Head over to your favorite crowdfunding platform (Indiegogo and Kickstarter being the leading players) and take a look at products featured on the homepages. One of the first things you’ll notice is that most people going the crowdfunding route have physical products to show. You are much less likely to come across a software product than you are a hardware product. But this shouldn’t deter you from considering crowdfunding as an income opportunity for your software product.
Software developers understand how complicated creating a digital product can be. From navigating Docker to managing deployment with a cadvisor helm chart and automating your time-consuming development tasks, creating code isn’t easy. Developers also understand that communicating complex programming languages to the average person is equally as tricky.
As a software developer, you know how much work goes into transforming an idea into a machine. But there’s a reason why there aren’t too many software products on crowdfunding platforms. Many software products are taking a physical product approach to crowdfunding, and it isn’t working out for them. Figure out where you fit into the crowdsourced landscape here:
Understand the Crowdfunding Basics
The way crowdfunding works is fairly simple: you put your product on a crowdfunding platform and others can show support for your creation by financing it. This form of reward-based crowdfunding allows you to secure early support and acquire the necessary funding to take the next step in the production and go-to-market phases. There’s a reason why so many people support crowdfunding projects. Namely, it feels good to play an instrumental role in a startup’s success by being an early adopter.
Understand the Risks
There are several reasons why non-tangible products struggle to see crowdfunding success. One of the reasons that people are hesitant to support software startups is because crowdfunding origins emphasized innovative products that backers could touch, see, and feel. To combat this, think about the rewards and benefits you can offer that physical products cannot.
Early access via beta launches are a great way to make users feel involved in the development process. Users like to believe they play a role and are happy to support companies when they feel connected to them someway. On the same token, you should have a highly effective strategy in place for getting back to all of your supporters; gratitude goes a long way. When backers feel that their contribution made a difference, they are more likely to share the project and recommend the product.
Different Types of Crowdfunding
There are several different types of crowdfunding that you should consider when it comes to your software product. They include rewards-based crowdfunding, equity crowdfunding, and charitable crowdfunding. Rewards-based crowdfunding is when users are offered rewards/incentives in exchange for financial contributions. Reward tiers can range from $1 to more than $1,000, depending on the award.
Equity platforms like AngelList allow users to earn equity of a company by supporting it during early stages. Finally, charitable funding enables you to secure donations from people who believe in your product and might be ideal for those in very early stages and developers who are creating products that align with the charity industry.
Know Your Goals
Of course, if you’re putting your product on a crowdfunding platform, then your goal is to raise funds. However, even if money is one of your objectives, there should be an overarching primary goal, and for many software startups, that goal is bringing in more users and building brand awareness. Think about it: if you were creating a digital marketing campaign, you would want to focus on a specific target. Would your goal be to get more email subscribers, get people to your website, or convince visitors to sign up for a free webinar?
Ask yourself which you need more: users or money? Chances are, you need more users. After all, software products are driven by user metrics, and when you’re in the early stages of growing your business, you need market proof. You need users to help you validate your app and continue refining the product.
Create Appealing Rewards
It’s important that you make it easy for potential users to support you, and one way to do this is by offering rewards that are appealing to them and easy to access. This means nix those high-tier goals that cost $25 to support. If your goal is to both get lots of money AND lots of subscribers, chances are you’ll fall short of your goal.
You can take a look at other successful crowdfunding campaigns for software to learn more about how they framed their language and rewards to appeal to potential backers. The Dwell Scripture app was designed to create an easy listening and interactive experience with one of the most-read and complex books in the world: the bible. By focusing on product tiers that include digital downloads, they were able to secure support from nearly 3,000 backers and raised almost $130,000.
Similarly, No Agent, an online property management platform, also raised over half a million dollars for their software product. Headquartered in London, their goal was to disrupt the rental market and use technology to improve the traditional estate experience.