by David Israelsson, Globe and Mail | Published 

Raising startup money on the Internet has been a relatively easy ride for Sohaib and Ali Zahid, co-founders of a Toronto-based high-tech bicycle-manufacturing firm.

But the company, Vanhawks, may face bumps later when it files a tax return with the Canada Revenue Agency.

The bikes, which Vanhawks plans to ship this summer, will combine carbon fibre frames with software. The company’s app will connect the bike to the rider’s smartphone, calling out routes turn by turn, detecting blind spots and warning when thieves are nosing around.

“If someone’s touching your bike, you’ll get a notification,” says Ali Zahid, who is Vanhawks’s co-founder and chief operating officer.

The way Vanhawks has raised money is also cutting edge – it pulled in $820,000 last year through the crowdfunding site Kickstarter, when its goal was a mere $100,000.

A Canadian-built bicycle by Vanhawks. (Alex Choi)

What does the CRA have to say about raising money through crowdfunding sites such as Kickstarter or Indiegogo? “We’ve talked to our advisers. For safety we have put some money aside” for taxes, Sohaib Zahid says.

Tax experts say this is wise. Crowdfunding has been around since the past decade, but the revenue agency’s approach to it is a work in progress.

“The tax treatment of crowdfunding is evolving,” says Aurèle Courcelles, director of tax and estate planning at Investors Group in Winnipeg.

At first, the CRA’s general view was that any money raised by crowdfunding would be taxable. But it’s more complicated than that.

“The position has changed because crowdfunding can be used for a number of purposes. It could be a charitable effort, it could be a company trying to find investors, it could be a loan or gifts. Now it depends on the circumstances,” Mr. Courcelles says.

Sohaib Zahid, co-founder of Vanhawks, a Toronto-based high-tech bicycle-manufacturing firm. (Kim White for The Globe and Mail)

“We see ours as deferred revenue,” Ali Zahid says. In return for sending money last year, donors to his company on Kickstarter will receive a Vanhawks’ bike, when they start shipping in July, at a slight discount. (The company’s models will be sold online and retail for between $1,249 and $1,449.)

“We see it as you’re buying a product and Kickstarter is the distribution channel,” Ali Zahib says.

“It’s a new area,” says Robert Kepes, a partner at the Toronto law firm Morris Kepes Winters LLP. “You have to distinguish the different kinds of situations, such as where you’re not raising money for a product.”

He notes the case of 32-year-old Toni Morgan, a Toronto high-school dropout who later worked so hard that she was accepted to Harvard University, and has raised more than $50,000 for tuition through crowdfunding.

“She would be okay,” because nobody is making a profit from the donations, Mr. Kepes says. “It’s more along the lines of a philanthropic endeavour.”

The CRA noted in April that it “understands that crowdfunding is a way of raising funds for a broad range of purposes, using the Internet, where conventional forms of raising funds might not be possible.”

The agency’s approach “is to evaluate each situation on a case-by-case basis.”

Ali Zahib says Vanhawks just completed its year-end bookkeeping. “It’s a tricky area,” he says because in addition to the crowdfunded money, the company has additional backers. “We have funders from all around the world. Essentially we have to make sure that for the Canadian funders we pay taxes,” he says.

“The tax treatment of crowdfunding is evolving.” 

Aurèle Courcelles, director of tax and estate planning at Investors Group in Winnipeg.

Some of this will be offset by the cost of the bikes they ship and by other expenses, such as the GST or HST they spent on company-related purchases. The CRA’s April note says that “any reasonable costs incurred by the taxpayer that are related to such a crowdfunding arrangement would likely be deductible in computing that income.”

Dealing with crowdfunding is even more complicated for Canada’s provincial and territorial securities regulators, Mr. Kepes says. The CRA says crowdfunding is not taxable if it’s clear that the money is “a loan, capital contribution or other form of equity,” but this can trigger filing requirements so investors know what is happening to their money.

The trickiest situations can arise when a crowdfunder isn’t sure whether what he or she is doing will actually become a business. Some people might start raising money for something they consider a hobby or a pastime and then find once the crowdfunding begins that they can make a living.

Mr. Courcelles muses about how the tax department might treat the efforts to use crowdfunding to buy the infamous Rob Ford videos allegedly showing Toronto’s then-mayor smoking crack.

“How would you treat that?” he asks. “In the end they never did get the video, so is the money that was raised taxable?”


by Jana Shortal, KARE | 7:48 a.m. EDT May 7, 2015 | KARE

The crowded field of crowdfunding

Watch the video here.

MINNEAPOLIS – The crowded field of crowdfunding is filled with many voices asking and begging for the most you can give online.

“How many people will roll down their window and give a dollar to the guy at the street corner and the next person will say go get a job! So I think that same kind of psychology is at work in this kind of giving,” Kevin Sauter, an expert on social behavior, at the University of St. Thomas said.

The launch of crowdfunding happened about seven years ago.

Indiegogo broke the mold but Kickstarter came shortly after and took the lead.

To date Kickstarter owns the largest market share of crowdfunding.

“Their original founding principal was they wanted to help artists that didn’t have money to get going so they wanted to create a platform to find people to support them,” Gordon Burtch, a crowdfunding expert at the Carlson School of Management said.

Kickstarter exploded, funding every single art or business venture you can imagine.

The chefs of the restaurant Travail in Robbinsdale used it and raised $255,000 in one month to help offset the costs of building a bigger newer restaurant space.

But not everyone is that fortunate.

Kickstarter has a rule.

It’s all of nothing funding meaning the goal amount you set for your fund be met in full over a specific amount of time.

Laura Bonicelli knows the rules as well as anyone, she has a Kickstarter account active now to raise $60,000 before her May 8 deadline.

“We are cooking for people who need food,” Bonicelli said explaining what her vision is for Bonicelli’s Kitchen in Northeast Minneapolis.

She says her kitchen will in really be three concepts in one.

First it will be where she prepares fresh meals to deliver to people, as she has already been doing, on a daily basis.

Second, it will be a restaurant with a bar.

And third, it will be a bit of a corner store.

“We really do need this money to complete this project. We have our base funding but to get everything we need, we need this money,” Bonicelli said.

Working so hard to make that goal does beg the question.

Why does she have to work so hard for $60,000 when others seemingly don’t have to work as hard to make ten times as much?

Straight up why does one campaign for cash out-do the other?

A few reasons but one big one sticks out; popularity rules the day.

“People look for social proof. If they see other people giving you money they start to think oh maybe this person is legit. Maybe this is a good thing for me to do too,” Burtch said.

That means if you live on social networks and have 10,000 friends that’s broad reach.

So if you, as the popular person, give to a cause and share it, well, that’s an ad targeted to all of your online peeps.

Basically, if your cause becomes the cause du jour, you win.

“I’m not exaggerating when I say this but I nearly passed out,” Taylor Callais said when he recalled the moment he was told his dog had cancer a few weeks ago.

Duke the dog didn’t do anything to get cancer. It’s just bad luck.

So when Taylor and his wife wondered how they could afford the surgery they worried, and then someone suggested a modest ask on

“We started the page the day after we found out about it and by the end of the day Saturday we had already raised $1,000,” Callais said.

The couple was asking for $3,500 on GoFundMe to pay for the surgery and they got pretty close to it.

That’s not a total loss, like it would be on Kickstarter.

Taylor does get whatever money is raised on GoFundMe, that site doesn’t require you hit your target but the company does take a percentage from every donation for their overhead costs.

But what is interesting about all crowdfunds, and was true for Duke’s too, was that the money comes from two distinct camps.

Half of the money for Duke came from friends and extended family and the rest came from dog loving strangers.

“From here on out if anybody does come to us, whether it be financial or any sort of awareness we are going to be there for them,” Taylor said referring to what people gave them he will give back over the years to any causes he sees come forward that are similar.

Some needs however are beyond a couple thousand dollars.

“To be perfectly honest that’s where we are at now. This has been a five-year struggle and financially you try to maintain what you had, and you can’t because it’s too much,” Heather Gladbach said candidly talking about the huge financial strain of cancer.

Heather is a young mother of two who beat breast cancer in 2010 only to now face brain cancer.

She needs the help to continue her battle so her friends created her GoFundMe site.

“I’m scared to death. This is the first time anyone said if you don’t do this you could go and I’m not ready to go. I’ve got too much to do with my children and they need some more good years out of me,” Gladbach said.

Heather doesn’t have a social campaign fueled by thousands but she has the need.

So far her fund has climbed to more than $19,000.

But Heather has to compete with campaigns that range from a cute kitten who got caught in a drain to a team of kids wanting to raise money for a class project.

All things aren’t equal but they are competing for the same dollars.

“In those more charitable cases I think the reward has to be intrinsic. Is this something that will make me feel better about myself,” Sauter said referring to how a person can be talked into giving to one need over another.

Giving to the fight of a mom who just wants to keep a hold of that job will fill that intrinsic need for most.

Going in on the ground floor of the hot new passion project in your zip code is also a good one for your street cred.

So the donation game is yours to play. The crowded field of funds isn’t going to thin out anytime soon.


By Peter Henderson | Hamilton Spectator | May 6th 2015

Crowdfunding campaign for home espresso machine brews backlash

TORONTO — Backers of a failed effort on the crowdfunding website Kickstarter are considering their options after founders of a coffee maker missed a mid-April deadline to get the project back on track.

ZPM Espresso claimed its Nocturne coffee maker was the world’s first smart espresso machine for the home because of a programmable control chip, more common in commercial machines, that would allow consumers to create the perfect shot of concentrated java by precisely controlling water pressure and temperature.Nocturne Espresso Machine

Yet the company’s plans never materialized, and now supporters who spent as much as $1,000 US on the machine — and assorted bonuses including T-shirts and coffee paraphernalia — are looking for answers.

Christopher Browne, a Toronto-based computer scientist, said he contributed $350 during ZPM Espresso’s original Kickstarter campaign from December 2011 to January 2012, which was supposed to cover the cost of the machine as well as a few extra gifts. The campaign raised $369,569 US, well above the original $20,000 US goal.

The creators posted frequent updates in the beginning, Browne said. As the months passed, he remained positive even as the company ran into problems. There were issues with the quality of the manufacturing, and ZPM Espresso hired outside consultants to adapt the design.

Browne said he knew the project was destined for failure last fall as updates became less frequent and problems seemed to multiply.

In January, ZPM Espresso announced it was shutting down and that only a small amount of the initial money remained to return as refunds. The news prompted other backers to complain on Kickstarter and social media, Browne said, with some comments from those who felt “betrayed” by the company turning vitriolic.

In an interview, one of the founders of ZPM Espresso shed light on some of the problems.

“The way you make something at volumes of 50 is completely different than the way you make things at volumes of a thousand,” said Gleb Polyakov.

Consumers need to understand that crowdfunding is a different consumer experience than buying an existing product from an online retailer like Amazon, he added.

“That feeling of involvement and early access and participation is probably the main reason people go towards crowdfunding as a platform and find it exciting,” he said.

“But when a company is only three people instead of IBM or Apple, the manufacturing process and the customer service process looks much different.”

On its website, Kickstarter says the responsibility for completing the project lies with the creator and that any refunds must be processed between the creator and the backers.

The company has updated its rules and terms of use several times since the site launched. Last year, it clarified the legal rights of backers to sue creators if they fail to bring the project to its “best possible conclusion.”

Browne said he and other backers have discussed going to court to pursue a refund or some other remedy.

“The agreements that Kickstarter set up are worded such that this isn’t formally a product, where you can have a direct expectation of delivery,” he said. “Anyone that’s looked at Kickstarter with any care ought to be aware of that, but people like to imagine otherwise.”

Despite that, Browne hasn’t soured on the idea of crowdfunding. On April 24, he posted on Twitter that he was proud to be the 1,119th backer of a specialized 3.8-litre insulated flask for storing beer that claims to be the world’s largest personal keg.

The Canadian Press


By Julie Bort, Editor, Enterprise Computing | February 12, 2015 | Business Insider

There’s a big controversy over the electric bike that raised $3.3 million on Indiegogo

There’s a firestorm brewing over the electric bike formerly known as Storm, which raised $3.2 million in 11 days by billing itself as the world’s most affordable eBike, with a price tag of “under $600.”

It turns out, the bike won’t sell for anywhere near that cheap on the retail market after it gets produced. Only people who got in on the IndieGogo campaign will get it for that price.

Everybody else will pay around $1,300, the company confirmed to Business Insider. (At one point, the company warned in the fine-print that it could be around $2,000.)

The company’s spokesperson tells us:

The retail price of the bike is around $1,299 but is not final. Storm [Sondors, cofounder] is passionate about making his bike the most affordable on the market and it is currently priced at $599 which is very low for a comparable model.

Comparably the stated retail price this is rather low for an ebike, as many models currently on the market start their introductory offers in the low to mid thousand and go up to a few thousand dollars.

… The overall goal is to create an affordable eBike for the masses, and Storm is 100% committed to doing that. By going the crowdfunding route, it has allowed him to cut out the middlemen and deliver the eBike directly to market at a fraction of the price.

The Indiegogo campaign page now says in big letters up top: “Priced under $600 for a Limited Time. Offer Ends 2/13/15!”

There are also a lot of questions if that fat-tired, motor-assisted bicycle really can deliver the battery life and power promised, for the weight promised.

Storm Bike
Indiegogo/Storm eBike Sondors eBike (formerly known as Storm)
Yahoo Tech wrote an article about the bike and its $500 price tag that went viral and helped the Indigogo campaign go crazy. After hearing the skepticism surrounding the bike, Yahoo Tech’s Dan Tynan looked into its claims and found them “exaggerated at best.”

After we wrote about the incredible success of that crowdsourcing campaign, a reader named “Tom” contacted us about it. Tom says he invested in the campaign. When he started a discussion about the bike on an online electric vehicle forum, Endless Sphere, lots of skeptics piped up, there, too.

Tom tells us, “A number of ebike builders voice their opinions that are a good reflection of the skepticism of anyone who has built an electric bike. The numbers and facts don’t add up. PS: I did invest my $499 + ? for shipping.”

On top of that, there’s already another $1,300 electric bike called the Storm from a company in Florida called Prodeco Technologies. (Prodeco also forced Storm to change its name to Sondors.)

So, if Sondors’ eBike retails for $1,300 as well, it won’t be “The world’s most affordable eBike” as the fundraising campaign is still promising.

Right now, Sondors eBike has a prototype that they are taking on tour around Southern California to show it off to skeptical investors, prospective customers.

The Sondors crew posted an update on Indiegogo about the ongoing controversy:

Finally, to show that there are no gimmicks, “smoke and mirrors”, or uncertainties about the product, we will be showcasing the bike this weekend for fans and customers at our first ever demo day. This gives fans a voice and extends past just the press and media. We have 150+ backers RSVP’d for the eBike demo this weekend in LA and can’t wait to get their thoughts on feedback.

However, as Yahoo’s Tynan points out, unlike Kickstarter, Indiegogo investors are charged immediately and Indiegogo warns that “contributions on Indiegogo are nonrefundable.”

This bike has now raised nearly $3.3 million, and if it doesn’t work out as advertised, there’s no getting your money back.

But if it does, you scored an electric bike for $500 to $600, a fraction of what others will be expected to pay for it.




crowdfunding tips

Published on 

Remember that feeling when you graduated from College? Or that feeling when you got unexpectedly fired? It’s that distinct stomach-dropping “holy shit!”, paired with a hard-hitting wave of “what now?”. It’s also the feeling described by countless founders as their successful crowdfunding campaign comes to a close.

At Celery, we’ve worked in tandem with hundreds of top crowdfunders as they transition into pre-orders and finally shipping. After 2 years, here are the top 5 questions we get asked as campaigns wind-down and sellers enter new, unchartered territory.

1. What Should I Do With My Campaign Page?

As your campaign closes, you need to redirect attention onto your own website. Because the highest ranked search result for your product will be your Kickstarter or Indiegogo page, take advantage of its SEO. Place a powerful call-to-action on your expired campaign page to direct potential buyers to your website, so that you can continue selling your product. Boost your brand and don’t let that residual demand go to waste!

Pro-tip: For your url, use a modifiable link that you can edit in case you need to change domain names (or want to link to a future campaign).

2. How Do I Collect and Handle Missing Backer Info?

In case you didn’t notice, crowdfunding platforms are not designed around shipping physical products. Since the majority of backed projects fall into the art and digital realm, they don’t require shipping or additional information from backers. This means that when backers forget to add shipping costs, or input incorrect addresses, pledge multiple times, change rewards — even write in Chinese — you’re the one left to figure it out.

This is when shit tends to get real…complicated.

Filling in missing information, or even after-the-fact stretch goal selections will likely mean sending out a survey through apps like Google Forms, Survey Monkey, or Typeform. In these surveys, backers can help you fill in the blanks. Otherwise, a developer can build a custom solution, like coupons, that when redeemed in your online store will prompt for the missing info.

Once the data is collected, it will need to be transferred and stored in a serious Excel spreadsheet. Only a real Excel wizard has the data management skills for this one. If you or someone on your team isn’t savvy, you may need to hire someone who is.

Alternatively, BackerKit is a simple, all-encompassing solution. The downside: Using Backerkit means coughing up a small percentage of your total campaign funds plus up to 20% of pre-orders taken through their platform. Although their margin is a tough pill to swallow, they really do a killer job managing backer information, organizing shipping, and will prevent a grey hair (or eight).

3. I’m Scared. How Do I Keep My Backers Happy?

Your backers gave you the gift of bringing your amazing product to life, and they’ll destroy you if you don’t deliver. Just kidding. But they are watching your every move.

While all eyes are on you, it’s beyond important that you communicate with these backers often — weekly — without fail.

When backers hand over their cash, they expect to be answered promptly, told the tales of your production, and updated on just about everything. If you don’t they’ll send pissed-off emails and demand refunds. In fact, it’s not uncommon for backers to threaten to report sellers to Kickstarter, the Better Business Bureau, and even the FBI!

In short, keeping the lines of communication open is the only way to ensure angry mobs of backers won’t barge down your front door, carrying with them pitchforks and fury.

Beyond sending weekly emails to your backers and updating your website and campaign pages regularly, you need to stay on top of individual emails. To remain ahead of the curve, auto-responding to common questions will prove to be a huge time — and life — saver. By setting up intelligent auto-responder emails, and including FAQs in your emails, you’ll not only unclog your inbox, but will keep your backers confident and at bay.

Common FAQs to include in your emails:

When will I receive my product?
I moved. Can I update my address?
Can I change my selection?

4. What Should Be My Benchmark for Pre-Order Sales?

Based on past data from hundreds of crowdfunding alumni, you should expect to generate at least 10% of funds raised in pre-orders within 3 months. This 10% represents those who do not advertise, optimize their checkout, retarget, remarket, nor do virtually anything but set-up a checkout and run-off to Tahiti. Use this metric as a benchmark to judge the effectiveness of your marketing efforts going forward.

Furthermore, paying attention to your conversion funnel, closing leads, tracking metrics, and generating a buzz through advertising, you can capture continued pre-sales that far exceed 10% of your campaign total. Examples of companies who killed their continued pre-orders are ThingCHARGEROneWheelCarbide3D, and SCiO.

5. How Can I Boost My Post-Campaign Sales?

Without a doubt, this is the top question on everyone’s mind. However, there’s no silver bullet to boosting continued pre-order sales — sorry! But, there are undeniable ingredients for success. It’s just up to you to concoct the recipe that works for your product and buyers.

Here’s what we suggest you play around with:

Referrals — Referral Candy and Talkable.

If it sticks with your buyers, an incentivized referral program can boost sales by about 20%.

Abandoned Cart Recovery — Klaviyo.

Reach out to the 70% of customers who will abandon cart without purchasing.

Retargeting — Perfect AudienceAdroll, and ReTargeter.

Retargeting can be hit or miss, but Perfect Audience is an interesting one to check out. It allows you to share audiences with relevant companies. For example, you could target BackerKit’s audience which is likely to be interested in crowdfunded hardware.

Content Discovery — Taboola and Outbrain.

Many projects redistribute PR earned during their campaign to drive sales. No need to reinvent the wheel. Get more people engaging with the content that sells your product best.

Paid Acquisition — Facebook Ads and Adwords.

If you can crack the paid acquisition code and get the economics right, cost-per-click, cost-per-impression, cost-per-mille, cost-per-action, and cost-per-xyz can be a customer acquisition goldmine.

Also, if you’ve got a budget to work with, it’s never a bad idea to get a marketing agency on board or to bring a talented marketer in-house.

The entire crowdfunding journey is a wild one. And although the land beyond the Kickstarter or Indiegogo campaign remains largely uncharted, it’s where a lot of the discovery, learning, and behind-the-scenes accomplishment takes place. Join us as we uncover the best tips and practises learned — post-campaign.

crowdfunding marketing

Published February 4th, 2014 – by @trycelery

Crowdfunding Marketing

“It’s not about the money”. This overused line serves as a “trump” card when illustrating unadulterated passion in the face of conflict. It’s also kind of the truth when it comes to a growing primary use case for crowdfunding — marketing.

Marketing as the primary reason for crowdfunding is gaining considerable traction with celebrities, fortune 500 companies, and venture-backed startups alike: those who can’t even pretend to be in financial binds worthy of public contribution.

Celebrities like James Franco, Neil Young, Shaq, Kristen Bell and Zach Braff have each tried their hands at crowdfunding. Pair these Hollywood millionaires with major brands like Dodge, Honda, Kimberly-Clark, DC Entertainment, Phillips, Microsoft, and Coke, and it becomes obvious that marketing isn’t just a side-effect of crowdfunding.

Here are 4 ways brands use crowdfunding to kick-ass at marketing.

1. Get Product Validation (or not)

There’s nothing like a crowd to either validate or stomp the last shred of life out of a new idea. Generating as much product feedback as possible is a key component in creating something people want. As it turns out, crowdfunding is a fairly inexpensive way to quickly reach thousands of potential customers and find out what they really think. Nothing says “great idea!” like backer dollars, and fewer things can spell out “m-e-h” faster than a failed campaign paired with dozens of “I just didn’t get it…” emails.

For innovative marketers, crowdfunding is a modernized focus group with wider spread, more feedback, and a less contrived means for public discussion. It’s a way to test the waters without diving headfirst into building something with shaky demand.

Example: Bonobos Katy Perry Shark Suits

Bonobos is an American apparel designer that wondered if everyone else was as obsessed with Katy Perry’s Super Bowl shark costumes as they were. They took testing the market for ‘yay’ or ‘nay’ one step further by publically capturing demand before even launching a crowdfunding campaign. Taking to Twitter, the designer received 3.7K affirmative retweets that they should launch on Kickstarter.

Bonobos and the shark suits illustrates how even social crowdfunding can be used to capture demand, vamp up support, generate early-stage feedback, and validate what we already know: people loves costumes!

2. Create Brand Advocates

A marketing ‘win’ is when people are talking. Preferably they’re saying good things, but even that’s up for debate. In today’s realm, it’s not easy to cut through the clutter, and even harder to make an impact that’ll encourage brand advocacy. Creativity, uniqueness, and story matter more than ever: all things a well-executed crowdfunding campaign brings forth effortlessly.

Crowdfunding allows customers to become apart of the plot-line. Instead of passively consuming online advertisements or watching a television commercial, crowdfunding as marketing encourages activity and revolves around engagement. Closely resembling guerrilla marketing, seemingly intangible brands cross into unchartered public territory, becoming humanized in their vulnerability. Giving consumers the opportunity to experience brands actively, on their own terms, forges a connection that’s truly worth talking about.

Example: Dodge Dart

In 2013, Dodge Dart introduced a clever marketing ploy where customers could crowdfund their new car. The commercial announced, “Dad sponsors the engine for your birthday. Grandma sponsors the rims for your graduation.” Those registered would invite their family and friends to “sponsor” parts of the car within their selected timeframe, hoping that by the end of their “campaign” the car is paid for.

The campaign changed the way individuals and even communities thought about buying cars. The process became public, shareable, and in some cases, cause-driven, with groups banding together to purchase a vehicle for nonprofit programs and outreach. With over 1 million social shares, the campaign generated thousands of leads to remarket to, and according to Richard Swart, Berkeley’s crowdfunding professor (yes, Berkeley has crowdfunding courses), the Dodge Dart “saw sales more than double the following quarter.”

3. Have Greater Exposure

Crowdfunding and its success stories make the news. When this exposure is harnessed, it can give products and projects the final nudge they need to cross into ‘viral’ territory. Using crowdfunding to propel exposure in unique product campaigns is commonplace, and is even becoming a popular means for marketers and musicians alike to reach the ‘next level’.

In 2015 7 Grammy-nominated musicians were Kickstarter alum. Among them is American singer, Antonique Smith, who played Faith Evans in the biopic “Notorious”. She used her 2012 $50K Kickstarter funding to promote and market her finished debut album, and soon after gained public recognition. This year, she was nominated for a Grammy for Best Traditional R&B Performance.

Example: TLC

The all-girl trio TLC, famous for “Waterfalls” and “No Scrubs”, has had four platinum albums and won four Grammy awards. Despite this great success, the group turned to Kickstarter to get rolling on a new album, 23 years after their debut.

It’s unlikely the group was cash-strapped, but rather wanted a marketing edge to make their fifth album notable and most of all, relevant. Involving fans in the process was a strong marketing play, resulting in national and international coverage, plus a 14.5% increase in total Twitter followers.

Do you think TLC could have created this same buzz through traditional marketing and PR?

4. Become a Beloved Brand (it’s possible, really)

Crowdfunding as a storytelling tool cuts through noise, and connotes innovation, virality and a certain edginess. When properly harnessed, even big brands like Honda and Coke can break down a corporate wall (or two), and appeal to smaller communities and causes. Honda did this with their Indiegogo “Project Drive-in” crowdfunding campaign to save American drive-in theatres, and Coke with their campaign to crowdfund cleaner water in rural Mexico.

Crowdfunding allows for companies both small and large, to tell different stories, in an alternative way, and change the way their messaging is received.

Example: Newcastle

Newcastle Brown Ale knew what they were up against when it came to locking down a $4.5M 30-second advertisement spot during this year’s Super Bowl. Unwilling to blow their yearly marketing budget, the company spearheaded the “Band of Brands” to crowdfund the cost of the ad spot. For an estimated average of between $150–250K, 37 contributors appeared in one hodgepodge Super Bowl advertisement.

This brilliant crowdfund became one of this year’s most talked about Super Bowl ads. It also secured the beer brand’s role as one of America’s most beloved archetypes: the successful underdog. The “band of brands” showed the world how fun Newcastle is, and highlighted them as a relatable, creative force to be reckoned with.

The best part? It cost Newcastle a fraction of the $9.5M Busch spent on their flopped ‘anti-craft beer’ ad.

Crowdfunding as marketing can snowball exposure and network products to the power of 10. The transparency, call for action, and real-time story creation of a crowdfunding campaign is something that is unparalleled in today’s marketing realm. Although inviting customers along for the ride may be unpredictable, the reward is marketing that feels genuine, memorable, and two-sided — something close to human.

Indie Crowdfunding

Published February 17th, 2015 by Celery

Indie Crowdfunding

The idea of crowdfunding has been around since early human community and collaboration, but the mainstream uses are in constant motion. ArtistShare, said to be the world’s first crowdfunding platform emerged in 2003 as a way for creative artists to publicly fund projects; Indiegogo launched in 2008 during the Sundance Film Festival with a focus on independent films and ‘democratizing fundraising’; Kickstarter joined the scene in 2009 as the go-to place for indie hardware innovations.

What were formerly geared towards artists and modest ‘indie’ inventors, crowdfunding platforms now host major hardware launches where bullet-proof campaigns — backed by millions of investor dollars — are executed with scientific precision. Has the original idea of crowdfunding to gain independence, project control, and to circumvent traditional investment channels been lost somewhere along the way? Does crowdfunding need to be synonymous with Kickstarter’s cookie-cutter formatting and flow?

Like any song, micro-banged hairstyle, or business process that goes mainstream, the original ‘magic’ or use-case can become lost. However, this loss often coincides with the emergence of ‘the next generation’ — a reinvention that propels that song, hairstyle, or business process forward. This reinvention is brought about by thought-leaders or ‘rebels’ in a particular space — those who make the former way of doing things look as dated as 80’s hair bands.

In 2012, Lockitron became that rebel, and offered a window into what ‘next generation crowdfunding’ is shaping up to look like.

Lockitron: Crowdfunding Rebel

It was September 2012. “We Are Never Ever Getting Back Together” by Taylor Swift was number one on the radio, Kickstarter had just published their ‘We’re Not a Store’ blog, and Lockitron’s debut keyless entry lock was rejected by the number one crowdfunding platform in the world. Lockitron’s co-founder, Cameron Robertson reminisces, “We got caught up in the new ‘not a store’ requirements…And when we talked to people at the time, they were like ‘you can’t get on Kickstarter? That sucks. You’re screwed.’”

Instead of anchoring themselves to the very-sinkable ‘we’re screwed’ ship, co-founders Cameron Robertson and Paul Gerhardt got to work. Within a few days they had built their own crowdfunding web app, and opted to run their own pre-order campaign — a bold first in the heat of Kickstarter’s hardware market dominance.

The result of their self-crowdfunded campaign: $150K worth of orders in less than 24 hours, and a campaign total of $2.27M with 15,000 backers.

“You Don’t Need to Be on Kickstarter to Kickstart Anything Anymore”

After their campaign, team Lockitron affirmed themselves as the ‘Robin Hood’ of crowdfunding by releasing Selfstarter, their crowdfunding API, to the public. Selfstarter, is an “open source starting point for building your own ad-hoc crowdfunding site”, and although its framework is basic, the code has been copied over 1500 times by developers.

It was a done-deal. By 2012, Lockitron and Selfstarter had begun paving the DIY crowdfunding path.

Today, Robertsons explains, “You don’t need to be on Kickstarter to kickstart anything anymore. Hundreds of products have done this in the last two years.”

To illustrate, highly anticipated hardware innovations like Coin, Tile, August, Plastc, Navdy, and Vessyl each wrapped-up million-dollar crowdfunds independently. Interestingly, innovations perfectly aligned with Kickstarter’s hardware hold, are strategically opting out and choosing to run pre-orders on their own websites.

Speaking toward the independent crowdfunding shift, of the 25 innovations highlighted in world-class hardware incubator, Highway1’s portfolio, one third have chosen to run crowdfunding campaigns on their own sites.

Why Crowdfund on Your Own Website

1. Create Your Brand Identity

If the product you’re launching isn’t a one-off, it’s important to establish your brand, and build out an all-compassing company identity. For entrepreneurs that aim to build product collections, or have previously launched products, it doesn’t make sense to fall under the ‘Kickstarter’ or XYZ brand umbrella.

Notably, the templated format of Kickstarter makes all innovation look like ‘Kickstarter’. Essentially, your product is being plugged into the colours, layout, and design of another highly-recognizable brand. Adam Lee, co-founder of Bohemian Guitars, suggests “At the end of the day, all Kickstarter campaigns look the same. You can’t make the page your own or reflect the brand you’re trying to build with that product.”

We recently spoke with The Coolest Cooler team, who holds the top spot for their $13M crowdfunding campaign. When asked about what The Coolest was working to solve today, they replied with a question about branding: “How do we want to set up this company to really represent the heart and soul of Coolest?”

2. Keep Your Traffic

Instead of driving traffic to the platform, crowdfunding on your own website means keeping it all to yourself (insert evil laugh). This will prove quite fruitful when SEO sets in, and you can reap the rewards of an awesome pagerank, a more established website, and a higher rank on Google.

Adam Lee admits, “When someone searches Bohemian Guitars, the Kickstarter link is one of the first hits. Nearly two years later, I’d rather that wasn’t the case.” Bohemian guitars isn’t alone with this one. For several months (even years), company websites rank after their 30–45 day Kickstarter or Indiegogo campaign pages on Google. You can see this firsthand when googling Bohemian Guitars, The Coolest, Exploding Kittens, and dozens of other top campaigns.

3. Fewer Fees

When all fees are accounted for, Kickstarter and Indiegogo charge between 8–10% and 7–10% respectively of total backer funding.

Comparatively, Celery’s platform which manages both pre-orders and DIY crowdfunding, charges 2%, plus the transaction fee. When paired with Stripe, this equates to total fees of 4.9% +.30 per transaction (2% Celery +2.9% Stripe +.30).

For instance, with Lockitron’s $2.27M crowdfund in 2012, they would have had to pay Kickstarter and their payment processor anywhere between $181K-$227K in total fees. In opposition, crowdfunding through Celery’s platform paired with Stripe, would have meant a max ending total of $115K, with end-to-end order management.

4. Optimize Flow

With a customized crowdfund on your own website, you’re entirely responsible for the look and feel of your backer’s checkout experience. If something, anything’s, not entirely optimized for your buyers, you can adjust it to improve the flow. You also have full access to any of your metrics and data. This allows you to really own your company analytics right from the get-go.

Will You Crowdfund Differently?

As Robertson of Lockitron argues, “The amount that Kickstarter helps you in terms of traffic and additional sales is nowhere near the cut that they take.” For the Lockitron team and entrepreneurs like them, going it alone may present additional challenges, but the short and long-term payoffs are huge.

Recently, Lockitron began crowdfunding pre-orders on their latest keyless entry lock, Bolt. They’ve poetically referred to the Bolt as the “Next Generation” connected lock; a title that not only brings this article around full-circle, but perfectly underscores Lockitron’s larger brand identity as the forward-thinking, crowdfunding rebels of today.


Published by Terry Collins | April 19, 2015 5:00 AM PDT

Experts believe controversial, political crowdfunding campaigns show no signs of slowing down.

By the next day, as cable news channels played footage from police body cameras that captured, in visceral detail, the shooting of the black suspect by the white officer, the popular crowdfunding site suspended the campaign with little comment or warning.

The site has now officially removed the campaign, saying it “did not meet their standards.” Not a single dollar was raised.

This wasn’t an isolated incident. Just a week ago, Indiegogo removed another campaign to raise cash to pay the legal bills of a white officer charged with murder in the killing of a black man, after a witness’ smartphone video of the shooting went viral. In that case, the campaign for now-former South Carolina police officer Michael Slager raised more than $1,300 of its projected $5,000 goal before it was taken down. GoFundMe, another crowdfunding site, removed a similar page supporting Slager.

A shift is happening. Crowdfunding sites are typically places where people seek public donations for projects ranging from paying medical bills to helping the homeless to starting up businesses to manufacturing a product. Some campaigns even invite donors to contribute in exchange for one of the finished products.

Now those same crowdfunding sites — whose reputations were built on helping musicians, artists and other people behind good causes raise money — are becoming new portals to fund people involved in controversial, emotionally charged issues.

It’s not just to help policemen accused in shootings. A campaign for a small-town Indiana pizzeria that publicly supported a controversial “religious freedom” law critics said was anti-gay took in more than $800,000 in crowdfunding — despite a national backlash. Similarly, a Washington state florist that was fined $1,000 for refusing to sell wedding flowers to a same-sex couple netted nearly $170,000 in crowdfunding.

Also, before the coast-to-coast outcry over the fatal shooting of Michael Brown, who was black, by white Ferguson, Mo., police officer Darren Wilson last summer, fund-raising pages were set up for both men. Wilson’s GoFundMe page even netted more than a quarter-million dollars before it was shut down without explanation.

It raises the question: Is every major polarizing issue now a cause worth crowdfunding?

“I think it was kind of inevitable that crowdfunding would be used to address more controversial, divisive issues,” said Rodrigo Davies, a crowdfunding researcher at Stanford University. “I’m not at all surprised. It was just a matter of time.”

However, Davies, who also is the head of product at the civic crowdfunding site Neighborhly, said what does surprise him is that Indiegogo and GoFundMe pulled the crowdfunding pages of the officers involved in the recent shootings, and that they did so without any rationale.

“They can’t just hold their hands up and say, ‘Hey, we’re just a host,'” Davies said. “What they have done now sets the tone for future campaigns.”

A GoFundMe spokeswoman declined to comment and an Indiegogo spokesman had no immediate comment.

Richard Swart, a researcher at the University of California, Berkeley who focuses on crowdfunding, has a similar point of view.

“I would’ve yanked them down, too,” Swart said, but that doesn’t mean the sites should have. “I think they were politically polarizing, and I don’t think crowdfunding is meant to create polarization.”

Swart said this hot-button type of crowdfunding has been happening in America for the past couple of years with no signs of letting up.

Both researchers say more politicized, niche crowdfunding sites will eventually sprout up.

“We’re just scratching the surface for sure,” Davies said. “Is there an issue you’re passionate about, and can we apply collaborative funding to it? Probably.”


It’s been a wild ride so far. Here is the story of how we got here.

When we went looking for a crowdfunding platform for our revolutionary project, we were brutally disappointed. We ran into one brick wall after another trying to find the right combination of tools without too many restrictive rules.

In the end, to find exactly what we needed, we had to build it ourselves. In the process, we had an epiphany. If we had to build our own crowdfunding platform in order to get what we need, there must be plenty of others in the same boat.

The vast majority of crowdfunding campaigns fail to reach their goals. We believe part of the problem is systemic. Any craftsperson knows that to get the right results you need the right tools.

As we progressed through the sometimes-daunting process of building the crowdfunding platform to meet our specific needs, we slowly came to understand that what we were building had unlimited potential.

To make a long story short, we are now building a do-it-yourself crowdfunding platform so that no one will ever have to go through the challenges we have overcome.

The beta version of our platform is now live at You can try it out, see how it works and pledge to help us turn this unprecedented gamified crowdfunding platform into a do-it-yourself (DIY) tool for anyone to build their own easy-to-use, drag-and-drop, technologically sophisticated crowdfunding tool that anyone can use to build exactly the campaign they need to succeed. Fully customizable, brandable, flexible, with plenty of optional features to tailor the site to deliver success. Our platform will be an affordable, flat-rate subscription model so you don’t have to share a percentage of your raise.

In addition to ease-of-use and flexibility, our DIY crowdfunding platform will provide a multitude of revenue-generation points so that campaigns can raise funds the traditional crowdfunding way or through a whole range of alternative revenue streams.

More than this, the platform will offer components and features previously unknown on any crowdfunding site. Our gamification aspects reward backers with points they can use to buy real stuff or bid on valuable prizes in a live online auction. The rewards are an important part of our platform’s stickiness and virality.

Some of the greatest inventions and discoveries in human history have come when people were looking for something else.

BidOkee is proud to join this illustrious club. We hope you’ll join us.


Successful small businesses on sites like Kickstarter, Indiegogo tend to raise more money on subsequent projects

Here’s a secret for budding entrepreneurs using crowdfunding platforms to finance their projects: It pays to go back for seconds.

Consider the success rates on Kickstarter, the New York-based online platform where users make contributions on projects in exchange for rewards, like an early version of the product.

On average, people raising money on the site for projects are successful in meeting their goals 38% of the time, according to Kickstarter. But new data show that those with one successful project under their belts have nearly double the chances of success—73%—of reaching their next funding goal. And those with five projects have a 91% likelihood, according to the six-year-old site.

A similar trend is under way at Indiegogo, a San Francisco-based crowdfunding site created in 2008, said Chief Executive Slava Rubin.

Read the rest of the article here.