Kickstarting electronic products: How Crowdfunding Works
Dec 21, 2012
One of the most challenging things about developing a new product used to be where to get the funds. Product development usually involves considerable development fees for industrial design, engineering, programming, prototyping, and tooling. Once in the manufacturing stage, you'll then have to apportion a substantial budget to prepay the first production run.
Finding these funds can be a daunting task.
If you build it they will come
Luckily crowdfunding websites such as Kickstarter and Indiegogo are quickly becoming a popular platform for entrepreneurs who have a wealth of ideas but not, well, the wealth. These platforms allow startups with an idea to pre-sell their yet-to-be-manufactured product to people who have enough faith in the product and the team behind it to vote with their money. If the project does not reach the target fund by the deadline, then backers (usually) get their pledges back. In that sense, the site also serves as a test market: if nobody is interested to back for your idea then you’d best think twice about it.
Interestingly, crowdfunding is generating so much buzz that some start-ups are using the platform not so much for the money as to gain market exposure, build a brand, and get valuable feedback from all its potential early-adopters.
One of the biggest funding successes so far is the Pebble a customizable watch that connects to the iPhone or Android smartphones via Bluetooth. It’s funding goal of $100 thousand was met within hours, and when they closed in mid-May they had received an unprecedented $10 million in pledges. Unfortunately the product is not yet a shipping success, after moving the date back a couple of times the firm now declines to set a firm date, even though this startup had been working on it already since September 2008.
Once you’ve worked out (most) of the bugs during prototyping and are ready to start producing, it’s prudent to do a small pilot run for field testing before producing in the thousands. Distribute the product to a group of friends and supporters and collect user feedback. It’s critical that the final mass manufactured product is safe, reliable, and does what it’s supposed to do—or risk epidemic failure and have your backers clamoring for your head.
Raising funds to back your project may have gotten easier, but realize that funding is but a small piece of the very complex product development puzzle. Expect developing a new product to be inherently rife with challenges ranging from design, system engineering, component selection and pricing, debugging hardware, certifications, manufacturing to quality control.
We should know; we’ve been sidestepping these roadblocks on behalf of our clients for 12 years.
Titoma helps companies get their product to market fast cost effectively by engineering in Asia. We are a one-stop electronic design and manufacturing company with Western engineers that are serious about protecting our client’s IP. Should you decide to go the crowdfunding route, we can provide you with everything you need to develop a solid working prototype ready for mass manufacturing in Asia.Contact us today
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