Can crowdfunding fill in the financing gap for research and innovation?
There is a widespread perception that early stage and innovative projects are too risky to invest in. Crowdfunding can be a solution to fill this gap and it can play an important role in supporting projects for research and innovation.
Holoxica, a high-tech company working on 3D holograms established in the UK, grabbed this opportunity! The founder commented: “We struggled in getting any serious interest from angel investment groups at the time because we were still university students and people didn’t take us seriously”.
Today Holoxica is an award-winning high-tech company. It developed an innovative technology which creates real out-of-the-screen 3D holograms applicable in fields, from Engineering to 3D art.
So, what was as a springboard for this jump?
Before they made it, Holoxica failed. The first campaign was unsuccessful despite the fact it was launched on the famous platform Kickstarter.com. Holoxica’s founders blame the failure on the decision to do a product-based CF campaign. Namely, the technology they are developing is complicated and complicated to be explained to the crowd hence it has low effectiveness in persuading funders.
However, the second campaign was a huge success. The campaign, based on equity-base CF model, was launched on the local platform Shareln for 10 weeks. With this campaign the company managed to raise £120,000.00, which was double the amount of £60,000 asked for initially.
What was the key to their success?
- Strong communication strategy was necessary. This may require, as in this case, to hire experts that are able to ensure the visibility of the project.
Network. An important step was to create and maintain a good network before starting the campaign. Holoxica’s founder claims that it was fundamental to inform their network about the CF campaign.
- Collaboration of the whole company. CF requires all company employees to be fully engaged. The campaign lasted 10 weeks only. During this period, the extra effort from the whole team was a key element.
- Market competitiveness of the project. Even if this would not have been enough if not supported by the previous factors, it was also an element of vital importance. Once the crowd knows the project, the potential investors need also to appreciate it and choose to support it among others. For example, Holoxica was offering a technology revolutionising the way people will engage with images and displays in the future. No other companies were offering a similar unique solution.
- The choice of the platform also played a role. Shareln provided support to Holoxica by offering professional help in creating videos and photos and by boosting the visibility. Moreover Holoxica represented the biggest project of the platform, which allowed the company to influence the platform itself.
- The company pointed out short and long term impacts of the participation to the CF campaign.
- The company was enabled to get going in the short term and hire people to work on its long term goals
- The company secured more breakthroughs in several market sectors and expanded production
- Holoxica’s technology gained more visibility and recognition in the market both in the short and long term.
What are the take away lessons?
Crowdfunding can be an extremely effective tool to support R&I. This alternative way of financing makes it possible for early stage innovative projects to be supported. Otherwise the realization may be stuck because of their risky nature. However, even if CF is getting more and more popular, a successful campaign requires planning, a good network and a strong communication strategy.
Now, we have questions for you!
Holoxica was able to take advantage of its network and this was a vital factor for the success of CF. They relied on friends, families but also on the university’s network, and on contacts with the high-tech business world.
However there are probably outstanding R&I ideas by individuals or small companies that lack the network to boost their CF campaign. Is it possible to realize a huge CF without a strong network? Do you know any examples of successful R&I CF campaigns that did not use the network as one of the main tools or that may took advantage indirectly from someone else’s contacts?
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