A tale of two, polar opposite, crowdfunding entrepreneurs:
1. My friend Jeff wanted to make a movie. He bootstrapped $10k, created a very rough cut, and then decided to try Kickstarter for the remaining needed balance of $90,000. He promised his backers they would get “Associate Producer “credit in exchange for a donation of $250. When people went to his Kickstarter, they found an underfunded, frankly crappy rough cut of a movie, and little payoff for backing it. Jeff never raised the money and never finished his movie.
2. Jonah wanted to open a second food cart. His first was highly successful. Jonah put in $50k and needed another $50k. He offered great perks for different levels of donations, created an engaging intro video on IndieGoGo, contacted everyone he knew, marketed the heck out of his campaign, followed up, and was successful. He had skin in the game and treated the crowdfunding event like a professional marketing campaign.
Finding the money needed to start, run, and grow a business or launch a product is never easy and so yes, many entrepreneurs do indeed look to crowdfunding as a way to fund and launch their idea. Some of these campaigns do spectacularly well while others do not. What did the winners do right, and what do they have in common? Let’s see:
One of the most notable and highly funded Kickstarter campaigns of all time, the Coolest Cooler, sought to redefine the modern-day cooler. Ryan Grepper, the creator of the Coolest, initially tried a Kickstarter campaign, seeking $125,000. When the original campaign didn’t get funded, he regrouped, redesigned, and launched a second Kickstarter campaign 8 months later, seeking $50,000. That campaign went viral and went on to raise over $13 million dollars, becoming the most funded project on Kickstarter at the time.
But why was the Coolest so revolutionary? The amenities of the Coolest were unparalleled to anything on the market at the time. The cooler came with a rechargeable blender, embedded Bluetooth speaker, phone chargers, LED lights, and other items like plates, knives, bottle openers, and more.
Lesson: Have a great idea, execute on it, and don’t ask for too much money.
Although we all remember the fidget spinner craze that hit everywhere in 2017, the original Fidget cube was way ahead of the distracted-pack.
Mark and Matthew McLachlan had already tried four different Kickstarters before they found the success of the fidget cube. Raising almost $6.5 million over their modest goal of $15,000, they reached viral success few achieve via crowdfunding. The vinyl cube has 6 different sides, with each side featuring something to help stimulate each of our five senses. Clearly, this toy resonated with more than just its crowdfunders, as it inspired thousands of knockoffs.
Lesson: These entrepreneurs created a funny, clever intro video. Their marketing was very professional. They had a great idea and product. The levels of donation were all reasonable and not too expensive.
“Gentle for the bees, and easy for the beekeeper.” The Flow Hive was a revolutionary way for anyone, and they mean anyone, to have their own beehive and collect their own honey. Stuart and Cedar Anderson spent over a decade creating and testing different honey harvesting techniques, and eventually came up with the Flow Hive honey extraction, and then its progeny, the Flow Hive 2.
The method of honey harvesting was simple and allowed the masses to start harvesting their own honey. Clearly, this idea resonated with a lot of people, raising almost $15 million dollars, the Flow Hive and Flow Hive 2 sold over 50,000 units were delivered to 130 countries.
Lesson: Be unique. Solve a problem. Innovate.
The Baubox Travel Jacket solved a critical problem for travelers: storage. Instead of carrying on a heavy, bulky backpack, they could use a slim, organized jacket for everything. Not only were the jackets hailed as supremely comfortable, but their big sell was the many pockets embedded within the coat. It had a pocket for a tablet, passport, ID, earphone holders, a place for a neck pillow, gloves, and an eye mask; it even had a pocket to put a drink in.
The initial campaign launched in 2015 with a goal of $20,000. They raised over $9 million.
The Baubox Travel Jacket was so successful, it even came back for another run. In 2018, the Baubox 2.0 campaign was launched, and raised another $4.4 million for the updated version of this popular coat.
Lesson: Build a better mousetrap.
About Steve Strauss
Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business Success.© Steven D. Strauss
Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice. Bank of America, N.A. Member FDIC. ©2019 Bank of America Corporation