It is no longer the province of large R&D budgets or venture capitalists with deep pockets to develop innovative technology, from virtual reality headsets to solar-powered roadways. Today’s tech entrepreneurs don’t stand on the shoulders of giants – they surf a crowd.
Thousands of projects benefit from crowdfunding, which has become a multibillion-dollar industry. The technology category is one of the most popular fundraising categories on crowdfunding websites such as Kickstarter and Indiegogo. With over $500 million pledged since Kickstarter launched in 2009, it’s the third-most-funded category, behind games and design. A third of Indiegogo’s funds are raised by technology and design campaigns.
Several of Kickstarter’s tech breakthroughs have to do with making technology more accessible. “Instead of only being available in factories, people now have the opportunity to use these tools in their own homes or nearby markets,” says David Gallagher, a spokesperson for the Brooklyn-based company.
An active campaign is for a desktop waterjet cutter that can cut virtually any material on something the size of an office printer. Since September 12, the manufacturer, a company called WAZER, has raised nearly $1.4 million. A $100,000 goal was originally set.
“Kickstarter is a great place to find out if anyone is interested in your idea,” says Gallagher. In a sense, it’s a marketplace for ideas.”
A rags-to-riches story revolves around the virtual reality headset Oculus Rift, developed by a gamer named Palmer Luckey. Almost 1,000 percent of its original goal was raised by the Kickstarter campaign in 2012. Oculus VR, Luckey’s company, was purchased by Facebook for $2 billion in 2014. Virtual reality headsets finally hit the market earlier this year, fulfilling the promise of in-your-face experiences.
Pebble Smartwatch is one of the most innovative and successful wearables, according to Gallagher, which began selling nearly two years before the much-heralded Apple Watch. Pebble’s first smartwatch raised a then-record $10.3 million in 2012, boasting hundreds of apps and compatible with most smartphones.
The company raised more than $20 million for its second-generation watch Pebble Time three years later. A 64-color e-paper display along with an open hardware platform that allows third-party straps to connect to a port for added features like a heart rate monitor were among the improvements. Thirdly, nearly $13 million was raised for a fitness-focused smartwatch.
Ronald Kleverlaan, a crowdfunding strategist and co-founder of the European Crowdfunding Network, notes that serial crowdfunding is becoming increasingly popular.
The market is open
Despite the fact that Kickstarter, Indiegogo, and the rest have made crowdfunding ubiquitous, they didn’t start it. Rodrigo Davies, a researcher at the Massachusetts Institute of Technology’s Center for Civic Media, claims that the Statue of Liberty was the first major crowdfunding project.
The United States was unable to raise the $250,000 needed to purchase a granite plinth for France’s gift to the nation, Davies recalls in a BBC news piece from several years ago. In his newspaper The New York World, Joseph Pulitzer launched a fundraising campaign to raise money for the cause, according to Davies, which ultimately raised $101,091 from more than 160,000 donors, with more than 75 percent of the donations being less than a dollar.
It looks like crowdfunding may one day become routine 130 years later.
The barriers to accessing technology and funding are crumbling. As CEO of One X, Anthony Weil says, “Crowdfunding puts the team’s skills and mission at the center of successful startup endeavors,” which is currently running an Indiegogo campaign to raise $50,000 for its real-time health sensor for measuring skin antioxidant levels. Through a sophisticated app, people can get instant feedback and advice on how to live a healthier lifestyle.
One X has already reached its financial goal with a week to go in the campaign.
“Crowdfunding allows us to shift the funding scarcity paradigm where venture capitalists become the gatekeepers,” says Weil, a Singularity University Global Solutions Program alum.
It was less about raising manufacturing capital for One X than testing the concept in Gallagher’s marketplace of ideas.
Weil believes that even the best venture capitalists cannot compete with the direct market feedback offered by crowdfunding platforms. It is important to prove market acceptance and recognition through a successful crowdfunding campaign. In addition, crowdfunding allows [us] to hack the normal selling process by generating an impressive initial monthly revenue and building momentum for subsequent sales.”
Kleverlaan says successful crowdfunding tech projects require more than just good engineers. It is important to employ people who are knowledgeable about marketing and sales in order to build a strong team.
“That’s important, because people are interested in the technology, but want to know what they can do with it,” he says. It is common for a tech team with a good idea to raise up to $100,000. With the right marketing approach, this could grow beyond $1 million.” Pebble watch, anyone?
A new frontier is being explored
It is less about making money in some tech and science fundraising campaigns than it is about participating in a grand adventure. Even though space may be the final frontier, it is no longer prohibitively expensive.
Last year, LightSail, a citizen-funded project of The Planetary Society (fronted by Bill Nye the Science Guy), raised $1.24 million. It will use the sun’s energy to propel a CubeSat the size of a breadbox into Earth orbit. There is no need for interstellar gas stations.
DIY science project KIC 8462852 raised more than $100,000 on Kickstarter to buy telescope time. Known as the WTF star for Where’s the Flux, KIC 8462852 shows peculiar dips in its flux, or brightness, over time that are beyond explanation. It would likely have remained an obscure problem of astrophysics had it not been for some speculation that transient fluxes were being caused by alien megastructures.
“Space [exploration] is now accessible to the average person,” Gallagher says. It’s an area with a lot of promise.”
A company called OpenROV has successfully funded two Kickstarter campaigns to build underwater robots that anyone can use. David Lang and Eric Stackpole started the project in Stackpole’s garage in Cupertino. In northern California, the pair wanted to explore a submerged cave with a low-cost drone. Off-the-shelf drones were too expensive, so they built their own remotely-operated vehicle, growing a community of oceanographers along the way.
They raised more than $800,000 for their latest project, OpenROV Trident. In addition to performing maneuvers in tight spaces, the robotic vacuum looks like a rectangular version of the Roomba vacuum.
The devices have been used for everything from finding shipwrecks in Southern California to discovering a previously unknown fluorescent quality of a clam in the Cook Islands, Lang wrote on the website Backchannel.
Among scientists, crowdfunding is an alternative channel in a world where traditional sources of funding aren’t what they used to be.
Investing in the health of the planet
Also riding the crowdfunding wave are projects related to the environment and energy.
An Indiegogo project that raised more than $2 million was Solar Roadways, developed by Scott and Julie Brusaw.
This modular solar panel paving system is capable of supporting 250,000 pounds of weight and can be installed on roads, parking lots, driveways, sidewalks, and other surfaces. The Brusaws say they can power homes and businesses through driveways and parking lots connected to the network. A cable corridor treats stormwater and carries utilities and is equipped with heating elements to keep them clear of snow and ice.
This summer, the solar road was installed in Sandpoint, Idaho, the couple’s hometown.
Founded after the 2010 BP oil disaster, Public Lab has funded several citizen-science projects through Kickstarter. To map the extent of the oil spill, helium balloons and kites were used to launch inexpensive cameras to take aerial photos of the spill in 2010.
Citizen-scientists have been able to collect spectral data on different materials by using a DIY spectrometry kit since then. This information would feed into a Wikipedia-style library to aid in investigating chemical spills, identifying contaminants, and observing disease in plants. Another Kickstarter project raised more than $70,000 for an infrared camera that can map ecosystem health by detecting photosynthesis.
Gallagher explains that backers generally receive something fun to play with, as well as data to submit for broader research projects.
We think that’s priceless.