NCFAs innovation and funding ecosystem

Ottawa company’s home security system an overnight success on crowdfunding website

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Ottawa Citizen  | By Vito Pilieci, Ottawa Citizen September 20, 2013

Piper 300x244 - Ottawa company’s home security system an overnight success on crowdfunding website

OTTAWA — In just one month, Ottawa’s Blacksumac has gone from wallflower to belle of the ball.

The firm’s new Piper home security monitoring system has become a smash success on crowdfunding website Indiegogo, raising more than $260,000.

More than that, it took the company’s relatively unknown device and exposed it to a world of eager consumers with deep pockets. The company, which employs nine people locally, has gone from begging to draw attention to Piper, to answering calls from some of the largest retailers in North America.

“We’ve sold a quarter-million-dollars worth of product,” said Russell Ure, president of Blacksumac. “This product is not available in the market today. Imagine if it was?”

BlackSumac plans to start shipping the first commercially available Piper units in November. The crowdfunding campaign, which officially ended Friday night, was aimed at ramping up orders so the company could turn a small profit and begin manufacturing the units.

Piper plugs into a wall socket in a home, office or apartment, then connects to a Wi-Fi network and beams live high-definition video of that space to an application the Piper user runs on a cellphone. Users can see what’s going on at home, speak through a live, two-way microphone and speaker built into the unit, activate a high-pitched alarm, and even tie into an existing home automation system. That would allow Piper users to adjust a thermostat or dim lighting remotely.

BlackSumac was using Indiegogo to pre-sell a handful of the units in an effort to help raise $100,000 for the company. Piper smashed through its targeted goal. More than $75,000 worth of pre-orders came through in the last three days of the fundraising campaign alone.

The success the Ottawa company experienced underlined why so many startups are turning to the world of crowdsourcing in order to expand their businesses.

Ure said crowdfunding campaigns help companies like his who have a niche product that doesn’t seem to fit with conventional markets. He said one of the first questions investors ask is, “How have sales been?” If the company doesn’t have sales, then the conversation typically turns to, “How do other products in the market sell?”

If there are no other products in the market to act as a yardstick, then raising funds through traditional channels is immensely difficult.

“When you talk to any investor or venture capitalist, they are extremely cynical,” said Ure. “Their viewpoint seems to be, ‘What has worked?’ Not, ‘What’s going to work?’”

With thousands of pre-orders for Piper in his pocket and profit from those to help the company continue to expand, Ure believes he will have a much easier time securing future rounds of investment from more traditional avenues.

The BlackSumac story is only one of many that Indiegogo is working to push out into the open in a bid to get more businesses using crowdfunding to raise cash.

Indiegogo is one of a handful of online services, the most notable being Kickstarter, that have popped up to help small companies “crowdfund” their projects. Indiegogo works on a “campaign” system: Blacksumac would not have collected the funds it did if it hadn’t met or exceeded its $100,000 U.S. funding goal. The penalty for missing a crowdfunding campaign, which sees Indiegogo take a bigger cut, is aimed at encouraging companies to set realistic fundraising goals.

The crowdfunding platform, which was originally founded in 2007 in the United States, has embarked on a cross-Canada awareness campaign aimed at meeting with startups, businesses and other organizations, and explaining the benefits of crowdsourcing funds.

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