For an entrepreneur looking to launch a hardware product, crowdfunding platforms like Kickstarter or Indiegogo can be a game changer.
ButJosh Udashkin, founder of smart suitcase startup Raden, says he made the decision early on that a Kickstarter would be a bad idea.
“I didn’t want [the product] to be too engineer-driven,” he explains to Business Insider.
He says that with crowdfunding, the tendency is to introduce a few features that can blow you away in an introduction video, not toward designing a product that people will love in the long run.
This phenomenon, and unrealistic expectations about the ability to deliver those features, has likely led to the many high-profile flameouts crowdfunding sites have had over the years. Take this drone company for instance, which went up in smoke after raising $3.5 million.
- Business Insider
Udashkin says he didn’t want the pressure to over-design his suitcases, so he didn’t go for crowdfunding. However, this presented a bit of a challenge when he was trying to raise money.
Venture capitalists want to see traction, he says.
“Some of them wanted to see that Kickstarter,” he says. That’s because for hardware startups, one of the big ways of telling if people actually want the product is through a Kickstarter.
Instead, Raden had to rely on a compelling prototype and Udashkin’s selling skills. Raden ended up raising $3.5 million from First Round Capital, Lerer Hippeau Ventures, and private investors. This was enough to finance its first production run without preorders.
But other smart luggage startups have taken the opposite approach. After failing to raise enough money on Kickstarter last year, Modobag, which wants to make luggage you can literally ride on, has taken to Indiegogo. The startup has so far raised over $300,000 in this new venue.