There was a time when entrepreneurs had to dip into their personal savings, take out home equity loans or borrow from family members or friends to get the money they needed to launch new commercial ventures, but the information age has changed things considerably. Startup funds today can be provided by alternative lenders, business incubators or angel investors, but many entrepreneurs choose instead to take their messages directly to the public.
Crowdfunding websites like Kickstarter, GoFundMe and Indiegogo have risen from obscurity to become a major source of new business funding in just 10 years, and the allure of finding investment capital from thousands of ordinary people has attracted entrepreneurs from every corner of the marketplace. Inventors, entrepreneurs and artists have raised more than $3 billion from about 14 million backers on Kickstarter alone, but only 36% of the website’s campaigns reach their targets. Succeeding on websites like Kickstarter takes more than a good business idea. It also requires a hook of some sort that will resonate with a wider audience.
Getting a commercial venture up and running takes after a successful crowdfunding campaign requires quick thinking and swift action. Opportunities are fleeting, and new businesses must be able to move quickly if they are to succeed. In some situations, services offered by companies like Western Union offer a speedy and efficient solution. When transferring money for the first time, Western Union customers often ask what is a MTCN number? MTCN stands for Money Transfer Control Number, and it is a 10-digit reference code that identifies every fund transfer. MTCNs allow senders to keep track of payments, and they must be provided by receivers when transferred money is picked up.
The Rise and Fall of Pebble
Pebble Technology set a new Kicksterter record in 2012 when it surpassed its $100,000 goal in just one day and went on to raise $10.3 million. The Palo Alto-based company attracted tech savvy backers with the promise of wearable smartphone technology for less than $100, and it delivered on its promises by introducing the world’s first Android and iOS compatible smartwatch in 2013. Pebble founder Erick Migicovsky came up with the idea while studying at the University of Waterloo.
Pebble smartwatches were a roaring success, and the company returned to Kickstarter in 2015 to launch its second-generation product. That campaign was also successful, but 2015 was the year that the smartwatch landscape saw a paradigm shift with the introduction of the Apple Watch. At the peak of Pebble’s success, Migicovsky reportedly turned down a $740 million offer for his company from the Japanese watchmaker Citizen. That turned out to be a mistake. A year or so later, the company was sold to Fitbit for less than $40 million. Fitbit also agreed to issue refunds to Kickstarter backers who never received their smartwatches.
Cute Pets for the Win
Not all successful crowdfunding startup campaigns are launched by companies with innovative products or ideas. Husband and wife team Rich and Vicki Fulop launched a Kickstarter campaign to get Brooklinen off the ground in 2013, and the couple raised over $236,000 from 1,733 backers. Brooklinen’s products were not revolutionary, novel or unusual, but the company’s marketing strategy was. Brooklinen attracted backers in 2013 and continues to draw in customers today by posting images of cute dogs and cats lying on beds covered in their sheets. This deceptively simple marketing strategy has helped the company to post impressive growth figures year after year, and it now generates annual sales of about $50 million.
No Logos Allowed
New Zealand native Tim Brown and Silicon Valley tech guru Joseph Zwillinger also turned to Kickstarter for startup capital. In 2014, the entrepreneurial duo raised 119,000 by offering backers stylish and comfortable wool sneakers that bore no logos or obvious branding. The $95 Allbirds shoes became a hot commodity and were seen on the feet of influencers including Yahoo CEO Marissa Mayer and Google co-founder Larry Page.
This led to retail partnerships with Nordstrom, Shake Shack and Outdoor Voices, and the company has even produced eye masks for Air New Zealand. The Allbirds product line has grown to include shoes made out of eucalyptus fibers and flip-flops crafted from sugar cane and bioplastic foam, and the company is now worth about $1.4 billion.
A $2 Billion Idea
Palmer Luckey was just 20 years of age when he had the idea for a product that later became known as the Oculus Rift. The virtual reality headset was one of the earliest crowdfunding success stories when it raised more than $2 million from 9,500 backers in 2012, but that was just the beginning. Luckey had his idea at a time when the entertainment sector was experiencing unparalleled growth, and virtual reality was the market’s hottest trend. The gaming headset garnered a lot of media attention, and it also attracted interest from some of the tech sector’s biggest names. In 2014, Oculus VR was acquired by Facebook, and Luckey walked away with a cool $2 billion.