What is crowdfunding?
Crowdfunding is when companies or individuals take to the internet to raise funds, the two biggest sites out there right now are Kickstarter and Indiegogo. Generally there will be tiers of investment in to the product, ranging from a token amount just to back the project, all the way to the exclusive package or bulk amounts of the product. It’s the perfect way for small startups to get products to manufacture without having to sell large amounts of the company to investors. This allows them to stick to their vision and continue creating products that they know their customers will love. Even successful companies will occasionally turn to crowdfunding to gauge whether products are worth putting in to production.
Some incredible products saw the light of day thanks to crowdfunding like the Oculus Rift, Pebble Watch and the 3Doodler. Quite often if a project does well then the company will be bought out by a bigger one and inevitably the price will go up. So the early investment can work in your favour, not only can you get the product before anyone else, you could also save some money. Not all projects are a success, in fact it is far from it. Unfortunately with smaller startups comes larger risk, on average 9% of Kickstarter projects fail to deliver anything.
Do your research
Crowdfunding is starting to become commonplace but there is still always a gamble when backing online projects. It is important that if you want to back a product that you research the company before jumping in. If a project fails you are not guaranteed your money back, so you need to be sure about the product and the company behind it. If something seems to good to be true, it generally is.
The Story of Lilly Drone
Back in 2015 Lilly Robotics posted a product video online that went viral, it was essentially a camera drone that could do everything! It could take off from a throw, land in your hand and even take off and land in water. On top of that it could follow and record the user in full hd at 60fps for slow motion video all for around $500 (£319). They raised millions in pre-orders, but in 2017 it was announced that the product would not be released. The backers waited 2 years for the product and after all that time were left just having to apply for refunds.
2 years is a very long time in the tech industry and it would have been released around the same time as the DJI Spark that shares a lot of the features of the Lily Drone. It was never mentioned why Lily never made it to market. Many people speculated that the features boosted in the promo video were largely embellished and they couldn’t make it a reality.
Is it worth backing projects?
Lilly Drone and many others never made it to market, but crowdfunding is a great springboard platform for more established companies like Insta360 to test audiences for products before getting them in to production. They originally released the Insta360 Air Android 360 camera through crowdfunding at a great early bird price. In our opinion its the best money can buy in that pricing bracket.
The price point for those early bird pre-order customers is very appealing and often comes with extra perks that later adopters will not see. A good example is the Titch Micro Drone that is currently 30% off at the moment here on Indiegogo.
These types of platforms are integral in keeping fresh ideas coming from a much wider stream than the monopoly of big tech companies out there. Just use your common sense, do your research and enjoy the ride.