Crowdfunding new product development can be a good idea for investors because it allows you to get some working capital to make a prototype without having to convince people that your product is feasible and sufficiently different to attract customers. If you find big enough crowd to fund your prototype, your Phase One can be your R&D as well as your market research.
A good example came across our desk this morning. The Skunk Lock is a bicycle lock that makes it hard for thieves to steal your bicycle (just like every other bicycle lock), but it also has a unique deterrent feature. Once a thief starts tampering with it, the lock releases a noxious chemical that makes the thief vomit.
“It’s the bike lock that fights back,” according to their advertising.
"Our formula irreversibly ruins the clothes worn by the thief or any of the protection they [the thief] may be wearing, and replacing these items is likely more expensive than the resale value of your stolen bike."
It sounds great, doesn't it? We can only think of one problem. You chain your bike up with a Skunk Lock; a thief tries to steal it, the lock releases its noxious chemicals, and the thief retreats, vomiting uncontrollably. Victory!
Now, how on earth are you suoosed to ride it home?
Remember this, if you're looking to invest in a company making a new product:
- Is the design feasible?
- Can it be made at a reasonable cost?
- Is the marketing story appealing?
- What is the experience of the customer?
We think the Skunk Lock may have tripped up on one of those. Don't let this happen to you.