Bose follows big businesses like Heineken, Unilever, Motorola and Hasbro to try crowdfunding on Indiegogo.
Crowdfunding used to be about helping the little guys: websites like Indiegogo were for unknown brands to raise funds from people like you and me.
Now however, more and more big businesses are embracing ‘the crowd’ – and Danae Ringelmann‘s crowdfunding goliath today run campaigns for the likes of Heineken, Pfizer, Unilever, Motorola and Hasbro.
This week electronics giant Bose even launched a campaign to bring sleep earbuds to the market.
“Recently, established businesses have been using crowdfunding platforms before they prepare for mass-manufacturing of their products,” Joel Hughes, Indiegogo’s Director of UK & Europe told The Memo.
“Not because they need the funds, but because the market validation and opportunity to connect with customers through crowdfunding is incredibly useful to businesses of any size.”
It’s in response to this that Indiegogo has launched initiatives like enterprise crowdfunding – to assist large corporations with advice, hands-on support, promotions and analytics.
Making an estimated $3.8bn in revenue last year, Bose is hardly strapped for cash, and could easily have used its own profits to develop the new product. “We acknowledge that we don’t need the money like a typical startup does,” said the Bose team.
Instead the company says that the appeal of crowdfunding is that it connects them to a higher calibre of tester, which ends up in a better product.
“We believe it’s the best way to find highly motivated testers,” added Bose. “Testers who pay for the prototype are likely living with a severe ‘noise in the bedroom’ problem, they’re going to use the prototype rigorously, and they’ll provide more and better feedback to help us improve the product and user experience.”
Other Indiegogo partners have echoed the benefits of the enthusiastic audience crowdfunding brings.
“Right away, it opens a dialogue,” said said Dawn Noel Dolan, senior manager of Whirlpool’s recent crowdfunding campaign.
In terms of finance, it should be obvious that no sensible company would turn its nose up at ‘free funding’, no matter its size.
And by giving brands an easy water to test consumer interest, crowdfunding also gives big businesses the opportunity to sink bad ideas fast, potentially saving huge sums.
GE Appliances used the crowdfunding platform to launch two products – the Paragon Induction Cooktop and Opal Nugget Ice Maker – raising $3 million to become one of Indiegogo’s top 10 most successful campaigners of all time (a great example of how big brands can increase revenue for Indiegogo).
“If it flops, no worries,” said Natarajan Venkatakrishnan the Head of R&D for GE Appliances. “Upfront costs were some 20 times less than a traditional product rollout, which can cost tens of millions of dollars.”
“If we’re going to fail, we want to fail fast.”
Crowdfunding rival Kickstarter is not leaning in to enterprise crowdfunding. “Pursuing projects from big-name companies is not a focus of ours. We prefer to focus our efforts on supporting independent creators,” a Kickstarter spokesperson told The Memo.
But there’s no doubt that Indiegogo’s big business crowdfunding is part of a wider trend.
Even Made.com has brought the funding model to the furniture world with its crowdfunded TalentLAB designs.
For now, crowdfunding is still a lifeline for inventors and small businesses, but it’s going to transform the world of big business too.