One Entrepreneur’s Take on Kickstarter
Does Kickstarter really work? The buzz says it does, but more often than not the buzz is about companies that have raised crazy amounts of money in the space of a week, or about those with products that have attracted the eye of the tech press or social media.
However, Anne-Marie Roussel, co-founder of the more typical SeeSpace, has nothing but good things to say about her company’s Kickstarter experience. On Feb. 25, the San Francisco company had 1,099 backers and $137,562 raised – its goal was $100,000 — with 11 days left to go.
SeeSpace’s InAiR HDMI pass-through device allows Web content to appear seamlessly with TV content. In its first three days on Kickstarter, it received $30,000 in backing even though its product was still a prototype and very little was known about it. Depending on their level of support, Kickstarter investors already have access to early and special editions of the device.
The company’s founding team bootstrapped the year-old company before turning to Kickstarter. “We’re now at the juncture where we’ve launched the prototype at CES and we need to manufacture the device, and that takes a lot more money,” says Roussel. InAiR will be available in late summer to early fall.
While the crowdfunding route is certainly different from angel or seed funding, Roussel says Kickstarter was a great way to “test the market” and get funding at the same time. Iterations of the product were made available to Kickstarter funders, and their comments and suggestions were taken to heart. “Many of the people pledging are really savvy about tech,” Roussel says.
Gadgets and video games are big winners on Kickstarter, says Charles Smith, managing partner at Pegasus Intellectual Capital Solutions, a Chicago-based boutique investment bank. If the crowd catches on to the product on the site, the buzz generated can certainly push it into the public eye, he says.
Not every story on Kickstarter is a successful one, but Roussel argues that even those that tank can find value in the experience. If you’re not fully subscribed, she says, “it tells you something — maybe this isn’t the right approach or product or maybe you simply need to tweak it.”
Of course, most tech products on Kickstarter aren’t going to get the amount of attention or million dollar funding that Pebble Watch or Ouya have. Still, the cache of being on Kickstarter and getting feedback from potential customers is invaluable, says Smith.
Smith views Kickstarter as a way for early adopters to be opinion makers in the development of a product. Tech companies benefit from tapping into the wisdom of the crowd — a crowd that already has an interest in the product. The downsides, says Smith, are few, short of the worry that the competition is watching.
If you’re able to use the “wisdom of the crowd” wisely, says Kim Wales, CEO and founder of Wales Capital, a New York City-based management consulting firm, you can benefit from a cash injection that can also help you find new employees or begin manufacturing at a critical stage. “There are so many companies out there, and there simply aren’t enough angels,” she says. Traditional investors simply don’t want to be the first in on an untried product, so “when they see the interest of the crowd, that can be a powerful lure.”
Kickstarter wouldn’t comment for this story, and Smith says that’s typical. Not responding is a part of their “mystique,” he explains.