3 Ways Crowdfunding Can Fuel Innovation

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By combining data from 200 Kickstarter alumni who raised more than $17 million from roughly 239,000 backers during their campaigns, researchers Michael Stanko and David Henard gained insights into how crowdfunding campaigns can affect innovations.

According their findings, three are the key factors which contribute to focus on radical innovation in crowdfunding. They include:

1. Openness. Seeking out ideas from customers, suppliers, universities, and professional organizations whilst being open to insights from backers is key to make the most of the partecipation of crowd in someone’s project.

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2. Product Development.  Crowdfund early in the product development process as backers want to participate in the process.

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3. Engagement. Structure your campaign to attract as many backers as possible, even those backers who will contribute small sums. Update these backers often regarding the product development process. Don’t simply ask backers for money, ask them to share their thoughts as well.

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Reference: Stanko, A. M. and Henard D. H. (2016) ‘How Crowdfunding Influences Innovation’ in MIT Sloan Management Review, Spring 2016 Issue. Available here.

 

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