You may have heard of Kickstarter, it is crowd-sourced fundraising website for businesses of all shapes and size. The concept is simple: an organization proposes a project on the site, and sets a monetary goal. Then consumers vote with their wallets until the goal is met. If you don’t meet the goal, you don’t get the cash. If you do, you’re in business. Everything from funding the purchase of professional ovens for bakeries, to independent films have been funded using Kickstarter campaigns. But none has been as successful as the efforts by the makers of the Pebble watch.
Recently, a total of $10 million was raised as start-up capital via Kickstarter for a small Palo Alto-based watch company which makes what's called the Pepple watch. Those funds will be used in part to fulfill the 75,000 requests for watches that Kickstarter contributors “invested” in the company. It is the most financially successful fundraising campaign in Kickstarter history.
It askews the traditional notion of fund-raising, asking friends and family, and venture-capitalists to fund fledgling companies. Eric Migicovsky, the 25-year old Canadian-born entrepreneur behind the Pepple watch had tried raising money prior to Kickstarter, but reportedly was finding it harder than expected to raise needed funds. A group of angel investors had invested $375,000, but not enough to pay for a significant production run.
The folks at Pepple set an initial goal of $100,000 to be crowd-funded on Kickstarter. That goal was achieved in the first two hours on the site.
Dubbed a "smart watch," the Pebble watch syncs with IPhone and Android smartphones to deliver e-mail, text messages, and calendar alerts, among other things.
If the idea of crowd-funding $10 million sounds like a good thing, please note that too much of anything is not necessarily good. In fact, the Pepple watch has disproven the old notion that you can't have too much of a good thing.
After getting commitments for 75,000 watches, the Pepple team said “enough is enough” and announced that at 85,000 watches, they’d pull the plug on the campaign—which is essentially a system of pre-orders. The campaign is now complete, the product is sold out, and now the makers of the Pepple watch need to take that money, fulfill those orders, and make a real business out of all that dough.
Let’s hope they spend it wisely, and make all those “investors” glad they helped kick-start this business.