How A Crowdfunding Failure Can Have A Happy Ending

There are more tears shed over crowdfunding than there are popped champagne corks. Not everyone’s big idea can attract capital. But coming up short on the cash front doesn’t necessarily mean it’s time to toss your dreams out the window.

College undergrads and twin brothers Max and Zach Zitney had an interesting idea that they felt could make a compelling product. It was a simple ring to be worn on a single finger that would vibrate and light up when you receive a phone call or notification using Bluetooth wireless technology.

Called MiRing, the concept was born while the Zitney twins were members of the Business Builders Club at Ohio State University, a group that teaches entrepreneurship. During the club’s November ‘Idea Pitch’ – a concept session before a panel of local investors – the Zitneys brought forward their idea for a vibrating ring. Of the seven groups pitching, the two came in third and won $500 and filed a provisional patent that same month.

Max and Zach, both 21, enlisted the help of university student program coordinator Krystal Geyer to help them guide their development and had OSU industrial designer Erika Braun create a conceptual rending of their ring product.

Next step was securing development capital and the brothers decided to kick off a month long crowdfunding campaign with Fundable.com, an Ohio-based platform founded by Eric Corl and Wil Schroter that allows startups to receive support from anyone for rewards or equity.

“We thought it would be not that expensive of a startup,” said Max Zitney. “But after looking at everything we just figured out how much it would really take, what kind of technology we’d have to raise.”

To get their startup off the ground and pay for product development – there wasn’t even a working prototype – the brothers tried to raise $150,000 in a 30-day period beginning mid July of this year—they only managed about $8,000.

Max Zitney’s outlook is that the disappointing campaign saved the two a lot of grief because it showed them that the product, in its current configuration, was obviously not sparking a lot of enthusiasm.

But the Zitneys’ story doesn’t end by merely recognizing the silver lining. A UK-based company called NFC Ring, which has developed a similar idea, approached the brothers, offering to inspect their concept and possibly collaborate in the near future.

The NFC Ring (that stands for Near Field Communication) did not fail its crowdfunding campaign, having raised almost £242,000 ($374,000+) earlier this month on Kickstarter after only shooting for £30,000. That company’s product allows you to unlock your phone, tablet, or even your home, by placing your NFC ring in close proximity. Even simple information can be transferred through the NFC Ring.

NFC Ring appreciated the Zitneys’ idea but said the technology is not yet in place to create a ring-size, Bluetooth-enabled vibrating notification device. Those features, however, are ones that the company would like to incorporate into its product . “They said that’s their ultimate goal,” said Zach Zitney, adding that NFC Ring intends to resume talks with the brothers when they’re ready to start integrating MiRing’s designs into their own technology. Given the fact that the Zitneys have a U.S. patent on such a gadget, they may have to.

“There are still options available,” Max Zitney said. “The crowdfunding just opened up the doors for us.”

Another upside is that the twin inventor-entrepreneurs scored internships at Fundable, which should provide some valuable experience, and maybe a little money, as they work toward completing their undergrad degrees in communications and entrepreneurship in 2015.

Follow me on Twitter @KarstenStrauss 

 

Source: Forbes – Karsten Strauss

Link: http://www.forbes.com/sites/karstenstrauss/2013/08/30/how-a-crowdfunding-failure-can-have-a-happy-ending/

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