About two weeks ago, I wrote about a startup company founded by two ex-materials science students that goes by the name of Power Practical. The company has developed some nifty thermoelectrics gadgets called PowerPots that combined a camper’s cookpot with an integrated power-generation system that could be used for LED lights, charging cell phones and enabling other USB devices.
One of the intriguing things (for me, anyway) is that instead of bootstrapping their enterprise via traditional investment sources, Power Practical turned to Kickstarter, a three-year-old crowdfunding project. With Kickstarter, projects must set a fundraising goal and are given a chance to make an online pitch for supporters to pledge anywhere from $1 up to hundreds of dollars, typically using a stair-step offer of premiums (like your local PBS station pledge drive). Through Kickstarter web pages, companies, such as Power Practical, can make use of videos, links to external websites, Facebook pages and anything else they can think of to help sell the idea of why they deserve monetary support. The only catch is that they have 30 days to reach their fundraising goal — and then its all or nothing: If your goal was $30,000 and you only got $27,000 pledged, you get nothing at the end of the 30 days. (There is some more fine print: If a company reaches its goal, Kickstarter takes a 5 percent commission, and Amazon, which handles the pledge/investment transactions, also takes a cut.)
Returning to Power Practical and PowerPots, the company’s Kickstarter goal was $50,000, but, hell, they soared past that weeks ago. Today is the last day of their 30-day period and they have raised more than $126,000!
Lest any reader think reaching this level of Kickstarter success is easy, a New York Times infographic shows that only 44 percent of the projects reach their goals, and the average financing for technology projects is only $11,704. So, relatively speaking, Power Practical/PowerPots smacked a Kickstarter home run.
Microfinancing efforts, such as Kickstarter, won’t replace in the materials science world’s corporate investments, venture capital or government support, but my guess is that this is still relatively unexplored territory. The New York Times story published around the time Practical Power jumped on Kickstarter reports on how projects have been moving from mainly novelty efforts to more serious tech-oriented proposals:
Although the site first began as a way for people to raise money for quirky projects like pop-up wedding chapels, around-the-world boating trips and offbeat documentaries, it quickly expanded to include video game production, feature films and innovative new gadgets, like the Elevation dock, a sleek stand for the iPhone, or Brydge, which turns an iPad into a laptop resembling the MacBook Air.
The NYT story also makes a great point that “Kickstarter offers budding entrepreneurs a way to float ideas and see if there’s a market for them before they trade ownership of their company for money from venture capitalists.”
Despite the success of PowerPots and other tech-oriented proposals on these sites, I would be remiss if I didn’t point out that not everyone is convinced that these general-interest crowdfunding websites are the best match for science and applied science ideas. Along these lines, two environmental scientists, Jarrett Byrnes and Jai Ranganathan, launched the #SciFund Challenge last year with a “call to arms” written by Byrnes.
The current rate of funding for science proposals in the U.S. is ~20%. … All of the traditional sources of cash for science — the National Science Foundation, the National Institutes of Health, NASA, private foundations — are getting harder and harder to access. And the situation is probably only going to get worse. So what is a scientist to do? … We’d like to propose an experiment to fund our science in an entirely new way — the #SciFund Challenge.
The #SciFund Challenge isn’t really a stand-alone website, but is apparently a subset of the larger RocketHub, mentioned above. It seems that the organizers try to package and publish a multitude of funding proposals in a series of “rounds” that are featured on RocketHub for one month. “Round 2” was launched this week and includes proposals from 70 different researchers. Here is a look at them:
According to the #SciFund Challenge blog, over $15,000 was raised during the first 24 hours.
What do you think? Is crowdfunding sci-tech work and startups a novelty or something that will eventually be engrained as another go-to option for researchers and entrepreneurs?