April 24th, 2017
Companies turn to crowdfunding sites
The Indiegogo launch of her innovative underwear brand Knix Wear last May netted founder and CEO Joanna Griffiths an 18-store Hudson’s Bay preorder and more than $60,000.
Since then, she’s shipped 13,000 pairs, forged a partnership with Lycra and put Knix on shelves in 14 U.S. states and more than 100 stores.
So why has the winning entrepreneur returned to crowdfunding with FitKnix, a follow-up athletic line?
“Just because you have big retail partners doesn’t mean that you have all this cash in the bank,” explained Toronto-based Griffiths. “Sometimes, the bigger the retail partners, the longer the payment terms, and the bigger the impact it can have on your working cashflow requirements.
“Because we’re so new, we’re not in the position where we can afford to make a mistake. Crowdfunding is a great way to help with our cash flow and to reach new customers.”
Sites such as Indiegogo and Kickstarter, which became popular as funding alternatives for fledgling entrepreneurs, are increasingly becoming ongoing finance platforms for established, for-profit businesses.
“The heart of crowdfunding and the heart of Indiegogo is about communities building things together; whether that’s somebody who’s emerging . . . or if it’s somebody who’s a pro,” said Ayah Norris, Indiegogo Canada’s marketing and community manager. “We’re merit-based, so the campaigns that we promote are based on the traction you build yourself.
“What we see a lot of the times . . . is that people do their first campaign and they learn so much through the process of doing their campaign that they’re excited to run another.”
It’s an attractive way for small operations to raise capital without giving equity to investors or paying interest on bank loans or lines of credit. Instead, such campaigns offer donors gifts or discounts on services or merchandise. Indiegogo takes nine per cent of donations if the fundraising goal is not met; four per cent if it is.
A month after wrapping a campaign that sold more than 400 pairs of its polarized bamboo and hardwood sunglasses, Victoria’s burnt. is back on Indiegogo to meet demand, since its ecommerce site isn’t yet ready.
“The idea of going to a bank and taking out $10,000 and trying to market traditionally . . . I‘ve never even considered it,” said co-founder James Hanson. “This is a great way to develop interest. I can’t see a homegrown business developing any other way in the future.”
The company, which is trying to determine if consumers would willingly pay more if their glasses were sourced and made in Canada instead of China, may yet run a third Indiegogo campaign for a different product under the same brand, he said.
“If we can keep the momentum, and keep building the community, and adding to the people that have seen us, we’re thinking at some time we’ll be able to sail off the crowdfunding sites.”
Griffiths credits her initial experience on the financing site for honing Knix Wear’s direction.
She initially pitched her product to new moms and others experiencing “stress incontinence,” but consumers responded poorly. “Women, even if they experience an occasional light leak, they don’t know that it’s called that, and no one wants to be told that they’re incontinent,” Griffiths said.
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