So you have an idea – the “next big thing” in the technology or consumer electronics area. You may have developed it alone, or with a group of friends or colleagues. Over many sleepless nights and busy weekends it was developed into a working example. Or your small company worked on it non-stop. You overcame the design challenges, early bugs and faults. Now you’re at the stage where the prototypes are performing as required and you know it’s ready to convert into a product.
At this juncture the project may have hit the largest stopping point there could be – funding and commercialisation. More money is required to further development, however as an individual, small group or business there’s no way the bank will lend you the money. Furthermore with almost everyone “feeling the pinch” you don’t want to ask family or friends.
However there is a solution – “Crowdfunding”. Until recently crowdfunding was unheard of, but like most great ideas has spread like wildfire and is now a legitimate form of fund-raising for great projects. How it works is very simple – you describe your new product in as much detail as possible, showing the features and benefits just like any other sales tool.
However you then offer people the ability to pay in advance to either sponsor or back the product development and purchase the final product. You will set in advance a goal amount. Different monetary amounts are set, each with a ‘reward’ of the product and other extras – and the higher the amount, the greater the reward. At this point is is supremely important to accurately state the delivery date. People will wait if they know when to expect their product. These amounts are pledged, and not received unless the financial goal amount has been met at a set cut-off date.
If the total amounts pledged fall short of the goal amount, the project remains unfunded and you’re back to try again. However – if the goal is met – the backers funds’ are transferred to your organisation, less a fee by the crowdfunding facilitator. And this is when the next challenge arises – bringing the product to market.
For inspiration, two recent examples of crowdfunding success were developed locally here in Australia. The first of these is “Ninja Blocks”, a hardware and cloud-based solution to interface all sorts of objects interactively with the Internet. Their goal was $24000 however ended up receiving just over $100000. The product captured the imagination and enthusiasm of so many people the founders have had a second round of VC funding.
Another is a current project – the “LIFX Light Bulb”. It’s an RGB LED energy-efficient light bulb that can be controlled via wifi and therefore an Internet-connected device. Although the end date hasn’t been reached, and the goal is $100000 – they have already received over one million dollars in backing.
As you can see – with the right product, pricing and promotion – crowdfunding can be a raging success. However before moving forward and examining further development, who are these crowdfunding facilitators?
The largest and most popular is known as Kickstarter. Based in the United States, they have a huge range of products and projects being funded. If you need to reach a global audience, this would be the facilitator to consider. They collect the pledges via the Amazon payment system and capture a small percentage, around five to ten percent. But there is one drawback – projects must be based in the United States. However this can usually be worked around by having a representative in the US who can act on your behalf.
Another choice is Pozible, although not as large as Kickstarter they’re based locally which makes the process so much easier. However as a domestic facilitator you may not reach the global audience due to foreigner trust issues and being far from the majority of the target market.
Back to your project – let’s say you’ve successfully gained your funding. Where to next? You could be staring a huge bank balance, a prototype on your desk and have several thousand people waiting for their reward. Do you understand the processes of taking a design from prototype to actual manufacture? Perhaps it could be redesigned for a cheaper cost price – not only components but making it cheaper to make. And where will you have it made? Locally? You’ve heard about how cheap it is to offshore to East Asia – but who do you contact? Who can you trust? Do you feel confident sending your designs and a large payment offshore – hoping everything will work out? Or do you have the time, knowledge, language skills and savvy to research in country?
If the answer to even one of those questions is “no” – to ensure success you need a partner who understands your product, will take the time to work together with you from your initial contact right through to delivering the final products to your backers. That is where you can take advantage of our experience and success to bring your product to market.
LX has experience in successfully taking electronic products from concept through the commercialisation process. There are many factors to consider before commencing product development and LX can provide expert advice throughout the process, lowering your commercial risk.
Some of the services offered by LX include:
Development of business cases and business plans
Competitor research and analysis
Evaluation of proposed solutions
Intellectual Property (IP) landscaping
Market research and feasibility studies
Rapid market testing
Surveys and focus groups
Development of marketing strategies
Starting a business – LX Business Quick-Start pack
Assistance in raising funding (investment and government grants)
Product versioning strategies and technology road mapping
For more information or a confidential discussion about your ideas and how we can help bring them to life – click here to contact us, or telephone 1800 810 124.
LX is an award-winning electronics design company based in Sydney, Australia. LX services include full turnkey design, electronics, hardware, software and firmware design. LX specialises in embedded systems and wireless technologies design. www.lx–group.com.au
Published by LX Pty Ltd for itself and the LX Group of companies, including LX Design House, LX Solutions and LX Consulting, LX Innovations.