Raising capital can be a challenge for independent inventors who have a great idea but may lack the tens of thousands of dollars or more that may be required to create a prototype of their idea and bring their idea to the marketplace (see this previous C+B blog post for a discussion of this challenge in the pharmaceutical realm). While inventors have often looked to venture capitalists, angel investors or even personal savings for their startup needs, these options are not always available or desirable, and may involve selling an ownership stake in your idea or company, for example.
Kickstarter.com is a website in which individuals can create projects that require a certain amount of funding, and others can pledge money to towards that goal. Those who pledge are only charged if the funding goal is met by a stated deadline, and if the funding goal is not met by that deadline then no one is charged. Many artists have used Kickstarter to raise money for art projects, often at tiered giving levels (e.g., pledge $10 and you get a copy of my album, pledge $500 and you will receive a private concert, pledge $1,000 and you can perform on my album).
Recently, some creative inventors have been turning to Kickstarter for startup funding. A notable success story is that of the C-Loop. A group of professional photographers headed by Ivan Wong had an idea for an SLR camera strap mounted to prevent the strap from entering the camera’s frame during windy photo shoots. Instead of mounting the strap at the standard location at the two top corners of a camera, Wong proposed mounting the strap to the camera’s tripod mount on the bottom of the camera.
Wong and his partners turned to Kickstarter to raise $15,000 to build a prototype of the C-Loop, asking pledgers to effectively preorder their product. Thus, instead of getting a loan from a bank or a group of investors, Wong and co. went directly to potential customers to raise funds. By the end of their funding period they had raised over $60,000 – over four times their original goal. Using Kickstarter enabled Wong and his partners to not only secure capital to bring their idea to market, but to effectively guarantee that their first run of manufacturing would be immediately sold upon manufacture.
There can be some drawbacks to following in Wong’s footsteps, as Kickstarter requires you to publicly disclose your idea, and large funding goals could be difficult to meet. Nevertheless, Kickstarter can be mutually beneficial for both project creators and pledgers alike, giving project creators much-needed capital and assurance that there is indeed a demand for their products, and giving pledgers a chance to creatively purchase items and interact directly with the designers behind those products.