Jason Wincuinas
Jan 27, 2014

Crowdfunding: Can big brands play along?

HONG KONG - Crowdfunding might seem like an irrelevant trend to established brands. But aiming a regional marketing budget at a small tech firm’s innovative product development could pay off with an innovation halo, earned- and social-media enthusiasm and maybe even a new business model.

Kevin Leung demonstrates his Shuttr device at StartupsHK
Kevin Leung demonstrates his Shuttr device at StartupsHK

Kevin Leung had a problem, one he knew would be an issue throughout Asia. How can you hold your new daughter and your smartphone at the same time and still take a good selfie?

Sound silly? Maybe. But his idea for a simple little remote to click the shutter on the smorgasbord of digital devices in our lives proved a quick success. Leung started a company to produce the device. He sold his house and quit his job and turned to crowdfunding to cover the 'last mile' of cashflow and get the project in gear. After telling his story on kickstarter.com, things took off, and in fewer than 30 days he had exceeded his funding goal by more than nine times.

Leung lives in Hong Kong, but TV stations in the US picked up on his invention and highlighted it in news segments. A multitude of global tech and photography blogs also gushed about it, even before he had a production run. “We had momentum,” he said on a startup panel this past weekend, “even if maybe we made mistakes along the way.”

His story isn’t just about founding a new company; it’s about tapping into a cultural pulse. His invention, Shuttr, was simple enough and solved a common problem. That combination easily sparked imaginations. And therein lies the opportunity for brands.

This weekend StartupsHK, a startup company in its own right, hosted a conference to educate local entrepreneurs about the pitfalls and potential of crowdfunding. The day featured a panel of four small-business leaders, including Leung, who found thousands of backers (and customers) on the kickstarter.com platform. Each had an innovative idea, a passion for product design and a great vision. But they all needed cashflow to get their ventures going. All turned to crowdfunding.

The other three great ideas at the conference included a collapsible adapter that turns a smartphone into a more traditional gaming console, the Jump phone charging cord, which is also a slim backup battery, and the 3doodler 3D-printing pen, which captured lots of attention at this year’s CES in Las Vegas. (The latter product makes its Asia retail debut in Hong Kong this Wednesday at Log-on in the Times Square mall at 6pm, if you want to see it in action.)

The four entrepreneurs gave different reasons for choosing to crowdsource, but each found similarly excited audiences that expressed their enthusiasm with dollars. Native Union’s Jump raised $40,000 in 24 hours on kickstarter. And the 3Doodler pulled in half a million dollars a day for the first three days, finally cresting at about US$2.3 million after a month. If there is a lesson in there for brands, it’s that when people see a product, understand its value proposition and sense relevance to their lives, they buy it. That’s without an integrated media campaign, without a major market-tested label behind it and in some cases without even a working prototype.

If you’re unfamiliar with kickstarter it’s a website that gives artist and entrepreneurs a venue to pitch projects to the world. Enterprising men and women outline their ideas, explain their funding needs and set a deadline for backers to get on board. If people like a project, they pledge money to help get a movie, comic book or new digital device project up and running. It’s an all-or-nothing proposition that has a viral way of building momentum and rallying consumers. That viral aspect is what holds potential for major brands.

Daniel Cowen, co-founder of 3doodler, said there is definitely a way brands could play a role and support startup tech companies “but it has to be done in the right way and with a view to facilitating innovation," he said. "There's some subtlety to that.”

Kickstarter’s policies are strict and would likely preclude any companies with ample budgets from putting something on the platform. But there is still room for brands to get involved and support the communities growing up around a product.

“I know of a company that’s looking to get small developers to build products to fit its own platform,” Cowen said. He declined to reveal the firm but highlighted that the brand was trying to encourage partners to crowdsource funding on kickstarter, largely to take advantage of the community aspect of the site.

Kickstarter’s backers number to well over five million strong, according to the company's stats page, and users have collectively pledged nearly $1 billion dollars in funding since inception in 2009. Many backers are also active bloggers or tweeters, so the influence can easily grow exponentially past the site’s own user base.

During the panel talk, Cowen pointed out that for his firm, community building pays off the best. “It supports the product better than ads,” he said. His company gave 3D printing pens to artist and asked them to create. The results were spectacular and helped demonstrate what the pen is capable of producing, which both sparks and spreads ideas further, feeding back to the company with more enthusiasm and, ideally, more sales.

That social aspect has global flow and opens the door for brands to get involved. An investment in a startup could be relatively small. Some firms only look for $10,000 to tool up. Dedicating a portion of a major brand’s marketing budget to provide that operational cashflow can help get a company going. But playing a role in any community that grows up around the resulting product can pay off beyond the dollar investment with goodwill, enhanced brand image, media buzz and the kind of loyal following that every company wants.

There may also be ways to co-brand some startup products, giving developers the entrepreneurial opportunity they crave to start their own firm while allowing an establish brand to piggy back on the same high growth trajectory.

Leung’s Shuttr, a simple product that a lone father in Hong Kong wanted for taking family pictures, proved a quick catch around the world. The device is only key-chain sized and can easily integrate into consumer lifestyles. A co-branding arrangement could have given his company the funds it needed to start production while giving both Shuttr and a sponsor substantially more reach. Then every time someone takes a selfie, they’d also have that partner brand at least in hand, if not front of mind.  What brand doesn’t want to be a part of every selfie in Asia?

There are plenty more small ideas out there looking for funding. Asia’s entrepreneurs are everywhere, and if regional marketers can find ways to creatively fund them, the win-win potential can propel a brand above the crowd.

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