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As of a few days ago, my company, a small consulting firm in the DC/MD/VA area, launched a Kickstarter campaign in the hopes of generating funding to make some products of our own. We’ve had a lot of people ask us since then, exactly why we chose to do this via Kickstarter, versus seeking out traditional investor capital via Angels or VCs.
This was a topic that we struggled with ourselves, and so I would like to share our decision process. This team had recently been at another startup and intimately involved in trying to obtain VC level funding where we learned the pros & cons of that route.
One difference in our case is that the two products we are trying to make, BubbleSorter.com and GridSorter.com, are fairly small, self-contained products. They are planned to be simple, efficient & single-tasked. They aren’t the kind of product concepts that typically have VC’s excited about funding. They already have a profit model built in from the beginning, and they are designed around small, slow, steady user base growth. There are no ‘viral explosion’ plans that would make an investor excited about seeing their money quadruple within a year.
Secondly, typical investors don’t want to see a product until you’ve already shown traction in the first place. This might be done via showing explosive growth, or showing that people are willing to pay for the product. This means you need to build it before ever asking for funding. By choosing the Kickstarter campaign, we are accomplishing something even better in our eyes. We are asking for people to make a commitment that this is a product they would be willing to pay for, and sign up to pay for, before we’ve even built it. It gives us exactly the kind of feedback that we need; that this is going to be a product that others find useful. Most importantly, it gives us that feedback right now, before we’ve even started writing any code for the product, and will allow us to pivot even quicker to match what the market wants.
Finally, it also gives us a source of funding that comes directly from those people who are going to use the product. While it can be absolutely great to get VC funding for an application and have a large check letting you sit and focus on coding, it also means that you gave up a part of the company and with that some amount of control over exactly what the company does.
By using Kickstarter to fund these web applications, we are letting the future users of these apps be the funders. The people who are contributing money are really invested in seeing this succeed and giving feedback into the product that they are going to use.
Eli White is a Founding Partner & CTO of Musketeers.me and really hopes that you are going to fund his Kickstarter. He’s worked on numerous projects over his career, such as Digg, TripAdvisor, Zend, mojoLive, and the Hubble Space Telescope program. He’s also a member of the PHP community and regularly speaks and writes on various web technologies. You can find his work at EliW.com.
