Can launching a crowdfunding campaign with a less-developed product improve product development and campaign success?
A working paper featured in The UCLA Anderson Review by UCL School of Management’s Sidika Tunç Candoğan, Bilal Gokpinar, Ersin Körpeoğlu and their co-authors; Philipp B. Cornelius and Christopher S. Tang aims to answer just that.
In the paper, the authors explore the benefits of crowdfunding on product development and examine the level of development required before launching a successful crowdfunding campaign.
The advantages of crowdfunding go far beyond the financial and it has become a common way for entrepreneurs and innovators to elicit feedback on new product development, which in turn encourages innovation. However, entrepreneurs who chose this route face the dilemma of how developed the product should be before launching a crowdfunding campaign.
The working paper uses both a theoretical and empirical study of 21,000 campaigns to show that, although a well-developed product does make a campaign more likely to succeed, it can be more beneficial for creators to proceed with a less-developed product and improve it during the campaign based on real customer feedback.
This reduces the fundraising target and prevents unnecessary investment in features which might not be desired or useful to the end-user. It also helps to avoid feature fatigue, where the consumers become overwhelmed by features they either don’t understand or do not need.