Like many an inventor and entrepreneur over the years, Dan Ikoyan probably could have cajoled friends and maxed out a few credit cards to raise the $50,000 he says he needs to take his TruPosture “smart shirt” to market over the next 24 weeks. Instead, he made a very conscious decision to raise funds through a crowdfunding campaign that launched on Indiegogo this Wednesday.
“The whole idea is to validate the market, create buzz and talk, and get people to actually use their credit card and preorder,” Ikoyan said the day before the launch. “There’s a lot of stuff that needs to happen — including the messaging, the product definition, the videos — and it all has to happen at the same time.”
There is, in other words, a lot of branded content that needs to be created to support a “rewards” crowdfunding campaign — which, in this case, starts with a 50%-off offer of the TruPosture undershirt for $99 and ratchets ups to a $1,099 “Chiropractor Pro Package” of 12 shirts.
TruPosture contains embedded nanosensors that Ikoyan’s company, Adela Health, claims will help you improve your posture and reduce back pain. The sensors measure the curvature of your spine when it is in its optimal position; they then deliver a vibration when you’re slouching or leaning. They also connect via Bluetooth to smartphone apps, allowing users to see real-time visualizations of their spine against their ideal position.
As of early Friday morning, TruPosture had raised $6,028 from 48 backers — 12% of the 30-day goal for funding that would take the product through finished designs for the packaging, updated apps, production, assembly and shipping to customers within 24 months. It also had 2,347 likes on its Facebook page, 406 followers on Twitter, and nearly 500 views of its primary video on YouTube. Concurrent media outreach has so far yielded several online articles, a podcast interview and the expectations of a product review from two major tech websites.
Ikoyan, an engineer who is an avid runner and mountain biker, came up with the idea for TruPosture six years ago after health professionals told him his back pain was due to poor posture. But it’s one thing to be told to “sit up straight,” entirely another to remember to do it. Ikoyan self-funded his own research and got a patent. Then he and a co-founding investor put together a sales, marketing and tech team last year. More recently, Adela hired The LaunchPad Agency to help with the crowdfunding campaign and other marketing efforts.
As with any marketing effort, it’s essential to identify your target and engage it with relevant content. But “the secret to any crowdfunding campaign is driving traffic,” points out Sean Angus, president and co-founder of LaunchPad. And that’s where it pays to have friends. Lots of them. “The number one reason crowdfunding campaigns fail is lack of social capital,” Angus says.
LaunchPad’s fee for a crowdfunding effort ranges from $10,000 to $30,000. A lot of the differential depends on how much social capital a client has built up. The more you have going in, the less LaunchPad needs to do, and the lower its fee.
A concurrent “conventional” Facebook mobile ad campaign is “getting great numbers,” Angus says. And a B2B email campaign to physical therapists, chiropractors and the like — who, he says “may be a little slow to embrace a crowdfunding campaign” — is providing valuable feedback.
The overall crowdfunding market — including GoFundMe, Kickstarter and hundreds of smaller platforms — has doubled every year since 2011, when $1.5 billion was raised, to 2014, which saw $10 billion in play, according to Crowdfunder.com. Four slices make up the pie at present: rewards (43%), donations (29%), equity (15%) and lending (13%).
Angus feels the equity portion “will be huge” once the SEC adopts the final rules for Title III of the Jumpstart Our Business Startups (JOBS) Act, which the SEC has indicated will happen before the end of the year. Ordinary people will then be able to take equity crowdfunding stakes in offerings up to $1 million, not just “accredited investors” with a high net worth.
And that’s going to require a huge amount of content that not only tells compelling origins and benefits stories but also meets all the transparency and due diligence requirements of a public offering.
The halo effect of a crowdfunding campaign is essential to establishing credibility in the marketplace, Ikoyan feels. If Adela breaks even after getting its pre-orders, starting production and shipping the initial run, he says, “I think we’ve won.”
