Businesses, Brushed Off by Banks, Look to Customers for Funding
Bia Sport already had a significant target customer base as well as backers. However, when the company went to raise its seed round of financing, investors wanted to see that there was a market for the product.
"I wish that we could say that we approached Kickstarter as this brilliant market strategy," says Cheryl Kellond, co-founder of Bia Sport. "We went there a little bit as a last resort."
That said, Kickstarter was a good platform to "prove to investors that we were developing a product that not only was there a market for, [but] that we could access that market and get them to buy," she says.What Kellond didn't expect was the amount of education she and her partner had to do about crowdfunding. "We were very fortunate. Our product appeals to a very defined set of customers -- women who want to swim, bike and run. They're also socially connected in reality and very connected through social media," Kellond says. "The biggest barrier we hit was explaining the crowdfunding model" to key industry bloggers and enthusiast Tweeters. Although the campaign was successful, Kellond is less interested in the equity-based crowdfunding model. "For this company, I would not. The kind of money we want to raise for our platform is really more amenable to venture capital," she says, as well as the potential to sell directly. "We've got a tremendous asset in our 2,000 Kickstarter backers, and 4,000 put their name on the waitlist since the Kickstarter campaign closed," she adds. "[We have] a lot of potential to a group of evangelists to do direct sales." And while an enthusiast backing a campaign is one thing, should they be investors in a company? That's bound to create, at the very least, some control conflicts. But perhaps in some cases it will be more beneficial than overwhelming. Ryan Payton, founder of Camouflaj, a small video-game developer located in Bellevue, Wash., was able to garner more than half a million through a Kickstarter campaign to help fund its creation of mobile game Republique.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV