CrowdFunding in the OC

posted Nov 29, 2012, 8:46 AM by Unknown user   [ updated Nov 29, 2012, 4:28 PM by David Khorram ]



O.C. Kickstarter successes hitting market

Three Orange County entrepreneurs turned to the crowd-funding website to raise money for their projects.

Feargus Urquhart's company has never owned its creations, despite making video games for nearly a decade. Jeffrey Hsieh made a Siri-powered smartwatch but had no idea whether customers would wear the accessory. Brian Fargo wanted to make a sequel to a 1988 computer game but couldn't find anyone to bankroll it.

All three Orange County entrepreneurs turned to the crowd-funding website Kickstarter this year to raise money for their projects. 

  • Urquhart got $4 million,
  •  Hsieh $221,000 and; 
  • Fargo $2.9 million.

New York-based Kickstarter helps creative people and startups finance video games, albums, films, books, gadgets and other projects, raising $363 million in three years. Only 17 Kickstarter projects have garnered more than $1 million and three of those are based in Orange County.

But it's not easy. Fewer than half of all projects reach their funding goals. Running a successful project is a full-time job and could cost thousands to manage, says Jim Redner, a publicist who helped steer two of the highest-earning Orange County campaigns.

"The first thing I tell companies is that Kickstarter is like a baby," Redner said. "It needs constant care in order for it to survive and flourish."

Kickstarter, with 3,300 projects active on the site, has seen huge growth this year in areas such as video games. Beyond just bankrolling projects, though, the site also allows people to sharpen their ideas and attract passionate supporters before hitting the broader market.

Here's a look at how nine successful Orange County projects have fared.

1. Olloclip

Owner: Patrick O'Neill of Huntington Beach

Funding: $68,201; raised June 2011

Summary: O'Neill invented a lens system called Olloclip that slips around the corner of an iPhone and stays there snugly. In one direction the camera lens is a fisheye. Slip the tiny accessory off, flip it around and put it back on, and it's now a wide angle. Unscrew the wide angle and there's a third lens hidden inside – a macro for super close-ups. When O'Neill turned to Kickstarter, he was well on his way to making the Olloclip a real product. He had borrowed against the equity in his home for seed money. Kickstarter gave him a platform to raise more money to push the product out the door and, more important, attract early customers who could help build buzz for his product. More than 1,100 people raised nearly $50,000, each pledging $45 through Kickstarter to preorder the lens. "What we really needed were customers," O'Neill said. "That's what Kickstarter gave us."

Latest: The $70 Olloclip is now in the Apple Store, Best Buy, Target, Walmart and Office Depot, and O'Neill recently released a version of the lens for the iPhone 5. The company employs about 25 and is searching for a larger office. O'Neill obtained a patent in October.

2. iZZi Orbit and iZZi Solo

Owner: Jayson Guzman of Irvine

Funding: $29,407; raised in October

Summary: Guzman also wanted to enhance the iPhone camera and approached it from a different angle – with an iPhone lens and case combination. He sought $25,000 to set up production in the United States for a case that adds the heft and shape of a point-and-shoot camera to the iPhone. The cases come with lenses built in, including a telephoto for far-off subjects. "Kickstarter wasn't a make or break for us. It was a proof of concept," Guzman said. "How are consumers going to react to the product without being able to see it?"

Latest: Guzman is launching the product Dec. 1 with an iPhone photography exhibit at the Crewest gallery in Los Angeles.

3. Revolve

Owner: Jeremy Canterbury of Laguna Niguel

Funding: $71,664; raised in May

Summary: Canterbury, a recent UC Santa Barbara graduate, designed an inexpensive camera dolly that could be used for smartphones or relatively lightweight SLR cameras to shoot Hollywood-like tracking shots. He set a goal of $7,500 for the initial production run, but by the time fundraising ended in May he had almost 10 times that amount. He offered the dolly for preorder to early bird backers for about $59. "We were able to fulfill all of the Kickstarter preorders," he said. "The initial capital from the Kickstarter campaign was enough to manufacture nearly double the amount of inventory necessary to fill those orders, so in the time since, we have done nearly $40,000 in sales and are almost sold out and ready for another manufacturing run."

Latest: Canterbury recently re-launched his website and sells the dolly starting at $99.

4. Wasteland 2

Owner: inXile Entertainment in Newport Beach

Funding: $2.9 million; raised in April

Summary: Brian Fargo appeals to fans of an earlier generation of computer games when he pokes fun at the gaming industry in his five-minute Kickstarter pitch for "Wasteland 2," a video game sequel. He uses humor to show how a game creator, like himself, has to work through publishers who may not be interested in making a sequel to a 1988 game. "I'm pretty sure my mom graduated high school that year," says a fictional publisher in the video. When Fargo turned to Kickstarter, his company launched a complex fundraising campaign that far exceeded the original goal of $900,000. The lowest level of support – just $15 – promised a downloadable copy of the game. More than 32,000 people gave that amount; because there was no physical product to ship, the orders cost inXile practically nothing to fulfill. The funding levels stairstepped up from there – from $50 (for a physical copy); to $100 (for a collector's edition), to $1,000 (backers became part of the game) to $10,000 (12 people received perks including a private party with game creators). "I've never had more pressure to deliver a game in my life," Fargo said during the campaign earlier this year. "There's no retailer in the way, and there's no publisher in the way. I'm just standing here eye to eye with my fans."

Latest: "Wasteland 2" is scheduled to be released in October.

5. Project Eternity

Owner: Obsidian Entertainment in Irvine

Funding: $4 million; raised in October

Summary: Obsidian Entertainment doesn't own any of the characters and worlds in video games that the company has been building since 2003. Obsidian CEO Feargus Urquhart used Kickstarter to change that and create "Project Eternity, a game similar to role-playing titles from an earlier era. To attract donors, the company built reward tiers between $20 and $10,000, offering incentives modeled after inXile's successful campaign. Five people contributed at the $10,000 tier, which included an invite to a private party. In all, nearly 74,000 people backed the game, raising $4 million and making it one of the highest-earning projects in Kickstarter history.

Latest: "Project Eternity" is expected to be released in April 2014.

6. Oculus Rift

Owner: Palmer Luckey of Long Beach

Funding: $2.4 million; raised in September

Summary: Palmer Luckey invented a virtual reality headset called the Rift that he pulled together from smartphone parts. The Rift could be a game console of the future that, when strapped in front of the eyes, lets gamers disappear into a 3-D world. Luckey set a goal of $250,000 to begin shipping early versions of the headset to developers. The lowest levels of support offered T-shirts or posters, but for $275 and $300 donors could get the headsets. Oculus VR, the company Luckey co-founded to make the gadget, warned backers that the system was not ready for consumers, just developers, as they far exceeded the funding goal.

Latest: Oculus VR set up shop in Irvine last month.

7. CameraMator

Owner: Usman Rashid of Irvine

Funding: $103,367; raised in September

Summary: With the help of 455 people, Usman Rashid raised 25 percent more money than he needed to ship a wireless photo transmitter for high-end cameras. The gadget mounts to the top of many SLR camera models and allows users to transfer photos wirelessly to an iPad, iPhone or Android gadget and wirelessly control some camera functions. Rashid plans to sell the device for $300. On Kickstarter, though, early birds preordered the gadget by pledging $185. "It's been great, especially because of the feedback we got," Rashid said.

Latest: The gadget is expected to ship in December.

8. Martian Watches

Owner: Martian Watches in Irvine

Funding: $221,298; raised in September

Summary: Martian Watches, an Irvine startup, passed its $200,000 goal for the first production run of a Siri-powered smartwatch a few days before the campaign ended. The watches look like classic analog timepieces but come with a microphone, Bluetooth, speaker and a small screen to accommodate a single line of text. That allows wearers to use an iPhone or Android as the brains of a voice command system that extends to the wrist. Many of these smart features were initially listed on the face of the watch, but the creators quickly changed the design after hearing from Kickstarter backers who didn't care for the cluttered look. "The most important thing we can get from Kickstarter is not the money. It's the firsthand market feedback," said Martian Watches founder Jeffrey Hsieh. "We want to use this like planting a seed – so we can build our own supporter community in the long run." The company promised early bird backers a watch starting at $110.

Latest: The watches are expected to retail for $180 to $230 when they start shipping next year.

9. Axle

Owner: Fallstreak Studio in Orange

Funding: $20,357 raised on Nov. 18

Summary: A team of Chapman University students built a mobile game called Axle that won first prize at an intercollegiate gaming showcase this year. They made the game for experience, but Kickstarter provided the opportunity to fund a business. The students set a $15,000 goal to fund device testing, software licensing and cover other business expenses. The students set stretch goals of $22,000 and $30,000 that would allow them to add additional features and release the game for iPhone. They funded the initial project but failed to make the stretch goals. In all, 303 people backed Axle. "A lot of people our age are going home and living with their parents," Liz Fiacco, who designed Axle, told the Register recently. "We want to show this is an avenue to look at. You can make a job for yourself!"

Latest: The game is expected to be released for Android in April.




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