It’s been a few months since I ran a successful crowdfunding campaign. If you asked me a year ago if this is how I would choose to launch a company, I don’t think I would have said yes. But here we are, now in production on our first product, the Pixlplay camera, and it’s all thanks to a Kickstarter campaign and the many incredible people who choose to support the idea.
What led me to Kickstarter?
Initially, I thought I would raise money from angel or maybe even venture capital investors. It seems that every week you hear of some new funding news and I thought, I can do this! I had worked in the toy business for fifteen years. I had prototypes and packaging. Heck, I even had orders from Barnes & Noble! So, I set out to raise money. I created a pitch deck. I got in front of as many investors as possible. And, I failed.
The challenge with raising money as a hardware company.
One of the more telling lines I got when speaking with an investor was “you shouldn’t be raising money in the Bay Area”. Initially, this made me upset but now, I understand it. Like it or not, investors here are looking for a very specific company. Among other things, they’re looking for a high margin (software) businesses with TRACTION in a large market from a team with startup pedigree. Think Uber or Airbnb. Since I didn’t fit their model, I stopped pitching investors and decided to go “all in” on crowdfunding.
What is crowdfunding?
Crowdfunding is still a very new concept for most of us. It’s not like Shark Tank. There is no equity exchanged. Crowdfunding platforms like Kickstarter and Indiegogo take between 5-8% to essentially facilitate PRE-ORDER campaigns that help bring creative ideas to life. Crowdfunding is essentially an additional distribution channel prior to retail. It’s ‘pretailing’. Unlike the investors I met with, consumers were more willing to ‘invest’ money in the future promise of a product.
The $60K we raised on Kickstarter in just over 30 days allowed me to start Pixl Toys. This is not something I could have done five years ago and I am forever thankful to all 1,350 people (and counting) who backed the idea.
The beautiful thing about all this.
When you end up talking with a lot of people about an idea (friends, family, and investors), you get better at telling your story. You learn what people respond well to and you adapt your pitch. When you choose to run a crowdfunding campaign, you are forced to zero in on your idea and the value proposition to consumers. When you speak with investors, particularly those in the Bay Area, you start to think differently. You ask, “how can I add a few zeros to this idea?”. All of this allowed me to clearly define the company positioning and identify the problem we are trying to solve.
The beautiful thing sitting here today is that Kickstarter and the community of backers allowed me to start a company without any dilution. I wake up each day without a master. Better than that, when I wake up, the phones are ringing. And, while I’m sure this will change, for now, I’m feeling more confident than ever and am in a position to bring in people who see the vision.
Thanks again to everyone who backed us on Kickstarter. We’re continuing to take pre-orders now on Indiegogo InDemand and on track to ship by July!
This article was originally published on Linked In.