How Established Businesses Can Benefit From Crowdfunding

Picture Courtesy of bitrebels.com

Picture Courtesy of bitrebels.com

Paul Fulton could have easily turned to his Silicon Valley connections to help bankroll a new product from his startup Cloudsona, which makes and sells wireless wristbands that synchronize with light shows at concerts, clubs and sporting events. The man knows people; he has held top positions at Compaq and 3Com and worked as an entrepreneur-in-residence at the Mayfield Fund before founding a software company that was later sold to Cisco. But to fund and launch Cloudsona’s latest product, Fulton turned to Kickstarter.

Cloudsona’s crowdfunding campaign asked for $75,000 to produce Wave, a wristband and smartphone app that uses color codes to indicate who’s calling or messaging the phone. Kickstarter contributors who pledged $28 were promised first-production units of Wave; those who pledged $8,000 got the VIP package–special treatment at a Las Vegas nightclub, complete with limo, bodyguard and a hotel room on the Strip.

Call it crowdfunding 2.0. Established companies are using Kickstarter and the like to launch new products, paid for by a built-in customer base before they hit the production line. But according to Fulton, the appeal is not limited to raising funds. “Just as important, we’re looking to get feedback,” he says. “This campaign is about market messaging and product viability. It’s forcing us to think about how this product should be sold.”

Fulton admits, however, that crowdfunding comes in handy when traditional funders say no. Fulton didn’t even bother going to VC firms with Wave because, he claims, they’re not interested in hardware or entertainment. He’s glad he took the route he did. “When you’ve gotten your Kickstarter funding, you get to keep all creative control,” he says. “There are no money strings attached.”

Jeff Abramowitz, CEO of PowerCloud Systems in Palo Alto, Calif., likes the fact that crowdfunding puts him in touch with a new target audience. His company makes enterprise-grade, cloud-powered Wi-Fi products; when employees tested them out in their homes, they came up with the idea for Skydog, a cloud-managed app and Wi-Fi router for home networking. Through Kickstarter, PowerCloud asked for $75,000 to put Skydog into production, raising more than $120,000 from some 1,000 backers, some of whom were beta testers.

“This isn’t just a crowdfunding project; it’s a crowd-involved project,” Abramowitz says. “We’re getting a community of supporters, and we’re using their input to create new features and improve the product.”

If there is a downside, it’s that there’s no guarantee a company will get the money it needs. Take Fulton: By the end of the Wave campaign, Cloudsona had raised just $57,943 of its target $75,000.

Still, Kickstarter is paying off. Both Fulton and Abramowitz say they’re fielding requests from companies and organizations interested in partnerships and investments. “Overall, it has been a fun experience,” Abramowitz says.

“Doing the campaign got my team excited. And it paid off in helping us find a target customer base and a go-to-market pathway.”

Source: Vanessa Richardson – Entrepreneur
Link: http://www.entrepreneur.com/article/227374

Tags: , , , , , ,

HEADLINE NEWS

ForbesHow One Startup Raised 10 Times Its Original Crowdfunding GoalForbesRunning a successful crowdfunding campaign isn't easy. The odds are heavily stacked against you, as very few end up succeeding. "Statistically, up to 89% of campaigns fail. Kickstarter has the highest [...]

ForbesThe Ultimate Pre-Launch Crowdfunding ChecklistForbesCrowdfunding is not limited to the platform where you launch your campaign. Instead, it has become a valuable way to transform your idea into a mainstream business. In order to head in that direction, you must execute a number [...]

Eater LondonFat Macy's Launch Crowdfunding Campaign to Open Restaurant in PeckhamEater LondonFat Macy's — a food social enterprise which aims to train young Londoners living in temporary housing — have launched a crowdfunding campaign. Their aim is to raise £55,141 to fund a [...]

Realnoe vremyaEveryone pools: Elvira Nabiullina to look closer at crowdfundingRealnoe vremyaThe Central Bank has seriously started fighting against crowdfunding platforms. The regulator told the gradual imposition of control of the sector won't begin earlier than in 2018. But mar [...]

Devon LiveCrowdfunding campaign launched to save adopted Romanian puppy who needs £8000 for vital surgery to save its lifeDevon LiveSam has started a crowd-funding campaign to try to help meet the £8000 cost of the surgery. It's a tall order, but every little helps. Sam had been [...]

U.S. News & World ReportNo Cash for Hate, Say Mainstream Crowdfunding FirmsU.S. News & World ReportThe block on mainstream crowdfunding is just the latest blow to far-right activists operating online. In the last 24 hours, neo-Nazi website the Daily Stormer had its domain regi [...]

The AustralianIgniteme heats up crowdfundingThe Australian“The only other comparable film that raised money through crowdfunding would be Crocodile Dundee, but not all funding came from the crowd.” Mr Morello said the idea behind the platform was relatively simple — giving new and bud [...]

UKTN8 simple steps for a successful equity crowdfunding campaignUKTNTom Horbye, senior campaign development associate at Seedrs, shares his top tips for a successful equity crowdfunding campaign. Here are eight easy-to-follow tips to help you devise and launch a successful equity crow [...]

LivemintFinding the right balance on crowdfundingLivemintSecurities market regulator Sebi (Securities and Exchange Board of India) has been trying to get a handle on digital platform-based crowdfunding since at least 2014, when it issued a cautiously positive consultation paper. It fl [...]

Crain's Cleveland Business'Smaller' gifts can go long way for Clinic's crowdfunding platformCrain's Cleveland BusinessFor an institution accustomed to securing multimillion-dollar donations, Cleveland Clinic's latest fundraising effort has some relatively [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |