Home security system a crowdfunding success
Blacksumac raises more than $260,000
In just one month, Ottawa’s Blacksumac has gone from wallflower to belle of the ball.
The firm’s new Piper home security monitoring system has become a smash success on crowdfunding website Indiegogo, raising more than $260,000.
More than that, it took the company’s relatively unknown device and exposed it to a world of eager consumers with deep pockets. The company, which employs nine people locally, has gone from begging to draw attention to Piper, to answering calls from some of the largest retailers in North America.
“We’ve sold a quarter-million-dollars worth of product,” said Russell Ure, president of Blacksumac. “This product is not available in the market today. Imagine if it was?”
Blacksumac plans to start shipping the first commercially available Piper units in November. The crowdfunding campaign, which officially ended Friday night, was aimed at ramping up orders so the company could turn a small profit and begin manufacturing the units.
Piper plugs into a wall socket in a home, office or apartment, then connects to a Wi-Fi network and beams live high-definition video of that space to an application the Piper user runs on a cellphone. Users can see what’s going on at home, speak through a live, twoway microphone and speaker built into the unit, activate a high-pitched alarm and even tie into an existing home automation system. That would allow Piper users to adjust a thermostat or dim lighting remotely.
Blacksumac was using Indiegogo to pre-sell a handful of the units in an effort to help raise $100,000. Piper smashed through its targeted goal.
More than $75,000 worth of pre-orders came through in the last three days of the fundraising campaign.
The success underlined why so many startups are turning to the world of crowdsourcing to expand their businesses.
Ure said crowdfunding campaigns help companies like his who have a niche product that doesn’t seem to fit with conventional markets.
He said one of the first questions investors ask is, “How have sales been?” If the company doesn’t have sales, then the conversation typically turns to, “How do other products in the market sell?”
If there are no other products in the market to act as a yardstick, then raising funds through traditional channels is immensely difficult.
“When you talk to any investor or venture capitalist, they are extremely cynical,” said Ure. “Their viewpoint seems to be, ‘What has worked?’ Not, ‘What’s going to work?’”
With thousands of pre-orders for Piper in his pocket and profit from those to help the company continue to expand, Ure believes he will have a much easier time securing future rounds of investment from more traditional avenues.
The Blacksumac story is only one of many that Indiegogo is working to push out into the open in a bid to get more businesses using crowdfunding to raise cash.
Indiegogo is one of a handful of online services, the most notable being Kickstarter, that have popped up to help small companies “crowdfund” their projects. Indiegogo works on a “campaign” system: Blacksumac would not have collected the funds it did if it hadn’t met or exceeded its $100,000 US goal. The penalty for missing a crowdfunding campaign, which sees Indiegogo take a bigger cut, is aimed at encouraging companies to set realistic goals.
The crowdfunding platform, founded in 2007 in the United States, has embarked on a crossCanada awareness campaign aimed at meeting with startups, businesses and other organizations, and explaining the benefits of crowdsourcing funds.
Ayah Norris, Indiegogo’s community management lead in Canada, started travelling from Halifax on Monday.
She plans to hit nine cities over the next month. Her last stop will be in Vancouver on Oct. 1.
While stopping to talk to Ottawa businesses on Wednesday, she underlined the success that Blacksumac has seen and pointed out that crowdfunding isn’t just for businesses like that.
The Mayfair Theatre on Bank Street used the crowdfunding platform to raise more than $22,000 for a new digital projector. It had set out to raise $15,000. The Great Canadian Theatre Company, an Ottawa not-for-profit professional theatre, raised more than $25,000 to help cover cost overruns at its new theatre on Wellington Street near Holland Avenue.
“Canada is our second-largest market and we are seeing a lot of growth. In the past two years, the number of campaigns has increased by more than 200 per cent,” said Norris.
The crowdfunding website has teamed with Startup Canada, a national organization that lobbies on behalf of entrepreneurs, to target markets and businesses that could benefit from crowdfunding, like Blacksumac has.