{"id":3197,"date":"2017-02-17T23:25:10","date_gmt":"2017-02-18T07:25:10","guid":{"rendered":"https:\/\/www.backerkit.com\/blog\/?p=3197"},"modified":"2017-10-11T18:24:18","modified_gmt":"2017-10-12T01:24:18","slug":"boost-your-business-with-crowdfunding","status":"publish","type":"post","link":"https:\/\/www.backerkit.com\/blog\/boost-your-business-with-crowdfunding\/","title":{"rendered":"Boost Your Business with Crowdfunding"},"content":{"rendered":"

The conventional crowdfunding narrative typically features a first-time entrepreneur or fledgling start-up trying to raise enough capital to manufacture and ship a product to backers. But not all project creators are new to the game. Sometimes, established businesses turn to crowdfunding as a way to experiment with different business and financial strategies.<\/p>\n

Crowdfunding and Cash Flows<\/strong><\/h2>\n

Founded in 2001, GAMA-GO is a wholesale and native consumer product design company based in San Francisco. It specialises in products and household objects with a quirky bent: animal-shaped <\/span>tea steepers<\/span><\/a>, <\/span>bling-ring<\/span><\/a> bottle openers, and <\/span>Sriracha sippy cups<\/span><\/a> for toddlers, to name a few. <\/span><\/p>\n

GAMA-GO had been a successful business for over 15 years before it decided to launch its first Kickstarter campaign for the <\/span>Tea Otter Tea Steeper<\/span><\/a>. \u201cWe wanted to see whether or not leveraging our existing customers and fan base would be a useful strategy for launching new products,\u201d founder and creative director Greg Long says. (The company had another motivation, too: a competitor had launched a product that was a \u201cblatant, complete knockoff\u201d of one of its existing products. \u201cWe decided to play them at their own game and see how it goes.\u201d)<\/span><\/p>\n

Long believed crowdfunding could also provide a way for GAMA-GO to balance its cash flow more attractively. GAMA-GO launches between 20 and 50 new products every year. \u201cThere\u2019s a tremendous amount of development costs for each product, and we wanted to see whether any of that could be recouped up front,\u201d Long says. Typically, GAMA-GO pays for toolings and development costs, and recovers those expenses \u201cquite a bit down the road\u201d, Long says. Potentially, a crowdfunding campaign could recoup these costs almost instantly, which could have a significant impact on the company\u2019s operating expenses.<\/span><\/p>\n

GAMA-GO\u2019s Business Advantage<\/strong><\/h2>\n

Being an established business meant GAMA-GO was already familiar with all stages of the business lifecycle: design, production, getting the product through customs, and fulfilling the order. \u201cWe felt very confident that we would have a successful campaign, and we felt pretty confident that because we know how to manufacture, we know how to fulfill, that we would be able to deliver the product without too much of a problem,\u201d Long says. \u201cWe were very curious about the process, about social media, about how much effort everything took to have a successful Kickstarter and fulfill the Kickstarter.\u201d<\/span><\/p>\n

\"\"<\/p>\n

The process of designing, prototyping and getting the product ready for a crowdfunding campaign shared many similarities with a regular, non-crowdfunded product release, although there were some key differences. <\/span><\/p>\n

Before its campaign was launched, GAMA-GO had two tea steepers \u2014 a turtle and an otter \u2014 that were designed and \u201cready to go\u201d. \u201cWe made very sophisticated 3D prototypes of both of those items. Normally we do an in-house 3D prototype, but we went out-of-house and spent some money on getting really high-quality, realistic prototypes done.\u201d Long says this helped \u201ccreate media and pre-launch buzz\u201d. Then he asked GAMA-GO\u2019s fanbase to vote for their favorite product: the tea otter triumphed.<\/span><\/p>\n

\u201cWhen we normally do a product release, we certainly don\u2019t put a whole lot of social media push behind it because we\u2019re primarily a wholesale company. We don\u2019t usually do a tremendous amount of direct outreach to our customers,\u201d Long says. \u201cCrowdfunding was an opportunity to do that and we had a good time with it. It was fun engaging with people who were into it \u2014 there were 400 people who were really interested in getting a tea otter.\u201d <\/span><\/p>\n

Challenges<\/strong><\/h2>\n

In some ways, Long says, running a crowdfunding campaign can be more complex than traditional business operations. \u201cThe way that Kickstarter works with their metrics is that you must have a good first day,\u201d Long says. \u201cIf you don\u2019t, a lot of doors close on you and your chances of having a successful project are really diminished.\u201d The company focused its energies on achieving a strong showing on the first day, working to maintain that momentum through the end of the first week to show it was very close to reaching its funding goal. <\/span><\/p>\n

But even the most experienced campaigners run into obstacles, and GAMA-GO\u2019s campaign was no exception. Long says the company had \u201cbuilt in extra time\u201d to buffer for any manufacturing delays, but the factory it enlisted had slowed operations significantly, resulting in a two-month delay for GAMA-GO\u2019s production timeline.<\/span><\/p>\n

\"GAMA-GO's<\/p>\n

Crowdfunding campaigns are time-consuming, and Long advises project creators to ensure they have enough resources to cover all their bases. \u201cYou would need someone full-time just to work on the social aspects and the PR aspects of the story. Developing media that you can roll out regularly is critical,\u201d he says. But getting press coverage was \u201cextremely challenging\u201d, Long says. \u201cThe press is much more reticent to cover any crowd-sourced product\u201d. \u201cUnless you already have a very large user base, you need to figure out how you are going to get any sort of press.\u201d<\/span><\/p>\n

By virtue of its longevity, GAMA-GO has a substantial fan base. \u201cWe have been in business for 16 years,\u201d he says, \u201cand we worked hard to energize that fan base\u201d. He says there are \u201cpretty traditional cycles through the Kickstarter process that are well documented\u201d, and recommends that prospective project creators \u201cdo their research to understand how to motivate people to back\u201d before launching a campaign\u201d. \u00a0<\/span><\/p>\n

Long read about successful and unsuccessful campaigns online and took Kickstarter crowdfunding campaigners out to lunch and asked them \u201ca lot of questions\u201d before embarking on his own project. \u201cWe did a tremendous amount of preparation beforehand,\u201d he says. \u201cWe went it to it with our eyes relatively wide open.\u201d<\/span><\/p>\n

Greg Long will be appearing at a <\/span><\/i>panel discussion<\/span><\/i><\/a> on crowdfunding fulfillment challenges with project creators and representatives of Kickstarter and BackerKit at The Archery in San Francisco on February 23. Food and refreshments provided; reserve your spot <\/span><\/i>here<\/span><\/i><\/a>.<\/span><\/i><\/p>\n<\/span>","protected":false},"excerpt":{"rendered":"

What happens when an established business tries its hand at crowdfunding?<\/p>\n","protected":false},"author":4,"featured_media":3209,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-3197","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-case-studies"],"acf":[],"yoast_head":"\nBoost Your Business with Crowdfunding | BackerKit<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.backerkit.com\/blog\/boost-your-business-with-crowdfunding\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Boost Your Business with Crowdfunding | BackerKit\" \/>\n<meta name=\"twitter:description\" content=\"What happens when an established business 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