Tuesday, May 26, 2015

Is Your Business Idea the Height of Innovation, or Just Weird?

Ready for a venture?

Why Some Venture Capitalists Go for 'Weird' Ideas

When you start pitching ideas to venture capitalists, one of the first things you learn is not to go in blind. Because VCs tend to stick to the same industries, it is vital that entrepreneurs do their homework thoroughly. It is a good idea to find investors who have previously backed products or services similar to yours. Also find out other factors, like the stage at which they make investments and the level of involvement they have. A lot of this information is available on company websites. But what happens if you have a product or a service that serves an industry that does not exist? 

Maybe you are a pioneer

Just because you are not finding an overlap in what you are offering and in the VCs' profiles, that does not mean there is no hope for your idea. Perhaps you are onto something genuinely innovative. Remember the investors who first backed 3D printing or wearable tech did not have anything like that in their investment portfolios at the time. A few years ago these multi-billion industries did not exist. 

From crazy to viable

Some investors out there are even asking for so-called 'crazy' ideas to invest in. Look at Braintree founder Bryan Johnson, who told Fortune recently: “I want to get a company from ‘crazy’ to ‘viable,'” He has already invested in drones that service third-world countries, AI computers and interplanetary mining. The question for innovative entrepreneurs with is how to find somebody who will back their novel ideas. Not everybody can rely on Johnson; he only takes on a very small percentage of businesses.

Take it everywhere and pitch it hard

Nothing sells like conviction. Talk to anybody who will listen and hopefully it will eventually resonate with a VC with enough flexibility and capital to launch your futuristic brainchild. In the 70s, a university student called Fred Smith wrote an economics paper about an overnight shipping service and got graded a 'C' for it. Smith ran with his crazy idea anyway and it is now known as FedEx. In the 90s a financial analyst called Jeff Bezos noticed a marginal increase in online sales, which at that stage hardly existed. He thought that books would be a logical product to start selling online and started a website to do that. It took as many as 60 meetings to get the capital together with venture capitalists Nick Hanauer and Tom Alberg, who were some of the first to invest. That website now attracts millions of users globally and is called Amazon. 

Even though your idea may end up being more crazy than constructive, you never know. Today's outlandish idea may be tomorrow's Amazon, Facebook, Dropbox, or even Crocs.

Sunday, May 17, 2015

When You Have a Great Product but a Failed Crowdfunding Campaign

Why Some Great Products Are Not Successful in Getting the Required Crowd funding

Crowdfunding success stories get all the attention, and for good reason. Somebody somewhere thought up something amazing and worked on turning it into a marketable product. They then shared their vision with the masses and got some much deserved financial backing to get the wheels turning. The thing is, not all brilliant ideas can turn into crowdfunding superstars. Even if you have an amazing product, your crowdfunding campaign could still go very wrong. Although there could be many reasons, two of the most common problems are: the campaign is not hitting the right spot, or the product is great, but just not at the cutting edge of innovation -- like these two clever products that very nearly did not fly.

Crowd fouding

Campfire in a Can 

Although this portable propane fire pit is a great product, it initially failed to ignite the passions of the crowdfunding community. Inventor Leo Knight launched his ambitious campaign at the beginning of June 2014 with a goal of US$80,000. Knight cancelled it in late July, after a mere 297 backers pledged only 30-something thousand. Beaten but not discouraged, the inventor spent the rest of the year plotting his comeback. After looking into other campaigns Knight introduced his product yet again, this time with an improved promotional video, more in-depth descriptions and a more conservative funding goal of US$48,000. His efforts were rewarded with a whopping pledge amount of nearly US$125,000.

BeActive Brace

Akiva Shmidman is a physical therapist who invented a pressure brace that helps relieve back pain. He made a prototype in 2008, tested it with great success and called it BeActive Brace. For the next five years Shmidman spent time refining his product, until he felt ready to start promoting it. In May 2013 he launched his crowdfunding campaign. Unfortunately he raised a mere two percent of his US$50,000 goal. Shmidman realised that the crowdfunding community is more interested in innovative products than solving an old problem, like aching backs, and decided to ditch crowdfunding altogether. He took his life-changing device to an inventor's speed pitch event, where he impressed the audience with a live demonstration on one of the judges. In a matter of months, well over one million units were sold and in 2014 BeActive Brace became the most successful product sold under the 'As Seen on TV' category.

Not All Losers Are Losers

What we can learn from this is that even though a failed crowdfunding campaign can be disheartening, it does not mean it's the end of the road. The trick is to do some research, make some changes and try again, or try a different route.