Crowdfunding platforms such as Kickstarter and Indiegogo have become an essential tool for established startups and entrepreneurs trying to understand the reception of their products and find support for their brands. While these sites still house many proposals dreamt up in bedrooms and garages, they have seen an influx of products from venture backed companies which don’t seem to be using these sites for funding.
“If we simply wanted money then we could cut out Kickstarter,” said Proud, referencing his company, Hello Inc.’s 5% cut of all funds raised by any project. ”It’s not the most efficient way to get money. But it is the best way to reach people.”
In late July, Proud used Kickstarter to debut his company’s first product, a sleep-tracking device that sits next to your bed called “Sense.” Addressing a crowd before the product’s debut, CEO highlighted a main dilemma for fledgling consumer electronics startups: how do you generate public interest in your product if your company only just got going? Trying to launch a product after just announcing your company is impossible.
Jibo, a Boston-based social robotics firm, had a similiar experience with Indiegogo last month. CEO and founder Cynthia Breazeal noted that partnering with Indiegogo allowed for the company to test the market readiness of its product and get the word out to potential developers. Jibo has already raised more than $1.4 million in three weeks, crushing its original $100,000 goal.
Since Indiegogo’s founding in 2008, CEO Slava Rubin noted that there has been an evolution in the types of projects listed on the site. These days there are more “expert” companies.
“The spirit of these crowdfunding campaigns have become a tremendous accelerator,” Breazeal said. ”These are not just cash desiring guys in garages, who need the money to build, that are doing it.”
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