How to beat your crowdfunding goal
W here do great business ideas come from? Increasingly, from crowdfunding. When entrepreneurs turn to Kickstarter, Indiegogo or similar platforms to crowdsource their new startup or project, they are counting on old-fashioned democracy. Friends, aficionados, hobbyists and other early adopters vote with their wallets, signing up for new products or other “perks” that help these companies get off the ground without the aid of angel investors or second mortgages.
By definition, the most popular projects and causes tend to raise the most money. That got noticed by two 26-year-old friends from Richmond Hill, Ont., Mike D’Agostini and Christopher Engolo. Last year’s most successful Kickstarter project, the “Coolest Cooler,” a redesigned beer cooler with a built-in blender, light, can opener, USB charger and Bluetooth speakers, set out to raise $50,000 to fund production — and ended up raising US$13.3 million from 62,642 backers.
Its success prompted D’Agostini, a Seneca College business grad, former systems administrator for a pension fund, and avid do-it-yourselfer, to update another tired household product. He enlisted the help of Engolo, a former electronics store manager who had moved to California four years earlier to develop new products, such as a portable driving mat for golfers called “Range to Go.” (A third co-founder, Alex Brown from Barrie, Ont., looks after administration and corporate development.)
With the aid of designers and engineers Engolo arm-twisted into the project, they created the Coolbox last month, which D’Agostini calls “the world’s smartest toolbox.”
Designed to retail for US$299, the Coolbox emerged on Indiegogo on Jan. 26 with enticing options for buyers, such as a chance to be one of the first to claim a toolbox for US$169, or complete with a full set of tools for US$209. The goal was to raise US$50,000 in a six-week campaign. It raised that much the first day and doubled it on the second day. By the end of last week, the Coolbox had raised US$165,000.
If the team was bowled over, it doesn’t show. “I was excited when we hit six figures,” D’Agostini says. “Everyone had a higher goal in mind” than the $50,000 target, Engolo admits.
They’re now augmenting the campaign with new offers, video updates, adding features to the product based on feedback from the crowd, and trying new ways to reach the target market of contractors and DIYers who have probably never been on Indiegogo. “We’re really trying to raise $1 million,” Engolo says. “The more we raise now, the easier it will be to get distribution” when the product becomes available next summer.
“This is just the start for us,” Brown adds. “We know that the more we bootstrap this, the higher our valuation would be, [if they sought investors or buyers]. We won’t have to give away a large chunk of equity in the business.”
What makes the Coolbox cool? Engolo and D’Agostini reimagined the box for the work-hard, play-hard digital generation. Besides the tool storage you’d expect, it features stereo speakers, flowthrough AC power with three outlets and an extension cord, a 5000mAh battery to run small power tools (or charge your phone) on the go, LED lighting inside and outside, a removable whiteboard for planning your projects on the fly, and a tablet stand. Plus, it has wheels and a handle for easy hauling, two USB ports, an LCD clock and a bottle opener.
While the Coolbox is still an order of magnitude distant from the success of the Coolest Cooler, $200,000 worth of pre-orders seems about to change the lives of its founders. Five members of the team live and work together (and are growing distinctively Canadian playoff beards) in a two-storey house that Engolo rents 10 blocks from the ocean in Huntington Beach, Calif.
But because of the demand uncovered by their crowdfunding campaign, the group no longer anticipates a long, hard haul to land retail distribution. Home Depot has already been in touch, wanting to know when it can get product on its shelves. The question is whether to sell at both Home Depot and archrival Loews, or to hold out for a sweeter, exclusive deal with just one national chain, Engolo says.
There are still only two Coolboxes in existence: a non-working prototype, and a working one, sourced from China. Together, they represent an investment of US$40,000, say the founders — not including the sweat equity earned by all the team members and designers working without pay.
Besides potential distributors, the Coolbox team is hearing from prospects who want to see smarter containers for other uses, such as holding camera equipment or painting supplies. “We think there are a lot of different applications to explore,” D’Agostini says.
But right now awareness is the big challenge. Last week, the team was scheduled to meet the one man who could make its product even cooler. Through a friend who knew his agent, they reached out to Hollywood actor Tim Allen, “Tim the Tool Man” from the long-running 1990s TV series Home Improvement. “We think he’s the way to reach the blue-collar audience,” Engolo says.