chain issues, and celebrate your success when your product ships to your backers.


Jesse Kaufman

Jesse Kaufman is CEO and founder of ShippingTree, a provider of cloud-based logistics and e-commerce fulfillment services for consumer product companies around the world.