Think Toronto startups seeking funding, and you might conjure up an image of networking over drinks, or meetups between investors and founders.
Conventionally speaking, that may be the case, but a growing number of startups have turned to crowdfunding platforms like Indiegogo, Kickstarter, and the slew of other sites out there connecting backers and founders looking for financial support from the public for their ideas.
Toronto has its fair share of crowdfunded startups – and at Indiegogo’s city sessions on Wednesday, a number of them came out of their rented rooms and basement offices to explain why they turned to crowdfunding to make their projects work.
Take the example of Andrew Cox and Adam Brandejs, the duo behind Matterform. Working out of a rented space on Sterling Road, the two met in 2007 when they were both working at an advertising agency. Last August, while Brandjes, a sculptor, was trying to create organic shapes using a computer and a 3D modelling program, they realized there could be a market for a 3D scanner that would make it easier for consumers to scan physical objects and create a design for them. After scanning these designs, consumers could then have them printed at a 3D printer, if they didn’t own one themselves.
Their 3D scanner retails for about $600, versus a consumer-facing 3D printer, which may cost upwards of a few thousand dollars.
“We were just playing around, but we thought a scanner would be so useful,” Cox recalled, adding they quit their day jobs and switched over to a Kraft Dinner-diet to fund their new startup. “We were like, let’s make a scanner, it’s so easy, we’re sure we can do it and figure out the math … and we knew we would be crowdsourcing, because we didn’t know if anyone would want it.”
Apparently there was some appetite for their 3D scanner after all – Matterform’s 3D scanner netted about $471,000, making it the most funded international campaign to date on Indiegogo. Cox and Brandejs were originally shooting for $81,000, leaving them with trying to fill about 1,100 orders in the next few months. Matterform is currently going into the tooling phase, and aims to start shipping the 3D scanners to backers this fall.
It’s a similar story for Marc Nicholas, founder, CEO, engineer, and communications for his almost one-man company, Wimoto Technologies. Without crowdfunding, he said, it wouldn’t have been possible for him to raise the money to build his home and office sensors – small, wireless squares that fit into the palm of a hand.
Nicholas anticipates a number of use cases for these sensors – either as sensors that keep track of the temperature inside a consumer’s home, or even testing the moisture level in the soil in the garden outside. Those concerned about home security might also use the sensors to track motion inside their homes. The sensors track all of this data and then send push notifications to a user’s smartphone via Bluetooth Smart technology, letting them know if they need to either turn down the heat, water the tomatoes, or watch out for potential intruders. Businesses interested in running smart buildings can also set up the sensors to monitor where the heating and cooling systems are weakest or least efficient, he added.
If users want to access the data later for their own records, it’ll be hosted in the cloud. Wimoto Technologies also has an app available for users who want to check on their sensors and what’s going on at home or at the office.
“I’m a tech guy and I literally scratched my own itch,” he said, adding he wanted to get alerts to his smartphone or iPad every time the temperature peaked in his one-year-old child’s bedroom. So around Christmas-time, Nicholas quit his job and began working out of his basement-turned-workroom and office in Markham, Ont.
He said he also tried to keep the user in mind when designing the sensors. For one thing, a lot of sensors require users to change the batteries, but that can be an irritating, time-consuming task if a user has multiple sensors and needs to change the batteries in each one every few weeks. The Wimoto sensors can last more than a year under normal usage, Nicholas said.
Still, even though Nicholas knew he would find the sensors useful, he had a similar dilemma as the one that Cox and Brandjes faced – would anyone else be interested in his product? He turned to crowdsourcing on Indiegogo to see if anyone would fund him.
Initially, he set a goal of $22,000, but he was low-balling himself and operating at a loss. After a nail-biting few days when barely any money was coming in, Indiegogo began promoting his campaign, and he raised about $26,000 in one day. At the time of this writing, Wimoto Technologies has raised about $68,600 from 600 backers, with about 16 days left to go in his campaign. Nicholas plans to start shipping out the first batch of sensors to his backers in September.
Without crowdfunding, Nicholas said, he doesn’t think he would have been able to get his project off the ground.
“No one wants to give loans to a brand-new business in a Markham basement,” he said, adding he was both ecstatic and relieved when he began getting PayPal alerts to his phone, notifying him of the money rolling into his account. Yet despite the uncertainty, Nicholas said he feels he would never want to do anything other than work on his startup.
“This doesn’t feel like work to me,” he said. “I get up and I’m like, this is cool … This is my dream and full-time gig.”
Here at IT Business.ca, we’re hosting a Twitter chat on crowdfunding and the direction it’s taking within Canada. Join us at #itbcrowdfund on Thursday, June 27 at 2pm EST to learn and share about topics like marketing a crowdfunding campaign, and whether equity-based crowdfunding would benefit startups. Indiegogo and Invest Crowdfund Canada will be joining us on the chat as special guests! See you on Twitter!