for the right startup. “When you have a physical product, it’s a good early market tester,” Lein said, noting that crowdfunding campaigns often validate marketing strategy but not necessarily the product or service itself. “You can measure consumer demand and drum up excitement. But entrepreneurs often underestimate the amount of work involved. To do it right, you have to put a ton of time and energy into it—you have to talk to media, come up with compelling perks, and give regular updates to backers. Crowdfunding campaigns are successful not because of happenstance, but because of a coordinated effort.”
And what about startups told by VCs to come back once they’ve gotten funding—how do they get that first investment that helps VCs feel comfortable enough to roll the dice? Lein said that’s when entrepreneurs should seek out an angel investor or an organization like Tumml or TechTown.
“It’s a chicken and egg problem, and it’s basically why Tumml exists,” she added. “It’s about trying to create momentum and not being afraid to make the ask.”
Lein told the story of HandUp, a website that allows homeless people in need of money for medical bills, housing, transportation, or other milestones to connect directly with potential crowdfunders.
“When HandUp came to us, they had nothing but an idea,” she said. “In three weeks, they had a part-time developer build a text-based prototype. It was very basic, but it was amazing to see that kind of progress—that kind of momentum and traction—so we accepted them into our program. Since then, HandUp has gone on to raise $1.5 million and expand to Detroit and Oregon.”
