Monday, July 16, 2012

Lessons in Entrepreneurship: Pebble's $10MM Raise Via Kickstarter

By now, you may have learned about Pebble's record smashing $10MM raise through the Kickstarter crowdfunding site back in April 2012.  It is certainly a case study worth sharing with other aspiring entrepreneurs on the fundraising trail.

First a little bit about Kickstarter.  Kickstarter is one of the pioneers in the crowdfunding space, helping artists and entrepreneurs raise donations for their various startup projects.  Since Kickstarter launced in April 2009, it has created a marketplace where over 2,000,000 people have financially backed over 24,000 projects, helping them to raise in excess of $250 million in the aggregate.  It used to bias creative projects from artists (in the $5,000 project range), but startup companies were soon to follow and the average amounts of funds secured has increased over time. 

Pebble's $10MM raise, eclipsed Kickstarter's $10,417 average funding size and blew through the company's original $100,000 request.  Pebble had hit their original $100,000 goal within two hours of launching their campaign, hit $1MM in just over 24 hours, and ultimately ended up at their $10MM raise within a month of kicking off their project on Kickstarter (before voluntarily shutting off the spigot).  And, did I mention, they only offered sample products to their contributors, and didn't have to give up one penny of equity in their business, keeping 100% ownership for themselves. You can check out Pebble's fundraising page on Kickstarter, for more information.

The goal of today's lesson is to figure out exactly how they did that.  First of all, they had a cutting edge product that captured the consumers imagination.  The Pebble watch is basically a product right out of the Dick Tracy comics.  It ties a consumer's iPhone or Android enabled smart phone to their wrist watch via Bluetooth wireless technology.  Now you could keep your phone in your pocket, and use your watch to read text messages, control your music and access GPS enabled applications while working out.  Who wouldn't want one of those!  And, the first-run of these watches were promised to anyone that donated monies to their campaign.

Secondly, they just didn't talk about their exciting new product in words.  They took the effort to build a terrific video, that helped to sell the story in pictures (which you can see here, on their Kickstarter page):

Thirdly, the company's founder & CEO, Eric Migicovsky, had a strong background of his own.  He was a former employee at Blackberry, working on their smartwatch initiatives, and he was a graduate of the highly successful Y Combinator accelerator.  This track record and experience obviously provided an additional appeal to investors.

But, perhaps the most important thing Pebble did was to coincide the launch of their Kickstarter fundraising project, with a well-timed feature article about their product in Engadget, the heavily-read blog for hot new tech gadgets.  The article not only provided a rave review of the product, but it mentioned that Pebble was raising new funds through Kickstarter, including a link to the fundraising page.  The article helped accomplish two goals: (i) it created excitement for Pebble's new smartwatch; and (ii) sparked investor interest in their funding (from an empassioned based of techies, that would further fuel the viral buzz around the product and the funding as they got involved with the company).  Genius!

Pebble is more the exception, than the rule, in terms of what to expect from your crowdfunding initiatives.  But, it is certainly the blue print on how to create your best odds for success (e.g., exciting product + free giveaway + snazzy video + targeted PR buzz + credible team). 

And, it looks like Pebble will not be alone in the multi-million dollar club on Kickstarter.  Keep your eye out on Ouya, an Android-enabled video game console for televisions, which has already raised $5MM on Kickstarter with 23 days still to go.

For future posts, please follow me at:  www.twitter.com/georgedeeb.

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