Advantages to Investing in multi-product companies
-Kickstarter: 3 billion dollars contributed
-Successfully funded projects: 36%
-Successfully funded projects that succeed: 3%
Crowdfunding has become a multi-million dollar industry and a way for companies to gain track and followers by using private capital to make their vision come true. However, many campaigns that are champions in raising money are unable to fulfill their promise and bring their project to life. Why is that happening? Why do projects that excel at raising money do not excel at other aspects of business?
Beware: Low prices
One of the chief reasons is the intentional or unreliable projection of the final cost of making the product, which makes manufacturing economically insolvent. Oftentimes, campaigns fail to take into account many costs unrelated to actual manufacturing, like shipping, customs, delivery, and if he miscellaneous costs. Many campaigns, in order to attract more backers, promise the product at a fantastically low price, which is most certainly attractive for backers but is unrealistic and leads to manufacturing problems.
Conclusion: take a look at the market and look for similar products, or admit that you are impressed by PR and are willing to tip money to the creators.
A Prototype is Not the Final Product
Having a prototype is one of the requirements that platforms like Kickstarter demand as means of flushing out fraudulent campaigns, but in reality only only serves to convince the platform to allow the project creators to raise money. The reason why prototypes do not mean much in some cases are these: how can you prove the work of a chip on a blurry photo? Or a chaotic set of connected wires in disarray? For engineers, sometimes a simple glance at a photo is enough to discern the fake from the real. Even so, there aren’t many engineers among the backers, which means fraudulent campaigns have an easier time selling their idea.
Conclusion: If there are engineers or experts commenting on the campaign or a product, listen to their professional opinion. Many projects that successfully raised money and had an idea that was impossible to realize were scorned by engineers and experts, which unfortunately did not stop the people from backing the project.
An inventor does not stop at one discovery. They are not one-time use—inventors tend to invent many things in the course of their lifetime. When looking at legendary innovators and inventors like Nicola Tesla, who had over 300 patents and whose inventions changed the world, Thomas Edison, a man with a myriad of inventions and over 1000 utility patents, or James Dyson, a man with a vision and tens of useful inventions, it is evident that they did not have one single invention but many. Do not trust mono-product projects/campaigns/companies, 95% of the time it is the product of PR and Marketing, and not does not come from engineers and inventors.
Economical Risks of Mono-Product Companies.
There are inherent risks to a company with a mono-product. Chief among them is that competition can easily copy an idea and release to greater success. In fact, there are several businesses that deal in copying successful projects from Kickstarter or Indiegogo and releasing them to the market sooner than the campaigns themselves. One recent example is FidgetCube. The campaign on Kickstarter was widely successful, but one month later you could already order fidget cubes just like from Kickstarter, with no need to wait for the campaign versions to ship. One of the ways you can lower those risks is by investing in a company that has a larger potential.
Conclusion : look for companies that can offer more than one product/service.
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