Crowdfunding is brutal... even when it works
On a Thursday afternoon in the middle of July 2012, an exhausted Cheryl Kellond sat down at her computer and cried. Her Kickstarter campaign for Bia, a GPS sports watch for women with a built in panic button was $100,000 away from its $400,000 funding goal. Things looked bleak.
“I had never worked so hard. My eyes were bleeding. I couldn’t believe we were going to miss this goal after all this work,” Kellond says.
For Kellond, a 43-year old MIT-educated entrepreneur who splits her time between Manhattan Beach in Los Angeles and Silicon Valley, this wouldn’t be the end of her campaign. But two years later, as she gets set to ship out the last batch of Bia watches to supporters a year behind schedule, she reflects it was one of a long line of emotionally trying moments that no one warns you about when you’re setting up your page.
Crowdfunding had initially been Kellond’s last recourse for Bia.
“But we went for seed funding and wow did we hit a brick wall,” she says.
There was a market for her product, Kellond felt certain of that. Millions of GPS watches are sold each year, none of which cater to female concerns about safety. She knew that as an amateur runner herself. Reflecting on these first approaches to investors, she sees now that Bia looked and felt like an early stage hardware company, they didn’t have a working prototype and had a non-traditional product aimed at female consumers. The odds were stacked against them.
Largely due to the tech and gaming focuses of early Kickstarter success stories, it was a male-centric market. To bring in a new, female audience to the campaign, the traditional crowdfunding PR strategy had to be thrown out the window, Kellond says. An article on Mashable didn’t make a blip in their fundraising, but an endorsement from a running mother netted $30,000.
But even adjusting for this, Kellond says she was still shocked at how much education was needed to bring new supporters in.
“We’d see people posting on Facebook that they’d backed this new product on Kickstarter, but then we’d look at our backer list and we wouldn’t see their name. We realized that people thought backing us just involved clicking the like button,” Kellond says. They had to change their Kickstarter video to include arrows pointing to the big green pledge button.
Sitting in front of the computer with a day to go, resigned to defeat, Kellond says she watched existing supporters take ownership, farm out requests to friends and clubs and drag them over the line.
“I couldn’t have imagined it getting much harder than that campaign,” Kellond says.
The hard part hadn’t even started.
Kellond says that she knew at the time that Bia’s Kickstarter delivery dates were a best-case scenario. “But I thought the worst case scenario was that we would not miss by a lot. I was a little naive,” she says.
The first problem was that the company needed more than $400,000 to get the Bia into production. With 2,000 backers on Kickstarter, Kellond thought she had enough proof of a market to attract investors. But the new response became for her to show them that she could sell the product. “It’s always the next rock fetch,” she says.
The company never had to cut corners with its watch and eventually raised $1.2 million in mostly angel investment. But the money came “at a trickle,” Kellond says, which slowed production down. She estimates that half of the year-long delay came from being under-capitalized.
Kellond bought fifteen years of experience as a production manager, senior vice president and chief operating officer into Bia. She says she felt like she had ample experience, but still completely underestimated the time tied up in all the inevitable wobbles and delays that come with hardware manufacturing.
There were waits for developers. Vendors changed parts. At the end of 2013, Bia did its final pre-production run in China, stepping up in scale from 50 to 200. “When you move them through manufacturing faster, things that we had soldered were breaking because people were working faster now,” she says. An antennae had been attached by hand to a circuit board, but with the bigger production run, it cracked off in 80 percent of the devices.
Kellond was looking at her last $75,000 tied up in broken product. It pushed her production into 2014 and because of financial limitations, Bia was only been able to fulfill its rewards in spurts. At each step and pause this year she says she’s worried about whether she would be able to complete what she promised, which has been something akin to agony.
The updates page on the Bia Kickstarter campaign is a detailed chronicle of well intentioned error and delay. Transparency helped, but they couldn’t discuss their financial considerations and disclose when they were fundraising. “I’m sure half the people thought we were idiots,” Kellond says.
Crowdfunding was two years of Kellond’s life, a pressure she didn’t appreciate or anticipate going in, that will take her a while to process, even with the watch out, the real Kickstarter finish line in sight and favorable early reviews of her product.
“It is both a privilege and a burden. It comes with a price on your head. If I don’t ship this product, I might as well leave the country and change my identity. Five percent of our backers were people I know. This isn’t anonymous money, it is from people who are believing in you, whose faith is the reason you’re chasing this dream,” Kellond says.
Which is the upside. Shipping the Bia and pushing it into existence was so difficult, if Kellond didn’t have people’s expectations to live up to, she wonders what might have happened.
“You go at this with the honor and the knowledge of people’s faith in you. I think it is the only reason we didn’t quit. If was just our own money or our investor’s money, we would’ve walked away.”