1001 Startup Ideas - Crowdfunding platform for budding authors

What is the idea?This weeks startup idea is about establishing a crowdfunding platform for budding authors to crowdfund their books. It will have a publishing house which will publish the successfully crowdfunded books and share the profit with the author.

Market DefinitionAccording to an estimate, crowdfunding campaigns raised USD 34.4 billion in the year 2015. Some other interesting facts on crowdfunding are:a. Based on a report by researchandmarkets.com, global crowdfunding market is expected to grow at a compounded annual growth rate of 26.87% for the period 2016-2020; and b. Forbes.com also predicted that money raised through crowdfunding would surpass the money raised by VCs globally in the year 2016; the actual data is awaited.

Data with crowdfunding of books is also interesting:1. According to Guardian.com, Kickstarter has seen USD 70 million pledged to projects in the site's publishing category; and2. Guardian.com also states that recent years have seen very interesting numbers in terms of a number of successful books related projects. The number of successful books related projects increased from 735 in 2011 to 2064 in 2014.

It is also very interesting to note the number of books that are published globally every year. According to Wikipedia, the number of books published in some of the countries ever year is given below:

Considering the number of books published every year, one can only imagine how many books are rejected for publishing by publishers each year. According to an article in New York Times in 2002, 81% of the Americans feel that they have a book in them.

Competitor AnalysisCrowdfunding industry has kicked off in a big way. Some of the leaders who have done very well in this segment are Kickstarter and Indiegogo. Although, it needs to be noted that the aforesaid platforms are for all kinds of crowdfunding campaigns and not specifically for crowdfunding of books. Platforms like Pubishizer and Unbound are devoted specifically for crowdfunding of books.

Pain Point & Target AudienceThe targeted customer market for this business is "anyone looking to publish her/his book and lacks resources".  Publishers are in the business of making money, and they publish books on the basis of their prediction of the popularity and acceptance by readers and most importantly on their prediction of financial viability. There is no engagement of readers before publishing. This leads to various big books being rejected for publishing.  In addition to this, the authors need a platform to showcase their work to the world and gauge the response in advance.

Value PropositionThe platform will not only help authors to fundraise for publishing his/her book but also help them in gauging the initial feedback from his target audience. Based on the feedback, the author would have the last stage option of making changes or even delaying the release before making further amendments. The platform will also provide offline distribution support by collaborating with brick and mortar stores.

Business ModelThe business model of the startup will be very simple. The startup will not only be a funding platform but also act as a publisher and distributor. It will publish the books successfully funded through the campaigns and share the revenue from the sale of books. The startup can offer a high percentage share of the profits to the author considering the high probability of success of the books. The profit shared with the authors could range from 30-60%.

Way to marketThe first step will be to prepare a sleek website. The second step would be to reach out to authors who have completed their books but have been either rejected by publishing houses or do not have the means to reach out to them. This can be done by associating with literary clubs in various colleges. The startup will have to monitor the first few campaigns on the platform to ensure that there are enough success stories which will further attract a pool of visitors and authors on the platform. The startup will also have to create associations with formal and informal reading clubs for various launches of books to ensure the success of campaigns.

MilestonesThis startup will have to first ensure at least 5 to 6 successful campaigns in the first year. This will become the attraction for various authors to publish their book through the platform. The startup should aim at getting 100 books successfully funded through its platform and then publishing them by the second year. It will have to market the successful stories of first-time authors to gain traction. Word of mouth marketing amongst the author community will be a major factor in the success of the startup.

Investment Needed For PrototypeFor testing & building the prototype, pitch for raising 100K USD from angel investors or incubators. There are various incubators across the globe that would be interested P2P business models. Fairstarts is one such network of incubators which work with P2P startups. There should be no office rentals or salary payout for the first year and the entire budget should be apportioned for customer acquisition and technology.

Team CapabilityYou would need to have a team member with prior experience of working with media or publishing house. Second, you need a marketing expert in the team to streamline the process and making successful fundraising campaigns.

Investors / Expert TakeCrowdfunding is seen as the next big thing for fund raising. As stated above, it was estimated that funds raised through crowdfunding would exceed venture capital in 2016. Club this with the fact that the world in moving towards the peer-to-peer economy and one can understand the potential in crowdfunding startups. Investors have also seen the success of platforms like Kickstarter and Indiegogo. Now, in the next round, in our view, the interest will be in niche crowdfunding startup platforms. In case you are looking to build a venture on these lines, please do visit our website yostartups.com and drop us a note, we will be more than happy to help.

According to Brian Powell CEO of i1p2p.com, a niche investing platform for AgriTech and Impact investments, an end to end model would be a good start as it shores up the success rate. According to him “"Entrepreneurs often mistake crowdfunding as an easy way to fund their venture and a ticket to success, leading to high failure rates of fundraising campaigns. One needs to patiently go through the different aspects of crowdfunding i.e. choosing the right platform, setting right targets, marketing strategy and identifying a list of initial funders; and consolidate on each of them for a successful campaign."