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DocH

Crowdfunding - is it for me?

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Hi all,

I have invented a widget. It's a single item that can be produced by injection moulding. Not everyone will want one, but it's genuinely helpful to a section of people who participate in a popular UK (and world) activity. Tooling costs are quite pricey, I've discovered - say £12,000, and there are other costs that'll bring a launch cost up to say £25,000. (VERY roughly).

 

I can't absolutely guarantee that there's a huge market, but I've had extremely encouraging feedback from people who do this activity (which includes me), who have played with my 3D printed prototype, and it does what it's supposed to do, very well.

 

I'm wondering about crowdfunding to 1) raise the start up costs and 2) also gauge the size of committed group of buyers. The item will need to retail at £9-10, I think. So I'll be looking for people to essentially pay in advance for their item(s).  Since it's a simple object, there's a limit to the kind of sweeteners that make sense - probably just discounts for ordering higher numbers. (Which organisers of the activity might want to do).

 

What are Dosbodders' thoughts about/experiences with crowdfunding? I'm thinking Kickstarter. Trying to raise this sum to sell items of this value means getting quite a LOT of people tp commit - is this realistic?

... Calling Dosbods' hive mind ...

 

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Would users want more than one? Price point makes the offer a little marginal at one off including postage and packing and getting enough interested parties. Time limits seems to major issue with crowdfunding campaigns especially if you need high subscription count - well targeted campaign to get the message out int he first place - if niche it is easier to get you tubers onboard to help campaign go viral of example. 

Also seems like the mould is such a high proportion of costs that absolutely critical to get that right first time - need to make sure with right company and skills to do that part.

 

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Remember that by publicising it you are letting the cat out of the bag as far as the idea/concept is concerned for others to potentially copy.

If there is money to be made others will be interested, especially in the far east where costs are near zero.

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Crowdfunding can work, but:

  • Understand your target demographic.  Kickstarter has different people that'll fund it compared with indigogo, etc.
  • Understand your target demographic 2:  It can be relatively difficult to get some demographics to fund things.  Young people fund, but don't have money.  Old people fund but are frightened.  Middle aged people fund but it's really got to catch their imagination, because the 'hurdle to be bothered going through with it given all the other distractions in life' can be quite high.
  • I'd suggest be careful with assumptions over the number you can sell.  Better to have a low number with an aspirational extra, than not get funding because you were too enthusiastic about success.
  • Get the timing right.  The point where you go live on Kickstarter is the end-stage of the marketing period, not the start.  There (should be) immense work even to get to that stage.
  • Only really go into crowdfunding when you know your market size.  Don't use it to investigate market size.  This sounds mad because it'll work well at gauging market size, but, OTOH, going in blind means that your funding efforts will almost certainly be exactly wrong.
  • IMO the days of crowdfunding are over.  I know of quite a few quite reasonable but unsuccessful projects in the last 12 months.

Beyond this.  

Work on MVP -- get the minimum product that'll work; don't get distracted by extras.

Work on minimum production figures.  Your tooling costs are right for the 100,000 @ 10p market, but it might be that the right approach would be to get things made at units of 1,000 @ £1 ea, but with way lower tooling costs.  If your market test is successful then you'll have the cash for tooling investment to scale up.  Note that you'll have to worry a lot about materials properties, because the low volume materials (prob. polyurethane) are very different from the high volume materials (ABS, say).

Marketing is absolutely definitely everything.  At this stage marketing costs will be a significant proportion of total costs.

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6 minutes ago, Chewing Grass said:

Remember that by publicising it you are letting the cat out of the bag as far as the idea/concept is concerned for others to potentially copy.

If there is money to be made others will be interested, especially in the far east where costs are near zero.

To get anything like a useful worldwide patent for example is going to take ages, cost £10k's to get if £100k's with  more annually to keep current,  most people I have talked to just say forget it unless you already have deep pockets. Will just act as a mental and financial blocker. Accept the fact that it will be copied but try and steal a march into the market is probably the best approach.

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Oh, and If this is your first 'thing', buy a book called 'art of the start' buy Guy Kawasaki, and follow it chapter by chapter.  It is probably about 10x longer than it needs to be, but it doesn't take long to read even then.

[Get it second hand on ebay and remember every time you touch it how most ventures fail.  This shouldn't fill you with despondency at the futility of it all, but rather how success comes from massive amounts of effort, no matter how wonderful the idea.  Even for the most brilliant, essential gadget, success comes from the effort of actually getting it done, not in the amazingness of the invention]

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7 minutes ago, dgul said:

Marketing is absolutely definitely everything.  At this stage marketing costs will be a significant proportion of total costs.

Absolutely, Im thinking Youtubers again, if it is something that is truly useful just send to out a freebie to appropriate channel owners no strings attached. If the product is good some will bite, especially if linked back to referrals sales as well. All needs to be thought out in advance as you need to crete a big bang as you can rather than a long drawn out pop pop. It really is all or nothing.

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1 minute ago, onlyme said:

To get anything like a useful worldwide patent for example is going to take ages, cost £10k's to get if £100k's with  more annually to keep current,  most people I have talked to just say forget it unless you already have deep pockets. Will just act as a mental and financial blocker. Accept the fact that it will be copied but try and steal a march into the market is probably the best approach.

Yes.  Forget about patents.  Get a decent name and trademark it.  Everything else is in 'first to market'.  If the gadget is a success then you'll have a few years of phenomenal sales and then the value of the brand.  This seems wrong as 'all the value is in the IP', but you wouldn't be able to afford getting patents, let alone policing them.  It is actually very sad, and is something that Trevor Baylis was championing in the years before his death (how to make patents more useful for SMEs).  Just work on getting the product to market.

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31 minutes ago, DocH said:

I can't absolutely guarantee that there's a huge market, but I've had extremely encouraging feedback from people who do this activity (which includes me), who have played with my 3D printed prototype, and it does what it's supposed to do, very well.

 

How much do 3D printed ones cost?

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4 minutes ago, eight said:

How much do 3D printed ones cost?

Forget it, I've done a fair bit, quality not good enough and speed is not either and material cost high - if the invention was a good idea by the time you had made a few thousand the competition would pick it and be manufacturing in 100,000's. 3D printing is however good for very small runs and prototyping , that's it.

Only other option is to get a cheaper mould maybe, one with limited run, I don't know much about it but if you could get a £5000 cheap mould that could say knock out 10,000 parts that could derisk a bit.

Edited by onlyme

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2 minutes ago, onlyme said:

Only other option is to get a cheaper mould maybe, one with limited run, I don't know much about it but if you could get a £5000 cheap mould that could say knock out 10,000 parts that could derisk a bit.

Known as a soft tool, in the trade.

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2 minutes ago, DocH said:

 

No,, just a single one-per user.

Shame. 

1 minute ago, eight said:

Known as a soft tool, in the trade.

What do they run at compared to "proper" one and how many runs can you expect (obviously lot of variabilities but roughly)?

 

Edited by onlyme

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1 minute ago, onlyme said:

What do they run at compared to "proper" one? 

Couldn't say now as I've been out of that game for twenty years. They're generally aluminium as opposed to steel and only last for a few thousand impressions compared to virtually limitless for a steel tool. The OP really needs the advice of a professional toolmaker as depending on the complexity of the item there might be a need for movable cores etc.

 

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How strong does it need to be and does it require much material?. Urethane resin cast in silicone moulds might work for 10-100s, it's not brittle like the polyester resin you usually see and will cast small sections/details.

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Friend of a friend recently had a failed kickstarter for an electronic device, created a professional fully functioning prototype. Apparently his take away was unless your product his hipster enough then something like kickstater is a complete waste of time.

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30 minutes ago, Kilham said:

How strong does it need to be and does it require much material?. Urethane resin cast in silicone moulds might work for 10-100s, it's not brittle like the polyester resin you usually see and will cast small sections/details.

That should (IMO) be the next stage -- 500 units in polyurethane.  Polyurethane is fantastic as you can find a formula that'll replicate the mechanical properties of just about anything, from a squishy foam to a tough and resilient form.  

Polyurethane & silicone is also great in the early stages because you don't need to worry quite so much about draft angles, wall thickness, etc -- all things that you (absolutely) need to employ a complete professional for injection moulding.  With PU/silicone you can get fantastic results even for a complex design (albeit it does actually have to be able to come out of the mould).  Obviously the costs can be quite high, but in the early stages you've got to worry far more about building the business than actual profitability (again, this sounds mad -- but the business (should be) about the route to get to 100,000 pa efficiently, not how to make a profit at 500 units.  The '500 sales' is about testing the market.)

[trouble is PU doesn't scale -- when you're in the 1000s you've got to be working towards (if not already at) thermoplastics.]

Edited by dgul

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7 minutes ago, Great Guy said:

Go to a patent agent and see how much a patent would cost? If this idea is as good as you think some manufacturer will make it and give you a royalty. 

Before you do that, go to a (friendly) patent agent and ask them if it is a good idea to even get a patent (or more broadly, discuss how you might best protect your broader IP).

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There seems to be a lot of pessimism/cynicism about patents. I know that Joseph Joseph had a LOT of trouble with Chinese ripoffs of their super kitchen stuff, but they got on top of it eventually.

The neat thing is that you don't have to patent something worldwide from the very beginning in order to get useful protection: if you apply for a patent in say the UK, then you have a year's grace as far as applying in the US or elsewhere in Europe - that is to say, if you apply for a patent in the US within a year of applying for it in the UK, your application in the UK is considered a prior filing, so it is considered to precede a filing by some guy in the states who notices and likes your idea and thinks he can patent it there for himself.

Thanks for all your comments, Dosbodders!

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21 minutes ago, DocH said:

There seems to be a lot of pessimism/cynicism about patents. I know that Joseph Joseph had a LOT of trouble with Chinese ripoffs of their super kitchen stuff, but they got on top of it eventually.

The neat thing is that you don't have to patent something worldwide from the very beginning in order to get useful protection: if you apply for a patent in say the UK, then you have a year's grace as far as applying in the US or elsewhere in Europe - that is to say, if you apply for a patent in the US within a year of applying for it in the UK, your application in the UK is considered a prior filing, so it is considered to precede a filing by some guy in the states who notices and likes your idea and thinks he can patent it there for himself.

Thanks for all your comments, Dosbodders!

But is that useful?  If you've got someone starting off with nothing it doesn't matter if the £50k (too low) costs come now or in 12 months time; you've probably only just started sales in 12 months time (if you're lucky).   And then, when the first copies start rolling in, do you have the ££s required to pay for the lawyers to stop the copying?  

Patents exist to support large multinationals.  They've got the muscle to pay for them and police them.

That's not to say that patents are completely useless for the SME.  I've got a few.  It is just that they tend to get in the way for the aspiring SME.  People seem to think that the right approach, from zero, is:

  • Invent->patent->(commercialise)->license->gazillionaire! 

(the commercialise bit appears to be optional for most).

Whereas the reality (for that approach) is:

  • invent->try to patent->struggle to get somewhere->spend all the money

Much better off (for the smaller guy) to do:

  • invent->commercialise->if you've got to worry about copying at this stage then you'll have decent sales and could well have continuing decent sales based on brand while you work on the next product, and if you've not worrying about copying then you've not got decent sales and the whole patent thing would have been a waste of money anyway.
  • or, invent->commercialise->get a brand that is sufficiently strong to be able to support sales on its own or be sold.

[BTW, your guy in the US can't file for a patent based on your patent filing.  Your filing would be prior art and disallow this behaviour.  The 12 months gives you a chance to patent, and if you don't get this then no-one can patent the idea in the US.  This is also the downside to patents -- you could ignore patents and develop your product, springing it onto the market worldwide when you're ready.  If you patent, even in the UK, then everyone around the world will know about your idea and can work on their version.]

[I'm actually in favour of UK only patents.  This is, of course, mad, but does have some logic.  UK only is fairly cheap (no translations, for a start), and easier to police (using home lawyers, etc).  If your product is successful then someone else will come along and take the world market (damn), then do a massive amount of marketing that you couldn't afford to compete against, but you've still got the UK market -- you can then either sell in the UK using their marketing or, better, license the UK market to the world player for a 'name your price' and then go and do something else.  Sure, this isn't the way to becoming a gazillionaire (only a millionaire), but the upfront costs are a fraction of worldwide patent costs, and millionaire would be enough for most.]

 

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Most patent agents will give you a bit of free time. I had a bloody good idea some years ago, and spent a while making sure that no one else was already making it.

It was only when i went to a patent agent that I discovered that some bastard had already patented the idea, but had never put it in to production.

Which was a real pisser but probably saved me from a lawsuit.

 

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4 minutes ago, Cunning Plan said:

Most patent agents will give you a bit of free time. I had a bloody good idea some years ago, and spent a while making sure that no one else was already making it.

It was only when i went to a patent agent that I discovered that some bastard had already patented the idea, but had never put it in to production.

Which was a real pisser but probably saved me from a lawsuit.

Good point -- trawl through uspto.gov before doing anything.

Note, though that existing patents are very useful:

  • They might only be for one area (eg, US, not Europe), which would mean you could proceed just in the UK/EU
  • They can inform about ideas that sound great, but that someone has tried before and failed at.  Not necessarily a showstopper, but useful information nonetheless.
  • An expired patent might stop you getting a patent, but it also means that no-one will have patented that something recently such that that patent would be published just as you're going to market (a bad thing).

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