A New Crowdfunding Platform For Hardware Entrepreneurs

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Forbes by Rakesh Sharma | August 13, 2014

scott-and-team-hardware-crowdfunding

Scott Miller and a team of hardware entrepreneurs. Source: For

In the absence of investment capital from venture capitalists, hardware entrepreneurs have flocked to popular crowdfunding platforms, such as Kickstarter and Indiegogo, to finance their projects.

Come September, they will have another option.

Boston-based manufacturing services firm Dragon Innovation announced the launch of a crowdfunding platform exclusively for hardware entrepreneurs last week. Currently in a beta test, the platform is by invitation only. However, the firm plans to open it to a broader community of entrepreneurs in September.

For an upfront cost of $2,000 and regular transaction fees (that are comparable to other crowdfunding sites), hardware entrepreneurs will be able to crowdfund their plans or prototypes on the Dragon crowdfunding site.

The advance fee serves two purposes.

It sieves out the dilettante from the entrepreneurs. “Our platform is definitely not for the hobbyist (interested in a one-off project),” says Scott Miller, chief executive officer at the company. Instead, he says the site is targeted serious entrepreneurs interested in building a hardware company.

The fee will also serve as payment for services that Dragon Innovation plans to offer entrepreneurs on its crowdfunding platform. According to Miller, entrepreneurs will be able to access the services of Dragon’s experienced hardware professionals before pitching their product to general audiences through the site.

The access is expected to help them craft business and manufacturing plans to ensure fulfilment of orders post-campaign. “There is a big market gap in this space,” says Miller, referring to the high incidence of failures in fulfillment for hardware entrepreneurs. “We will be all over them (hardware entrepreneurs) to deliver final products to their customers,” he says, noting that this distinguishes the site from popular crowdfunding sites such as Kickstarter and Indiegogo. This will take the form of “poking and prodding” to ensure that entrepreneurs follow up on their  promise.

Miller says crowdfunding was added to the mix to reflect changes in the product development and marketing process. “Earlier, we spent millions of dollars in planning, developing and marketing products,” says Miller, who is a veteran of the manufacturing services industry and helped found iRobot, a popular Robotics company.

Crowdfunding reduces those costs by adding a “passionate, self-directed community of product evangelists” to the mix, he says.

Dragon Innovation’s contract manufacturing facilities in China, which already has names such as Pebble and Sifteo in its customer roster, may end up as the downstream provider of manufacturing services  to hardware entrepreneurs. However, Miller says that relationship will be optional for entrepreneurs crowdfunding their ideas on the proposed site.

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