By Kathryn Hawkins
These entrepreneurs blew past their funding goals by skipping the investors, the banks, and their own bank accounts. Here's how they launched successfully with the help of cash from future customers.
5 Cool Crowdfunded Business Ideas
5 Cool Crowdfunded Business Ideas
1. The iPod watch
Scott Wilson, founder of the Chicago, Ill.-based design studio MINIMAL, typically develops products for large companies. But when they all passed on his prototype for an iPod Touch watch kit, he decided his idea was too good to give up on.
He took his prototype to Kickstarter, and thanks to links from big tech blogs like Gizmodo, he raised over $941,000 in advance orders. Kickstarter provided "instant global validation" for the idea, says Wilson. "Nothing shows the strength of a concept like consumers opening up their wallets to buy your product even before you've manufactured it."
5 Cool Crowdfunded Business Ideas
2. Diaspora*
Last year, four New York University students pledged to build Diaspora*, an open-source social network to compete against Facebook. The students launched a Kickstarter campaign to raise $10,000 — an amount that would enable them to spend three months working full-time on the code for the new social network. Anyone who made a pledge would receive a CD containing Diaspora's software program when it was completed. Thanks to a combination of press from major news sources like The New York Times and good timing — Facebook had just experienced a huge backlash for privacy violations— the students were able to raise over $200,000 for the project.
5 Cool Crowdfunded Business Ideas
3. Brooklyn Soda Works
A Brooklyn, N.Y. couple, Caroline Mak and Antonio Ramos, began making artisanal sodas in their apartment in 2009. Friends loved their quirky flavors, such as cucumber-lime-sea-salt, so the couple decided to turn their DIY-soda-making enterprise into a legitimate business. They needed just a few thousand dollars for start-up equipment, but they knew most banks wouldn't risk giving them a loan.
Instead, they sold pre-orders of soda bottles and swag through Kickstarter, and raised $2,849 in their 40-day project period — more than double their target. Since launching the business last year, they've hired three employees, tripled their sales, and sold drinks to renowned restaurants like Blue Hill and Porsena. "To this day some of our original Kickstarter contributors are regulars of ours, and that has been one of the most gratifying things about starting Brooklyn Soda Works," says Mak.
5 Cool Crowdfunded Business Ideas
4. BucketFeet shoes
Aaron Firestein began drawing unique designs on canvas shoes while in college, and soon realized there was a market of interested buyers for his creations. In 2010, Firestein and his friend Raaja Nemani used crowdfunding platform ProFounder to raise $60,000 to cover their start-up costs in advance of their launch. "ProFounder makes the process easier, but isn't the final answer," says Nemani. "Entrepreneurs need to be very proactive and not assume their family and friends will just throw money at them. I would recommend focusing on the 10 to 25 people that are really interested in your business. We originally reached out to over 250 people, but raised our $60,000 with only 33 investors."
5 Cool Crowdfunded Business Ideas
5. Peerbackers
Sally Outlaw of Palm Beach, Fla. used crowdfunding to launch — of all things — a crowdfunding site. She created a limited prototype of her new crowdfunding site, Peerbackers.com, and used it to raise the initial $3,500 she needed to finalize the design and development of the fully-featured website. "The rest of our funds came from other sources," she says. "We just wanted to crowdfund to get first-hand experience so we could be in the best position possible to advise those who use our platform." The fundraising effort involved time and commitment: "It's not a 'post it and forget it' proposition, but if you are willing to dedicate yourself to the process and spend the time promoting your posted venture or product, you can absolutely be successful," says Outlaw.