Secret Benefits of Crowdfunding


Just 30 days after launching a Kickstarter campaign in August, Cameron Gibbs and David Gengler raised $652,000 to begin manufacturing a padlock that can be opened and closed from 15 feet away via Bluetooth. But the crowdfunding delivered far more than just money for their startup, FUZ Designs. The money-gathering crusade spawned widespread coverage on tech blogs, which led in turn to hundreds of offers of help with marketing, design, manufacturing, and distribution.

“We always thought of the marketing and the money, but we didn’t realize how it would open the door to other opportunities,” says Gibbs. FUZ’s Bluetooth padlock will ship this spring, and the company is now planning a second campaign to develop a Bluetooth bicycle lock.

Some $5.1 billion was delivered to startups and others through crowdfunding platforms in 2013, according to industry consultant Massolution, making it a rich source of cash. But 70% of entrepreneurs rank other benefits higher, says Richard Swart, a crowdfunding researcher at the University of California at Berkeley. They cite rapid input on strategy, messaging, and marketing, as well as help in finding distribution, investors, and employees. Money is typically listed as fourth or fifth most important.

Take Daniel Haarburger, a Stanford student entrepreneur who collected $32,000 in eight days on Kickstarter in 2013 for a band that attaches smartphones to bicycle handlebars. That won him 3,250 supporters, who have become an unofficial focus group. Haarburger received ideas for future iterations (a mount for a motorcycle) and changes to the design (adding a bottle opener). He also connected with 30 people who volunteered their expertise in packaging, sales, graphic design, marketing, and manufacturing. Finally, the campaign introduced him to his most valuable adviser, Michael Rosenblatt, a former product development manager at Apple, who gave him tips on product testing and other functions, and connected him to people at Apple and other companies.

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Source: Fortune | Jennifer Alsever

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