And yet, Amazon and grocery stores are quickly filling up with new brands that began on Kickstarter – proving the platform’s potential, if only entrepreneurs can figure out how to crack the code.
In this episode of FoodNavigator-USA’s Investing in the Future of Food, Tom Zheng, the co-founder and president of Vite Ramen shares strategies that helped his better-for-you instant noodle brand not only reach their Kickstarter goal to raise $10,000 in a mere 67 minutes but also exceed it to ultimately earn more than $249,000 in pledges from almost 4,300 backers.
Like many entrepreneurs who choose to crowdfund rather than team with private equity investors, Zheng said he chose Kickstarter because he wanted Vite Ramen to be a family business and was unwilling to give up equity in the company at such an early stage. He also chose it because he was familiar with the platform as a supporter of other entrepreneurs who had also launched on it.
Finally, he said, the platform helps with more than raising money – it also raises consumer awareness and is a way to prove a concept before fully committing.
But, as he also noted, to achieve these benefits, entrepreneurs need to put in the work. Zheng estimated creating the company’s campaign took almost a year, with most of the heavy lifting in the last five or six months of development.
Focus on the founders
Based on his experience, Zheng recommends that brands center their campaigns not just on their product, but the founders, as well.
“It is really about not just your product, but your journey as well. A lot of the success we had can be attributed to us kind of being out there as people,” and showing supporters that Vite Ramen was more than a product, but also someone’s dream, he said.
Show and tell
A successful campaign focuses heavily on visuals rather than text to show off the product, Zheng advised.
“If you have a really great product, and it is just a bunch of descriptions, it is very hard to get that across,” he explained.
“So, focus on getting your Kickstarter video as good as you can,” he added – even if that means making sacrifices. He explained that Vite Ramen invested heavily in a video that in the end wasn’t good enough and had to be redone last minute. Even though it was an extra expense, and a lot of additional work, Zheng said it made a huge impact on the campaign’s success.
Reward sponsors but not at your own expense
A fundamental part of any Kickstarter campaign is the rewards that are promised in exchange for pledges. These can range from a heartfelt thank you for $1, which helped Vite Ramen earn $103, to mid-range rewards, such as Vite Ramen’s offer to sample three of its flavors for $35, to high-dollar rewards, such as Vite Ramen’s promise of 300 servings of its noodles plus t-shirts and bowls for $875.
A key element of actually making money on pledges is to factor in how much it will cost to ship rewards, Zheng noted. He explained that a company could easily spend everything it raised on fulfilling rewards if it didn’t carefully think through all the costs up front.
He also advised companies to offer early-bird rewards to jumpstart a campaign’s momentum, which in turn could trigger Kickstarter’s algorithm for featuring the campaign on its website more prominently.
Set the bar low, but your standards high
Zheng also recommends startups set the bar low for their fundraise goal so that they are more likely to reach it with the knowledge that they can always exceed it.
“We did set the bar on the lower end of the threshold,” but quickly blew past it at a noteworthy speed that helped garner the brand extra attention, he said.
No matter how well planned a campaign, entrepreneurs should always brace for challenges, and when they come up they should be transparent with backers about their impact and how the company is addressing them.
For example, Vite Ramen exceeded its goal by so much that it needed to scramble to line up additional ingredient suppliers and rethink its machinery to fulfill the much larger than anticipated orders.
While Zheng acknowledged this was stressful, he said most supporters were understanding because the company was transparent about what it was doing to address the challenges it faced and fulfill its orders.
“The big thing was staying transparent with our Kickstarter backers. It really sucks when you go to a Kickstarter, pledge all this money and then they are alright awesome we are working on it, and they go silent,” he said.
Plus, he adds, each communication is another connection that will help bring consumers closer and build loyalty.