Developed by Vancouver-born entrepreneur Eric Migicovsky, Pebble's smart watch was the result of a wildly successful crowd-funding campaign.
The Vancouver Enterprise Forum panel of experts explores the pitfalls and promises of raising funds online
Pebble's smart watch, Rob Ford's alleged crack tape and Obama's JOBS Act have all helped build the buzz around crowd funding, albeit for quite different reasons.
Hosted by the Vancouver Enterprise Forum, the crowd-funding panel featured five veterans of Vancouver's startup scene, with experience in both developing crowd-financing platforms and in financing ventures through crowd funding. Moderated by Richard Mockett, senior manager at Ernst & Young, it included:
- Jay Giraud, founder and CEO of Mojio
- Daryl Hatton, founder and CEO of ConnectionPoint Systems Inc., the firm behind Fundrazr.com
- Mike Volker, director of WUTIF Capital
- Jayesh Parmar, co-founder and CEO of Piactic
- David Geertz, founder of SoKap
The panel largely focused on two types of crowd-funding: online pre-sales that build product buzz, and equity crowd funding, a form of financing that promises to widen the eligible class of investors who can fund ventures without securities accreditation or a personal connection to the enterprise.
For Jay Giraud, whose company Mojio launched a crowd-funding campaign on Indiegogo, crowd funding gave his company exposure to corporate customers. But Giraud advises balancing its promise with the need for a solid business plan, and proof that your concept can succeed.
Posting your project on crowd-funding websites like Indiegogo will give your idea market exposure and customer feedback, but ensure that you're far enough along to fulfill the promises you're making. "Do crowd funding two months from shipping," says Giraud. "Do it once you've established your brand, story telling and after beta testing."
"Equity crowd funding is coming; it's here, but it's not being used," says Mike Volker. He focused on B.C.'s unique regulatory environment, which allows non-accredited investors to fund companies that have issued an offering memorandum. Volker believes that this class of investors—so called micro-angels, or what he called cherubs—will see a lot of growth.
On where crowd funding is going, Darryl Hatton believes that we're set to see a wave of innovation, which he likened to a Cambrian explosion. However, the panel agreed that the fundamentals of raising capital remain the same: "If you can't raise $400,000 from [angel investors], why would you go to the crowd," says Volker.