America’s SBDC Blog

A “Forbes 100 Best Websites for Entrepreneurs”

5 Steps to Practice Safe Crowdfunding

Money doesn’t grow on trees. Hard work is the key to success. You would be hard pressed to find someone who hadn’t heard these lines growing up. But some of these erstwhile truisms need altering ever since online crowdfunding has taken the world by storm. For a case in point, look at the man who managed to raise more than $50,000 on Indiegogo to make potato salad. Potato salad! He raised $49,990 more than his $10 goal.

This example is to illustrate that people on the Internet have money to spend. But unlike a simplistic campaign that goes viral, designing a legitimate campaign is hard work. If you are looking to raise capital to launch a product, then crowdfunding might be right for you; and with a little patience, and by following the steps below, it will have definitely been worth the effort. You’ll be practicing safe crowdfunding in no time!

Step 1: Identify your intellectual property

First things first: identify your intellectual property (IP). IP is not limited to the tech industry; any and every company has IP, including yours. Launching an idea into the world exposes you to more than just some wise guys leaving disparaging comments. It enables anyone to access your campaign, and with enough capital, that person can recreate your product if you haven’t taken the necessary steps to protect it. If they successfully bring it to market before you, then you can kiss your baby goodbye. 

Step 2: Manage your IP

Once you have identified the various forms of IP in your startup, it’s time to either register for protection yourself (in the case of more simple registration processes like copyrights) or hire a lawyer to do it for you. IP is a broad subject and you will be surprised by how much protection is provided to things you assumed could not be secured. Throughout the process of identifying and managing your IP you will not only fortify your business but will also learn how much information you can safely reveal during the campaign. This is why these should be the initial steps.

Step 3: Pick a platform

There is no one size fits all when it comes to crowdfunding platforms. For example, popular platforms like Kickstarter and Indiegogo are rewards-based platforms on which you have to offer something other than equity in lieu of investment. Crudely put, it is similar to preordering a product online. But not all rewards-based Thus, you cannot set your campaign goal unrealistically high otherwise you will receive nothing if you do not attain the requisite investment within the campaign period. Another option is equity crowdfunding, however you can only pursue this avenue and receive funding by the state citizens in a limited number of states, narrowing your potential investors’ pool. States like Michigan, Georgia, Kansas, and Wisconsin are some of the states that allow equity crowdfunding. Do your research; choose the right platform for you and set a realistic goal.

Step 4: Build social capital

Before launching your campaign you must create a presence both online and within entrepreneurial circles. Integrating various social media platforms into your website, creating quality content, and building symbiotic relationships with other entrepreneurs are just a couple of ways to go about building influence. By expanding your clout you have a higher chance of success when you finally launch your campaign.

Step 5: Create the campaign

Most people start here and then work their way back. But by delaying this step to the end you have already laid the groundwork for an effective campaign. By identifying and managing your IP, you know how much you can delve into the details of your product. By recognizing a platform that is right for you, you know what is realistically attainable and what rewards should be provided to investors to incentivize financing. By building social capital you have a ready network to tap into when the time is ripe–a network that can further promote your campaign amongst their circles.

One very important factor to keep in mind while preparing your pitch is to ensure no material used infringes any third party IP rights. Unlicensed background music in your campaign video could lead to the video being taken down or hefty fines. We suggest either creating original content or licensing the content you use.

Keeping these steps and their sequence in mind and you will be on the road to realizing your entrepreneurial goals. If people can pay to get photographs of a man making potato salad, then they can definitely pay to launch your legitimate enterprise!


Mary Juetten, Founder and CEO of, developed the idea for Traklight while earning her JD and has leveraged 25+ years of business experience to globally launch Traklight in less than three years. Traklight is an innovative software company with a mission to help educate and empower you to be proactive in identifying, protecting, and leveraging your ideas for your startup, invention, or business. Through the use of online IP identification tools and resources, Traklight users can protect their IP, and prevent infringement disputes and subsequent losses of large sums of money. Follow Traklight on FacebookTwitter, or their blog.

Subscribe to our Blog

Monthly Archives