8 Ecommerce Businesses Finding Success With Crowdfunding

Crowdfunding is a groundbreaking customer acquisition tool for startups.

1. It allows innovators to validate an idea without first building it.

Crowdfunding platforms are the most direct way to do that - you pitch your idea to the very people who might buy it. And so you get many more points of view, from the people who actually matter.

2. It levels the fundraising game for less connected entrepreneurs

Fundraising is tough enough as it is, and most startup founders draw their initial rounds of funding from family, friends, and acquaintances. But fundraising is multiple times tougher for entrepreneurs with fewer of these connections – many of them women, people of color, and the non-college-educated.

In essence - crowdfunding platforms allow anyone to find their earliest adopters and materialize a great idea.

And we've collected some examples of eCommerce entrepreneurs who launched from successful crowdfunding campaigns, and their thoughts on crowdfunding as a customer acquisition tool.

1. OpenaCase - world's most functional iPhone case is a bottle opener

SUCCESS: OpenaCase raised $283k for a $150k target. Founders Chris Peters and Rob Ward also founded Quad Lock, and are selling their products via their eCommerce site, Annex Products.

Crowdfunded out of necessity:

"We didn’t have the capital so we turned to crowdfunding to help raise the funds to need to produce it. When we put the idea on Kickstarter, we realized that lots of people loved the idea and were willing to put money towards it to make it happen. Nothing better than having your idea validated by people voting with their wallets." (Source: Tim Ferriss)

Kickstarter was just a platform; directing traffic was hard work:

"As Kickstarter was fairly new, we knew we had to drive a lot of traffic or a lot of customers to our Kickstarter project to get people backing the project. We thought we'd build up a bit of a community before we would actually launch the project. So we set up a Facebook page, got all our friends to jump on board, got their feedback, and set up a Facebook ad. The Facebook page really helped boost that campaign. And as soon as the Kickstarter launched, we spent pretty much every day trying to get in contact with Tech Crunch, Gizmodo, the local paper. We tried to get as much PR as we could." (Source: Entrepreneurs-Journey)

Learn more about Opena Case: How Opena Case Hit 189% Of Their $15,000 Kickstarter Target And Built A Million Dollar Business

2. Goldieblox - toys for the next generation of female engineers

SUCCESS: Goldieblox raised $285k for a $150k goal, which it surpassed in just four days.

Construction toys for girls "just don't sell", so the founder turned to crowdfunding:

"I actually had my prototype in hand, and I showed it to people in the toy industry, and asked for their feedback. And they told me that construction toys for girls just don't sell, and you can't fight nature, that girls just want dolls and boys want to build, and that's the way things are. So if I'd gone the traditional route of going to toy stores, I think I would've had a real uphill battle. By crowdfunding, I could put my idea out there to real consumers and get market validation. And it was incredibly validating." (Source: Upstart)

3. Real Food Blends - real food for tube-fed people

SUCCESS: Real Food Blends raised $15k for a $10k target.

IndieGogo connected founder to angel investors:

“Indiegogo helped me soft launch the product and create a following among people who need or know people who need this specialized product," said founder Bombacino. For example, the campaign connected her with Randy Lewis, former vice president of supply chain and logistics at Walgreen Co.

A successful campaign was then social proof there is a market for Real Food Blends. The company went on to receive additional funding from angel investors, and from Elevate Ventures. (Source: Internet Retailer)

4. Pebble - aka "The Kickstarter Watch"

SUCCESS: Pebble raised $10.3m for a target of $100k.

Founder pitched poorly, couldn't raise enough money:

Pebble started out in the Y Combinator but didn't raise as much as it was hoping for."You know when you see a product and you say, 'Damn, that's good,' but the founders are explaining it the wrong way? That's what happened to us. And it was mostly my fault." (Source: Entrepreneur)

Sought advice from Twine, filled the gap on Kickstarter:

"We had a pretty firm idea of what Pebble would look like. We just didn't have a bunch of cash to start actually building the product. So, we thought of some other ways to get funding, and one of them was Kickstarter. I Skyped those guys from Twine and asked them how they did Kickstarter. They chatted with me for two hours about the project, how you post your project, what are some of the things you want to keep in mind." (Source: Inc.)

5. Tile - lost-and-found, crowdsourced

SUCCESS: Tile raised $2.6m for a target of $200k. It also exceeded its target within 24 hours of launching its campaign.

Founders attribute success to great PR:

"For any crowdfunding campaign on any platform you are responsible for driving your own traffic. Make sure you have some great PR lined up. We started PR work a full 6 weeks before we even launched." (Source: NextShark)

“You’ve got to really get the word out and figure that outright from the beginning. You can have the greatest product and video in the world, but if no one knows, you can’t sell it." (Source: SmartCompany)

Traditional investment and crowdfunding can go together:

"We believe that crowdfunding and traditional investments should go hand in hand – traditional investments helped build the backbone of Tile. With the traditional investments, we were able to launch a successful crowdfunding campaign to turn these initial ideas into an awesome product that our users will love." (Source: HackThings)

6. Bo & Yana - interactive toy robots teach young children how to code

SUCCESS: Play-i raised $1.4 million for a $250k target, from dozens of countries.

Crowdfunded to test the market:

Unlike Pebble, Play-i had already scored $1m from Google Ventures. But it wanted to test consumer demand with a crowdfunding campaign, which was how it landed itself 11,000 pre-orders. Following its campaign, Play-i continued to raise another $8 million of Series A financing.

Offered perks to early buyers:

"We needed to build social proof right off the bat, so we created special perks for the first few buyers. Our first 1,000 backers got limited edition, exclusive outfits for their robots as an incentive to back early. We emailed our existing audience and friends several hours before our campaign went live so they could be among the first to back the project. This gave us the momentum we needed to get off to a good start." (Source: TechCrunch)

Being personable pays off:

"We responded personally to every email that came in, every comment on Facebook, and every question on Twitter. And we got them excited about our mission to bring programming to every child. We also released additional features and stretch goals in our updates based on feedback from our backers. They became a part of our story, and so many of them helped us spread the word about our campaign."

Learn more about Play-i and other hardware startups here: Customer Acquisition Resources for Hardware Startups

7. Vibease - first wearable smart vibrator

SUCCESS: Vibease raised $130k for a $15k goal.

Crowdfunding is helpful when manufacturing costs are high:

"The funds we'd gotten through angel investment were barely enough for prototype manufacturing. We are making hardware and developing the application at the same time – so each trial-and-error takes more time and money compared to software startups."

Crowdfunding is especially helpful for 'adult' products:

"Investors already tend to shun hardware startups, even though they now start seeing the potential in hardware thanks to Makerbot and Pebble. But for us, being in the sexual wellness industry was another challenge." (Source: Seeding Factory)

8. Macaw - the web design tool for programmers

SUCCESS: Macaw raised nearly $276k for a goal of $75k, and met its target within 24 hours of launching its campaign.

Raising funds without giving up company equity:

“Crowdfunding was a great way for us to connect with the community. Beyond raising capital without giving up equity, it helped us test the market, identify early adopters, and gain a solid user base to test our ideas with." (Source: Envato)

Important caveat: Most crowdfunding campaigns fail.

The most successful projects like Pebble get a lot of press, while only 44% of Kickstarter projects and 10% of Indiegogo projects ever meet their funding goal.

Ari Zoldan cautions against a starry-eyed view of crowdfunding your business:

Convincing real investors that you’ve got what it takes is your company’s first reality check, and raising money from professional investors forces you to be think hard about your company and be honest with yourself. It also gives you the benefit of having real, seasoned experts thinking hard about your company.

No one on Kickstarter, Indiegogo or their imitators is going to ask you to estimate your cost of customer acquisition or the size of your potential revenue streams or any other tough business questions.

It's not that crowdfunding is always a bad idea. The cases of Vibease and Goldieblox show that crowdfunding powers avant-garde ideas that might be passed over by investors. Others like Tile and Bo & Yana are evidence that you can do both because crowdfunding still has its value in testing consumer demand and building a fan base way early on.

But for entrepreneurs serious about going the crowdfunding route, it's important to surround yourself with expert advice and do your due diligence.

It’s better to ask the hard questions before you’ve burned through a year of your life and $100k of other people’s money.

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Read next: How 13 Of The Best Kickstarter Projects Achieved Success With Word-Of-Mouth