Over the years, many entrepreneurs, startup founders, and creators have turned to crowdsourcing and crowdfunding platforms to fund and kick start their projects and creations.
By definition, crowdsourcing is the process of obtaining needed services, ideas or content from a large group of people. While crowdfunding is a similar practice, it’s only used to describe the solicitation of funds from a group of people to finance a particular project.
Other than the obvious fact that it provides access to capital, crowdfunding has numerous advantages. It hedges risk when you’re starting up a project as it gives entrepreneurs an opportunity to obtain market validation during the process.
A decent crowdfunding campaign can also be used as a marketing tool to get your name out in the media and it also helps you gain organic visits from both unique users and potential funders. If done right, it could be the stepping-stone that you were looking for to even go viral.
But most importantly, crowdfunding campaigns serve as an avenue where you could obtain a proof of concept for your idea. Usually, startups don’t receive sufficient market validation when they’re first starting off, which is why they might need to pivot but crowdfunding makes this possible.
If you manage to run a successful crowdfunding campaign, you’d be aware of your key audience and you can also be assured that your customers see the potential in your idea and are even willing to back it financially. And this is something that you could brag about when you’re pitching to an investor.
Case Study: Wok It
Wok It, a Malaysian mobile kitchen that serves quick and customised meals, also turned to crowdfunding to raise finances to build their kitchen and to set up permanently at Grind 22, Bangsar.
In their blog, they mentioned that they came up with their crowdfunding idea while working towards their first permanent place at Grind 22, Bangsar. However, as things progressed they realised that they were RM10K short of making it a reality.
The money was also going to be used to source all of the necessary equipment for their kitchen, and this included sourcing a 2-stove wok burner, a freezer/chiller, a suction hood, among other necessities.
“For RM10,000, we thought it was a bit too small of a sum to get a loan from the bank plus we didn’t want the burden of having to pay interests when we’re just starting out,” they wrote in regards to their preference of crowdfunding over going to the bank.
They hosted their campaign to raise RM10K on PitchIn and by the 2nd of February, they announced that they managed to reach their goal. At the end of the campaign, they managed to raise a total of RM14,495—more than their initial goal!
They wrote on their blog that they contacted their suppliers the very next day to get the whole process started, and the completion date is tentatively set to the 11th of this March.
Usually, crowdfunding campaigns tend to be quite successful when they’re used to raise funds for say consumer products in the tech space, according to this article from Forbes. However according to crowdfunding platform Kickstarter, only 44% of projects posted on their site meet their funding goal, and out of the estimate 60,000 unsuccessful projects surveyed, nearly 40,000 failed to reach even 20% of their goal.
Even though crowdfunding as a means of raising finances for projects is an ideal one, it’s quite difficult to actually pull off a successful campaign, especially if you’re from the F&B industry, for a whole set of reasons.
But one of the main reasons as to why crowdfunding projects often fail is because they fail to build lasting confidence and trust among their backers. And that’s something Wok It managed to do through their very first crowdfunding campaign.
So What Can We Learn From Them?
I feel that if you’re operating in the food and beverage industry, it is key to have a cult-like following for both your food and your service. And that’s something that one can only be built over a period of time through careful planning, dedicated passion, and consistent quality.
When it comes to the F&B industry, consumers are very selective about their tastes and preferences. For example, customers either like the way a particular meal tastes or they end up hating the entire concept of what it stands for. Given such strict consumer preferences, F&B businesses, especially restaurants or pop-up kitchens should strive to always satisfy the needs of their customers.
As an F&B business, Wok It offers a unique experience to its customers, whereby customers get to choose the ingredients that go into their meals. Customers get to choose their preferred carbs, proteins, vegetables and sauces that they’d like, and the Wok It team will fry it for them in a wok. Based on the provided choices of ingredients, there are currently over a 1000 possibilities of meals that can be cooked up.
Given this unique proposition and the fact that their food is tasty, they have a significant number of loyal customers that can positively testify about the Wok It experience.
Secondly, they were also guided by the constant feedback that they received from their customers, and as such, one of their most common requests was that Wok It should get a permanent place.
Following which, Wok It also conducted a survey and the common consensus was a general yes.
Thirdly, their campaign was designed in such a way that it wasn’t entirely skewed towards finances but it was also focused on rewarding their loyal and potential customers. People that backed this project were rewarded with gift vouchers that they could use to redeem Wok It boxes in the future. And this is definitely a great way to keep the backers interested in the product or the business long after the campaign is fully funded and closed.
Your prospects of running a successful crowdfunding campaign as an F&B business would simply be higher if you’ve built a unique and positive reputation in the marketplace, as your loyal customers would be more inclined to support and fund your campaign.
Backers are also more inclined to fund projects that have a unique flavor to offer rather than funding a standard replica of something that does work. F&B businesses that are able to appeal to consumers in such a way would be in a better position if and when they choose to setup a crowdfunding campaign.
One should always remember that successful crowdfunding campaigns aren’t an accident. While serendipity might play a role in a few, most successful ones share common characteristics.
Business Loans wrote in their article, “70% of the crowdfunding campaigns that meet or surpass their goal have most or all of the following: a video introducing the product, a distinct voice for written copy, a listed product name, a project icon, graphics, logos, a customer service system, a prototype, an accurate price estimate, photos of the product, and a marketing strategy.”
Wok It’s success not only proves their smart and well planned strategy, it also paves a way for newer and younger F&B pop-up stores to further their business into a proper permanent brick and mortar store. Instead of immediately investing into a restaurant or café, which is a risk, F&B business owners can start small, gain a following, and test that loyalty with crowdfunding.