Entrepreneurs find financing a bit at a time on Kickstarter
NEW YORK -- Paula Patterson recently was back in her studio, where she has spent nearly every weeknight and too many weekends to admit since January.
From her day job as a graphic designer at an executive search firm in midtown Manhattan, she takes the subway and a bus to Brooklyn. That leaves her about two hours to build another V-Luxe, the iPad stand she designed as a birthday gift for her boyfriend last summer and soon afterward decided to market online.
"If there's one thing I failed to estimate, it was the time this project would take," said Ms. Patterson, 41, looking exhausted but also relieved, because the last of the V-Luxes were boxed up on her worktable, ready to ship.
The recipients were backers she found last fall, through the Web site kickstarter.com. For pledging at least $500 toward her $5,000 financing goal, they are entitled to a finished V-Luxe, which stands about 18 inches high, is made of three species of wood, and looks a little like a television from the 1950s.
She is among a growing number of designers who are using the site to get their sketchpad ideas into production, through crowd-sourced financing. Kickstarter's design category shows dozens of projects in search of backing, from screen-printed glassware billed as "awesome glasses for awesome people" to a sustainable house intended for use in developing countries.
Of the various projects the site features, including film, books, musical recordings, fine art, and, recently, a piano duet performance inspired by the punctuation in a work by J.D. Salinger, film remains the top category in terms of the amount of money raised since the site was started 2 1/2 years ago. But at least half the site's "blockbuster" projects -- those that have received $100,000 or more in financing -- have been design-related, said Yancey Strickler, one of Kickstarter's founders.
In the current economy, that's the kind of opportunity that designers, particularly those starting out, may have a hard time finding elsewhere.
"It's been so gratifying," said Ms. Patterson, who received a PhD in architecture from the University of Washington in 2009 but has yet to find work as an architect. "Especially with this job market, when you're a designer and your field barely has a pulse." She used the roughly $5,900 she raised on Kickstarter, she said, to pay the rent on her studio in Brooklyn and to buy tools and materials.
More established designers are also finding the site helpful.
Take Tom Gerhardt and Dan Provost. Both men had degrees in environmental design and were working at design firms in Manhattan when they came up with the idea for the Glif, a plastic tripod mount and stand for the iPhone 4. They raised more than $137,000 on Kickstarter last fall, partnered with a factory in South Dakota, and now sell the Glif for $20 on their Web site.
By April, Mr. Gerhardt and Mr. Provost, who are both 27, were successful enough to quit their day jobs and start their own design firm, Studio Neat. That was around the time they introduced their second Kickstarter project -- a stylus for the iPad they call the Cosmonaut -- for which they raised about $134,000.
They could have used Quirky.com, a social product development site that accepts ideas from inventors, handles the manufacturing, and then pays them a royalty. But "for us, Kickstarter was the only option," Mr. Gerhardt said. "A big thing was having control over the project."
Alex Andon, 27, creator of the Desktop Jellyfish Tank aquarium, raised almost $163,000 from 515 backers through Kickstarter and now plans to "go all in," he said, on a factory run.
"A lot of minimum orders at a factory are 50 grand," Mr. Andon said. "If you took Kickstarter out of the equation, we'd be very low on cash, and I'd be very stressed out and worried the tank wouldn't sell."
Although design projects are popular with Kickstarter's users, the in-house committee that reviews submissions also declines more ideas in the design category than in any other, Mr. Strickler said. "We stress that people have a prototype before they come to us," he said. "If you have a sketch on the back of a napkin, we see that as too risky."
On Kickstarter, tech or Apple-related products tend to do well because they appeal to Web-savvy users, it helps to introduce projects around the holidays and promote them on Facebook and Twitter, and the short video that accompanies every pitch is particularly important.
For his video on the jellyfish tank, Mr. Andon rented studio space and hired a professional cameraman, but CheyAnna Peterson, 26, the South Carolina-based artist behind the "awesome glasses," said she "probably watched every video of every project that was currently live" before going live with hers.
Most designers find the site's easy-to-use, low-risk platform appealing, especially because it doesn't require up-front capital. But Kickstarter does require the creators to meet a set financing goal in a specified amount of time or they will not receive any of the money their backers have pledged. And that can be stressful.
Kickstarter doesn't provide manufacturing, legal vetting, or other resources for bringing a product to market. How to negotiate favorable terms with a factory or set retail prices that allow for a comfortable profit margin are matters the designers must figure out for themselves.
Mr. Gerhardt said he and Mr. Provost made "seven or eight" prototypes of the Glif before ever approaching Kickstarter. But they still ran into warehouse and delivery problems.
Ms. Patterson set a modest goal to make sure the V-Luxe was financed and decided on a $500 sale price because it was roughly equivalent to the price of the least expensive iPad. But she neglected to calculate the per-unit production costs, and because building one V-Luxe requires a 200 steps, "the labor has been donated," she said.
"If I was being realistic, we probably needed $10,000 to $15,000 to get started, and these things should cost at least $750," she added. "Below $750 is a losing enterprise."
Kickstarter, she joked, "allows you to dig just enough of a hole."
Many who have used the site say it is best suited to projects that are a labor of love. As Ms. Peterson, the glassware designer, said, "You have to be prepared and committed to every project you put on there."
For Ms. Patterson, the V-Luxe has been a learning experience. She is now close to an arrangement with a factory to produce the stand, which should reduce her workload and production costs. The Kickstarter campaign, she estimated, has covered only about 20 percent of the money she has spent so far.
"I'm more in debt, and so exhausted," she said.
Still, she was quick to add, Kickstarter enabled her to produce one of her own designs, a longtime goal. "We wouldn't even have gotten the traction to get going without that money.
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