Kicked into High Gear

En­trepreneurs are on a roll with crowd­fund­ing

Business Traveler (USA) - - FRONT PAGE - By David Weiner

Ed­i­tor’s Note: Crowd­fund­ing is a way to fund projects or en­ter­prises by rais­ing money from a large group of peo­ple (the crowd) as an al­ter­na­tive to the tra­di­tional sources of fi­nan­cial back­ing.

While the name crowd­fund­ing has been around for only about a decade, the con­cept goes much far­ther back in his­tory. Crowd­fund­ing saved the Bank of Eng­land in the 1730s, when de­pos­i­tors made a run on the bank that was founded in 1694. Un­til con­fi­dence in the pound was re­stored, Lon­don’s mer­chants crowd­funded their own cur­rency.

For a more re­cent ex­am­ple, visit the Statue of Lib­erty in New York har­bor. In 1885, the mon­u­men­tal pedestal upon which she sits was crowd­funded by 160,000 donors in a news­pa­per-led cam­paign af­ter gov­ern­ment fi­nanc­ing for its in­stal­la­tion fell through.

Most re­cently, crowd­fund­ing has rock­eted into the pop­u­lar con­scious­ness thanks to hun­dreds of In­ter­net plat­forms (‘reg­istries’) which, for a fee gen­er­ally be­tween 5 and 15 per­cent, bring to­gether peo­ple who have the ideas (known as the ‘project ini­tia­tors’) with a com­mu­nity of sup­port­ers. In 2014, crowd­fund­ing world­wide raised over $16 bil­lion, which more than dou­bled to an es­ti­mated $34 bil­lion in 2015.

Artists and mu­si­cians use the crowd­fund­ing model to fi­nance con­cert tours, books and films. And the phe­nom­e­non has spread into all sorts of other en­ter­prises, with ini­tia­tors look­ing for fund­ing for ev­ery­thing from launch­ing cloth­ing lines to get­ting breast aug­men­ta­tion.

In fact, ac­cord­ing to a re­port on the per­sonal fi­nance web­site Econible, one en­tre­pre­neur, Zack Brown, set out to raise $10 to make a bowl of potato salad. But his cam­paign went vi­ral and gen­er­ated $55,000 from over 6900 back­ers. Brown ended up throw­ing a potato salad party with over 3,000 pounds of pota­toes.

Brown’s spud wind­fall came courtesy of Kick­starter, a global plat­form which raised over $400 mil­lion in 2014. Another Kick­starter alum is David Weiner, founder of Pri­or­ity Bi­cy­cles. Dave shares his story of a pas­sion for two-wheel­ers and how crowd­fund­ing con­tin­ues to help him mar­ket his prod­ucts to the world.

The Kick­starter Story

Tech­nol­ogy and so­cial media are chang­ing the art of busi­ness in a big way. Thanks to crowd­fund­ing plat­forms like Kick­starter, the de­moc­ra­ti­za­tion of in­di­vid­ual dol­lars is em­pow­er­ing small com­pa­nies with big ideas to com­pete on a large scale.

Kick­starter has given birth to a new wave of busi­nesses, where en­trepreneurs can turn to the Kick­starter com­mu­nity to raise cap­i­tal for prod­uct devel­op­ment, pro­duc­tion and ex­pan­sion, in­stead of us­ing pri­vate eq­uity and other forms of in­sti­tu­tional in­vest­ment.

Per­son­ally, I’ve found the Kick­starter com­mu­nity to be in­cred­i­ble. With­out this com­mu­nity I don’t think my small com­pany would have been able to grow so fast – all while re­ceiv­ing so much valu­able prod­uct feed­back from its cus­tomers.

Com­pared to tra­di­tional fundrais­ing, crowd­fund­ing via Kick­starter of­fers cap­i­tal fund­ing, a feed­back-driven cus­tomer base, and full re­ten­tion of own­er­ship and con­trol of your new busi­ness.

I never thought it was pos­si­ble to launch a small com­pany that could com­pete with the big boys. In the old days, large com­pa­nies could launch new prod­ucts eas­ily and with­out much com­pe­ti­tion. Since they had the cap­i­tal, they could craft a catchy mes­sage and buy ex­pen­sive ads that smaller com­pa­nies couldn’t af­ford. This got them the eye­balls. Th­ese eye­balls turned into the sales. But thanks to Kick­starter, it’s now pos­si­ble to cre­ate mar­ket aware­ness and be­gin sell­ing new prod­ucts with­out heavy cap­i­tal by sim­ply re­ly­ing on the gen­eral pub­lic.

Build­ing the Dream

Grow­ing up I worked in a small bi­cy­cle shop. I was never into fast com­pe­ti­tion style bikes; in­stead I liked recre­ational bikes and also en­joyed help­ing oth­ers find the right bi­cy­cle that would fit their needs.

My dream at that time was to some­day have my own bi­cy­cle shop. As my ca­reer de­vel­oped, I worked for a large bi­cy­cle man­u­fac­turer be­fore go­ing into the soft­ware in­dus­try. I saw the soft­ware busi­ness trans­form from a small, pri­vately held startup to a larger, publicly listed com­pany.

As our small com­pany grew into a big com­pany, I watched the cul­tural land­scape change. In early 2014 I re­signed so that I could chase my dream of hav­ing my own bi­cy­cle shop. I had ma­jor de­ci­sions to make – first, how to make my prod­ucts in­no­va­tive; next, how to dis­trib­ute and sell them; and fi­nally, how to fund the ven­ture.

I had been think­ing about the de­sign con­cepts for this new bi­cy­cle com­pany for years. How­ever, mak­ing this new com­pany

Kick­starter has given birth to a new wave of busi­nesses

my“Pri­or­ity”was now the chal­lenge. Af­ter re­sign­ing my job I be­gan to use my free time to work on bring­ing my ideas and de­signs of recre­ational bi­cy­cles that were free of rou­tine main­te­nance to mar­ket. Us­ing a grease-free belt drive and gears/ brakes that were in­ter­nal to the hub, I had the ba­sic recipe.

I knew that to open a brick and mor­tar store would re­quire ex­ten­sive cap­i­tal and time that I didn’t have, plus it would limit the ge­og­ra­phy of cus­tomers my new com­pany could reach. There­fore, start­ing as an on­line only re­tailer seemed like a low over­head way to en­sure I could reach cus­tomers around the world, and of­fer bet­ter prices.

Be­yond that, I wanted this com­pany to lis­ten to its cus­tomers for di­rec­tion, not a board of direc­tors. So in mid-2014 Pri­or­ity Bi­cy­cles launched on Kick­starter. The goal was to see if oth­ers liked my idea of low main­te­nance, af­ford­able recre­ational bi­cy­cles.

Pri­or­ity Next

Fast for­ward to to­day: Pri­or­ity Bi­cy­cles is a suc­cess­ful com­pany with thou­sands of bi­cy­cles all over the world. In the last two years we’ve raised $600,000 via Kick­starter. Our small team wakes up ev­ery day know­ing that our“back­ers”make our jobs a re­al­ity. Back­ers are our Kick­starter donors; th­ese are the peo­ple who be­lieve in us enough to pre-or­der our prod­ucts (of­ten at a dis­count from MSRP) be­fore th­ese prod­ucts even ex­ist be­yond pro­to­type.

We spend our days lis­ten­ing to our thou­sands of back­ers talk­ing about how th they are en­joy­ing their bi­cy­cles, along with any feed­back they have and ideas for im­prove­ment. If any of our rid­ers have a prob­lem with their bike, it’s our job to fix it rig right away. Given that Pri­or­ity Bicy Bi­cy­cles only ex­ists on­line, our rep rep­u­ta­tion is only as good as our lat­est on­line cus­tomer rev re­view. This means the only way we can sur­vive is with 100 percen per­cent cus­tomer sat­is­fac­tion. We know that if we sim­ply lis­ten to our back­ers, an and make de­ci­sions that they feel are right, t that we’ll con­tinue to re­ceive their back­ing, a and that they will also spread the word about our com­pany, telling their friends, and hope­fully in­creas­ing our pool of fu­ture back­ers. Since we use so­cial media as our main form of com­mu­ni­ca­tion, word can spread very fast. As we get ready to launch our third Kick­starter cam­paign for the next bike, the“Pri­or­ity Coast,”the ul­ti­mate low main­te­nance, rust free beach cruiser, I’ve been get­ting a lot of ques­tions about why we are go­ing back to Kick­starter. The sim­ple an­swer is that I couldn’t imag­ine a bet­ter way to launch a new prod­uct, or a bet­ter way to sus­tain and grow our com­pany.

Be­ing a crowd­funded busi­ness means that we’ll con­tinue to bring new ideas to our cus­tomers early and use crowd­fund­ing tech­niques and so­cial media to reach our de­sired au­di­ence. We’ll con­tinue to ask po­ten­tial fu­ture cus­tomers to“back”us, or sup­port our ideas by pre-or­der­ing our prod­ucts at a re­duced price. We’ll be hy­per­ac­tive on­line, fo­cus­ing on great cus­tomer ser­vice with the goal of build­ing the most loyal, happy rid­ers who be­lieve in our mis­sion, prod­ucts and val­ues.

I hope other young en­trepreneurs with strong vi­sion can uti­lize this con­cept to crowd­fund their busi­ness, new prod­uct or ser­vice. The fi­nan­cial and mar­ket­ing tools to be suc­cess­ful are at your fin­ger­tips; launch­ing a new busi­ness is eas­ier than it has ever been.Your po­ten­tial cus­tomers can fuel your growth if you’re will­ing to let them in to pro­vide valu­able feed­back. My ad­vice – don’t fo­cus on how to raise money, fo­cus on how to cre­ate in­no­va­tive and great prod­ucts, and then let the pub­lic de­cide. BT

Be­ing a crowd­funded busi­ness means that we’ll con­tinue to bring new ideas to our cus­tomers early

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