The rise of alternative finance – in other words, those financial channels and instruments to have taken shape outside of the traditional financial system – has been one of the notable online trends of recent years. Peer-to-peer consumer and business lending as well as so-called ‘cryptocurrencies’ (such as Bitcoin) are among the many developments to be covered by this catch-all term, but arguably the most salient to the general public – to this point, at least – has been crowdfunding.
Historians might argue that the crowdfunding phenomenon can be traced back to the 18th century, when the publication of some books would be determined by levels of response to subscription schemes. But in a modern context the genuine trailblazer is none other than the post-Fish incarnation of prog-pop favourites Marillion, who underwrote a 1997 US tour via an Internet campaign. Subsequently, they issued the first fully fan-financed album, Anoraknophobia, setting a precedent for recording artists that would see acts as diverse as Amanda Palmer and De La Soul head down the crowdfunding route.
People in many other artistic disciplines have followed suit, but more recently the impact on manufacturing and other areas of business – particularly those active in more niche, lower-volume areas – has been similarly acute. Indeed, a recent report entitled ‘Pushing Boundaries: the 2015 UK Alternative Finance Industry Report’ and available via the Nesta website, found that 254,721 individuals, projects, not-for-profits and businesses raised finance via online alternative finance models last year, while a remarkable 1.09 million people invested, donated or lent through alternative finance platforms in the UK.
Kickstarter is the best-known of the crowdfunding platforms, but RocketHub, PledgeMusic, Indiegogo and Razoo are among the many others to have achieved traction. The pro-audio and MI sectors have certainly not been immune to the trend, so PSNEurope spoke to a few of the companies who have made crowdfunding work for them…
‘Kickstarter served as a POC to get private investment’
Based in East London, audio technology company Mogees is the brainchild of Bruno Zamborlin. Its eponymously-titled initial product combined an app and vibration sensor to transform any object into a unique musical instrument – the aim being, explains Zamborlin, “to help democratise music-making and enable non-musicians to learn the basics”. Its first fully commercialised offer, Mogees Pro, is built around a smart sensor and bespoke software that allows all manner of surfaces to become musical instruments. Subsequent product Mogees Play attaches to a phone or tablet and turns the world around the user into an interface for playing games, creating music and more, while the company’s latest release is a new app for iOS Mogees Pro and Play users, entitled Mogees KEYS.
The concept occurred to Zamborlin during five years of research at IRCAM/Pompidou Centre in Paris and Goldsmiths University London, but it wasn’t until early 2014 that he began to contemplate going into production via an initial campaign on Kickstarter that lasted one month and aimed to raise £50,000. In fact, says Zamborlin, “we got twice that, so the response was really positive. That translated to 1641 backers and about 3000 units, with some buyers purchasing two or more Mogees.”
With this tangible evidence of the concept’s appeal, Mogees has been able to secure $1.5m of private investment to date and embarked upon full commercial production with Mogees Pro. The rapid nature of this trajectory underlines what Zamborlin feels to be the primary benefit of crowdfunding for technology start-ups. “Kickstarter and other such sites have become a sort of proof of concept to subsequently get private investment,” he says. “In a lot of cases, if you go to an incubator or [angel investors] now they will actually ask you to see if there is any traction by doing a crowdfunding campaign – and if there is then they will fund you.”
A further Kickstarter campaign, for Mogees Pro, again comfortably exceeded its target, and Zamborlin anticipates going the crowdfunding route for at least some of his future initiatives. “It is a very direct way of raising visibility and gauging the interest in a project,” he observes.
‘It really helped us to raise awareness’
Boosting public profile for a new product was also an important part of the mix for Wiltshire-based Crookwood in deciding to utilise crowdfunding. Established by MD Crispin Herrod-Taylor in 1993, Crookwood’s pro-audio range has included mastering consoles, monitor controllers and remote controlled preamps, among many other products. But with Soundbuckets – which comprises both consumer- and pro-oriented active speaker models contained in (you guessed it) a bucket-shaped design – Herrod-Taylor wanted to reach a broader demographic.
“We became aware that using a site like Kickstarter allowed us to raise finance as well as awareness in hard marketing terms,” he says. “And indeed that proved to be the case, with coverage for the project in blogs, comment pieces and suchlike.”
Like Mogees, Crookwood set a one-month timeframe and managed to exceed its target by 50 per cent. Around 95 per cent of those who had pledged actually paid up, and soon after that the company moved into full production of the Soundbuckets, which are available in a host of different colours. “For us the Kickstarter campaign was about the right sort of size to get the first production batches up and running, and overall I would say the whole exercise improved our manufacturing abilities,” he says.
Sense of Flare
There are plenty of other examples to be found from the last two years alone. As reported by PSNEurope in June 2015, West Sussex-based Flare Audio went on Kickstarter and raised £177,277 (€241,125) with 1,260 backers – more than 177 per cent of its initial goal of £100,000 – to generate awareness of its “distortion-free” Reference series of in-ear and over-ear headphones and make them available for wider retail.
Investors were able to purchase one of three in-ear R2 models, or the R1 Mk2 over-ear model, at an introductory price that reverted to full price after the campaign concluded. There was a significant spike in pledges towards the end of the 28-day campaign, underlining the fact that constant proactivity and promotion is required for the duration of any such exercise, as Flare’s Naomi Roberts told PSNEurope: “People hold off pledging until they get all the information they are after. Reviews and endorsements helped massively as, after all, we are selling a product visually that people will be using aurally.”
In a new interview, Roberts reveals that a separate Kickstarter campaign for Flare’s ISOLATE ear protectors raised £462K (against a target of just £25K), with a subsequent Indiegogo campaign also proving highly sucessful. “And as far as the earphones go, we have recently secured significant investment which enables us to develop our technology and products further to enter the next stage of our growth strategy. Following the success of the R2s, we are currently working on our latest earphone, which we are due to release in November.”
Other notable recent examples include a Kickstarter campaign by Polish company Zylia, via which its 360-degree product AudioImmersion was made available for order last months, with the first shipments due to be made available in Q1 2017. Townsend Labs, meanwhile, has been hailing the ‘runaway success’ of its Sphere 3D condenser microphone, which was launched via an international crowdfunding campaign on Indiegogo and raised more than $100,000 in the first 24 hours. By the close of the campaign on 31 August support totalled $317,023 – 789% of its target – and 281 backers from across the globe purchasing the systems and pledging their support.
Sphere’s creators Chris Townsend and Erik Papp expressed “a huge debt of gratitude to all of our backers and everyone that supported us through the campaign. We have already started on production and are moving to deliver Sphere as soon as we can.”
‘Saturation point approaching’
Those keen to steer a calm course through this brave new(ish) world are directed to the ‘Crowdfunding Top Tips’ section [SEE BOX]. Meanwhile, the concern for prospective MI and pro-audio developers must be that crowdfunding sites are increasingly being saturated by such initiatives, and that potential investors could become exhausted by the process and even switch-off altogether.
“Oh yes, a saturation point is definitely approaching,” Zamborlin readily agrees. One answer to this could be more platforms operating as gatekeepers to a lesser or greater extent, and Zamborlin notes that “we are now seeing alternative platforms coming along that do propose to review projects before they are published online”.
With some sources suggesting that as many as 50 per cent of crowdfunded projects where the money is paid don’t come to fruition, that could definitely be beneficial. Nearly a dozen emails regarding future crowdfunding projects dropped into the inbox during the week or so in which this article came together, so one can expect plenty more start-ups to chance their hand at a route that has undoubtedly helped to facilitate a welcome wave of innovation.
Pictures: Top: Crookwood's range of Soundbucket portable speakers. Second: Mogees' Bruno Zamborlin. Third: The Mogee's vibration sensor set up to trigger the synth engine software on an iPad. Fourth: Crookwood's Crispin-Herrod Taylor. Fifth: Townsend Labs' Sphere 3D condenser microphone launched via an international crowdfunding campaign on Indiegogo. Last: Polish company Zylia has funded in AudioImmersion microphone through Kickstarter.