The founder of Top & Derby is a passionate and knowledgeable fan of the multibillion-dollar industry that helped launched his Winnipeg-based company’s stylish canes, and is now funding a line of fetching compression socks. So I asked him, via email, to tell me about his five favourite crowdfunding campaigns. And got…this:
(Don’t be daunted by all the scrolling. It’s one of the best primers on crowdfunded success stories I’ve read. Plus, there’s a strangely relevant Mr. Rogers remix at the end.)
1. Pebble Watch (pictured below)
For bringing crowdfunding to the masses
Up until the spring of 2012, crowdfunding had some success stories, but no campaign had ever raised "real" venture capital. More specifically, any amount that surpassed the 10 million dollar mark.
Along came Pebble – a hardware company that had created a consumer product that only had a mild response, at best, from venture capitalists. Before launching their Kickstarter campaign, Pebble had raised $375,000 in seed funding with notable angel investors, such as Tim Draper of Draper Fisher Jurvetson. However, after requiring more funding, the company was unable to raise additional funds and generate interest from investors. In the way that the Beatles were turned down from multiple record labels, Pebble was turned down by multiple investors. So they turned to crowdfunding. Once they launched their campaign, there was no way to forecast the storm that was about to hit them; a healthy goal of $100,000 was drastically surpassed to the tune of more than $10 million, making it the highest-funded campaign in history.
Then, this past spring, Pebble hit Kickstarter to pre-sell the next version of their product. The campaign generated $20,338,986 on a goal of $500,000, with support from 78,471 backers…and Pebble reclaimed campaign-funding title.
Lesson learned: It is possible to form a new company, be disruptive in an industry, and compete against large players like Apple.
2. Oculus Rift (pictured below)
For being the first major acquisition of a business that was born through crowdfunding
Growing up, Palmer Luckey was always interested in electronics and technological hardware. Often, he spent his time tinkering with different pieces of hardware and rebuilding them to suit his needs. When Luckey was frustrated with the inadequacy of the existing head-mounted virtual reality displays that he had for gaming, he decided to create his own prototype for a new headset. In 2011, at the age of 18, he built a prototype in his parents’ garage of what eventually became the Oculus VR. Ten months and six prototypes later, he created what he called the “Rift,” which was intended to be sold as a developer kit to other virtual reality enthusiasts on Kickstarter.
When the Rift hit Kickstarter, it was an instant success. As the campaign grew and got a great deal of media exposure, Oculus VR became the face and future of virtual reality. In the spring of 2014, only about a year after launching his campaign, and while in its infancy, Palmer Luckey’s company was acquired before it had even created a commercial, consumer product that was available to the general public through retail channels. Through Facebook’s acquisition of Oculus VR, the company was purchased for over $2B in both cash and facebook stock. The acquisition marked the first time that a company had been launched through crowdfunding and acquired shortly after by a major corporation. Although VR headsets are currently used for playing video games, watching movies and experiencing new environments, VR headsets, like the Rift, will continue to evolve into a consumer product that will eventually be integrated into all of our daily lives and social interactions.
Lesson learned: Crowdfunding can be unpredictable and a catalyst for innovation that has a major impact on an industry, while creating an exit opportunity.
3. Reading Rainbow (pictured below)
For showing how social proof can help to spread a mission
Goal: $1 million
In the spring of 2014, LeVar Burton – best known for his work on both Star Trek and Reading Rainbow – started a Kickstarter campaign to revive the Reading Rainbow show. However, through his campaign, he was driven by a mission – to help America get back to high literacy rates by creating a free, educational version of the show for schools to use. Touched by his campaign, many millennials who grew up on Reading Rainbow bought into Burton’s mission. In less than 12 hours the campaign reached its $1 million goal. As the campaign grew through social proof – the psychological principal where large groups of people conform to a choice because other people are behaving in a similar fashion – other celebrities got on board, spurring more growth.
Lesson Learned: Crowdfunding campaigns can not only be used to raise capital, but also to spread awareness about social missions and solve problems.
4. Veronica Mars (pictured below)
For proving that networks are not always needed (nor right)
Goal: $2 million
When Veronica Mars – the mystery drama TV series – was cancelled after three seasons in 2007, most of its 2.5 million viewers understandably thought they would never see or hear about the show again. Although it had a great following and was nominated for many awards during its short history, Warner Bros. Television cancelled it. Rob Thomas, the creator of the show, had written a feature film script continuing the series, but Warner Bros. decided not to fund that project, either. Fast forward to March 2013: Thomas and the show’s star, Kristin Bell, launch a Kickstarter campaign to produce the film. In less than 10 hours, Bell and Thomas had achieved their $2 million goal. The campaign continued to see success, and one year after launching their campaign, Bell and Thomas released the Veronica Mars film.
Lesson learned: Sometimes major corporations think they know what consumers want and need, but they can easily be proven wrong when loyal fan bases show that they are willing to pay for a niche product through a new channel.
5. Flow Hive (pictured below)
For democratizing beekeeping and bringing innovation into the honey harvesting process
Bees are an essential part of our ecosystem. But beekeeping is a unique art that doesn’t allow people to have their own bee hive, at least in the same way they have tomatoes in their garden. Along came the Flow Hive – a significant new innovation in the beekeeping space. The Australian duo, who created the hive, had worked on the innovation for a few years before taking it to market. They recognized how messy and disruptive the process of harvesting honey was, so they decided to improve upon it. Their new innovation allows the cavities of the hive’s synthetic combs to be filled with honey by bees then drained when full. Most importantly, this process doesn’t disrupt the bees, and it allows general consumers to have their own personal supply of honey without having to invest in all the traditional equipment required for bee keeping. Although the founders had a modest goal of $70,000 to bring their innovation to market, the global demand for their product shocked them. In the spring of 2015 they surpassed their goal, achieving a final total of $12 million to launch their product.
Lesson learned: Crowdfunding can allow new products and innovations to be launched, which people don’t even realize they want or need. It’s a result of the classic Henry Ford saying: “If I asked people what they want, they would have said ‘build me a faster horse.’ ”