Crowdfunding—collecting money from a bunch of people to fund a project—has in the last few years gone from “doable but tough” to “so easy we can’t remember how we lived before,” thanks to sites like Kickstarter and Indiegogo.
Particular beneficiaries of the new era are those wanting to make physical devices, who have often struggled for funding because of the higher risk and capital requirements of hardware development over software.
“Crowdfunding validates the product-market fit early in the development cycle, before you’ve spent millions of dollars creating something nobody wants,” says Scott Miller, CEO and cofounder of Dragon Innovation, in Cambridge, Mass., which offers certification and manufacturing expertise. “It provides the capital essential for buying the tools and inventory. And it’s the most efficient form of marketing: It creates an informed community who then evangelizes,” says Miller.