Author Topic: Best Practices for Crowd Funding Electronic Hardware/Devices  (Read 3575 times)

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Offline 1276-2449-1-ND

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Best Practices for Crowd Funding Electronic Hardware/Devices
« on: October 16, 2018, 10:30:28 pm »
A while ago there was a thread here that had a few posts lamenting how people were structuring or running their crowd funding campaigns in a way that made it harder for them to pull it off if they got funding -- and the more funding they got the harder it became for them (and of course I can't find that thread now). There are lots of examples of successful campaigns that ended up folding even though they had a viable product.

What do you think should be "Best Practices" for running a hardware-based crowd funding campaign?
 

Offline EEVblog

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #1 on: October 16, 2018, 10:38:36 pm »
Make a dozen real pre-production units with your own money first.
 
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Offline xaxaxa

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #2 on: October 16, 2018, 10:40:02 pm »
Keep the reward tiers simple; don't offer too many variations and stretch goals. This can easily double R&D resources required or more, and add headaches to production.
 

Offline LapTop006

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #3 on: October 17, 2018, 07:28:41 am »
Do some rough math to work out what a "success disaster" would look like, and don't forget that practical production yields will be less than 100%.

For example, if a particularly expensive part is only available in full reels of 250, what happens if (ignoring yields & spares) you need to deliver 251 units?

Also, your full prototypes should include everything you plan to include, and a real shipping box both to prevent surprises in how much packaging can cost, but also to get you a much closer idea on what shipping will actually cost.
 

Online SiliconWizard

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #4 on: October 17, 2018, 03:53:40 pm »
Make a dozen real pre-production units with your own money first.

I second that.

Many people try getting funding for their project way too early in the design process. A lot even have nothing more than just ideas and pretty 3D renderings and videos. That's the projects that are bound to fail IME.

That's pretty much the same pitfall for startups. Common sense and experience suggest making first prototypes on your own funds (and/or family/friend funding) before trying to get external funding.
 
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Online Stray Electron

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #5 on: October 17, 2018, 05:39:10 pm »
  I would say that "Best Practices" and "Crowd Funding" are nearly always mutually exclusive.  Unless you include the word "Fraud" in there somewhere.
 

Offline xaxaxa

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #6 on: October 17, 2018, 06:42:23 pm »
The other thing I would mention is there are realistically only two countries you can do shipping from, which are the US and China. For anything medium value ($20 to $200), customers will expect full tracking (and you will want it too), and the national post in most countries just won't offer that to international destinations for a reasonable price. I would rule out couriers like DHL or Fedex too unless you have >100 units per month of sales (and can therefore sign a contract with them to get a lower price). $50 shipping on a $100 product just ain't competitive. For anything low value (<$10) even national post without tracking is usually too expensive (reason I never bought a raspberry pi).

If you live in a first world country I would seriously recommend crowdsupply which will do the final shipping for you. You ship the entire batch to them and they ship to individual backers via USPS.
 

Offline biot

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #7 on: October 18, 2018, 01:23:01 pm »
If you live in a first world country I would seriously recommend crowdsupply which will do the final shipping for you. You ship the entire batch to them and they ship to individual backers via USPS.

Respectfully, that's terrible advice. I bought the EEZ H24005 power supply (much discussed right here on EEVblog) via Crowdsupply. The unit was made in Europe, shipped to Crowdsupply in the US, and then shipped back to Europe for me. That took several *months*, and €114 in customs fees.

Crowdsupply is just a terrible deal if you're not in the US.
 

Offline janekm

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #8 on: October 18, 2018, 02:51:10 pm »
Keep the reward tiers simple; don't offer too many variations and stretch goals. This can easily double R&D resources required or more, and add headaches to production.

I'll definitely second that being currently involved in the fulfilment of a Kickstarter campaign... Which had very modest extra tiers but even just an extra poster or patch ends up being a lot of hassle during logistics. Consider making higher tiers multiples of the base tier, or perhaps something that can be digitally delivered.
 

Offline pylo

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #9 on: October 22, 2018, 12:48:41 pm »
Make a dozen real pre-production units with your own money first.

This.

Many campaigns, especially some of the larger ones like Ossic, Fontus, PocketDefi, SuperScreen etc. all fail because they underestimate the needed R&D costs until the product becomes ripe or even just functional. A common factor to their initial success then sudden failure is they give the fake impression to backers as if they already had a working product, but in reality they were just using empty mockups or computer renders in their marketing videos. In reality all they had at campaign launch was an idea, a designer, and some photoshopping skills. Then when money is there and they actually have to deliver, they realize how much they underestimated the hurdles (not just technical) ahead of them.

So, I'll reiterate Dave's words: Build a bunch of prototypes, and only go into campaign once they are actually working. Don't worry, you'll still have lots of problems when going into volume production and entering the market :)
 

Offline LiTTT_up

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #10 on: October 27, 2018, 03:28:33 pm »
I've done precisely that in my crowdfunding campaign. Dave / Admin couldn't be more right about this. If you don't believe and trust in the design of your product enough to shell out for some pre-production units from your own money... you may be limiting how smooth everything will go after that.

Pre-production units offer a lot of learning opportunities from design challenges to logistics. You'll discover changes that need to be made and might even find a way to save money in the process!

In fact, Kickstarter now requires that you have working prototypes BEFORE you take anyone's money. I'll post my crowdfunding project in the appropriate category on the forum here, but here's it is below for reference on the prototypes. I just launched it last night, so I'm not sure how well it's doing yet.

http://kck.st/2z5hhzw

I used FDM/SLA and installed the copper myself. Working on the tooling for sheet metal now.
 

Online coppercone2

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #11 on: October 27, 2018, 03:39:55 pm »
be sure to pull a communist stunt that would make uncle Joe proud. The latest AVE video is like that. The channel is supposed to be about like, lower-tech/low barrier to entry stuff, typically old beat up cheap mill and skilled use of hand tools etc... but he takes his patreon money and buys a 5 axis CNC machine, then proclaims its a 'community device' that is basically collectively owned by the commune.

Exactly why I refuse to fund random people online unless there is a very specific plan/cash flow.

My advice would be to make a road map and try to do honest estimates of where the money is going, what avenues of R&D its going into.. so the purse does not feel cheated. You could go as far as saying how many billable hours went into various tasks, like I paid myself 15$ an hour to work on the graphical design and product videos and shit, worked for this many hours so it does not feel like your throwing your money into a black hole... however many business people would consider such transparency suicide imo.
« Last Edit: October 27, 2018, 03:47:41 pm by coppercone2 »
 

Online blueskull

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #12 on: October 27, 2018, 03:45:59 pm »
be sure to pull a communist stunt that would make uncle Joe proud. The latest AVE video is like that. The channel is supposed to be about like, lower-tech/low barrier to entry stuff, typically old beat up cheap mill and skilled use of hand tools etc... but he takes his patreon money and buys a 5 axis CNC machine, then proclaims its a 'community device' that is basically collectively owned by the commune. Exactly why I refuse to fund random people online unless there is a very specific plan/cash flow.

1. Can an ordinary individual afford a 5-axis CNC from his/her hobby money?
2. Would you like to share and co-own a 5-axis CNC with random people?
3. Under the above mentioned constraints, what would be the best option?

I would be totally fine if Dave offers an (even paid) test service with top notch tools from money he collected from Patreons.
 

Online coppercone2

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #13 on: October 27, 2018, 03:51:47 pm »
no but most of his videos are cool shit that makes it interesting to watch, which tool is the best bang for the buck, how to do fairly complex things with less effort and tools.. etc, but now you have a jump to something that looks like it costs at least 50-100k. It would be like if EEVBlog decided to buy a Cray and pushed code optimization for fluid simulation on us or something. I would stop watching it.

when you put money into a channel you think its gonna be more of the same stuff that you find interesting and useful.

I don't see why dave would do a test service, the idea behind his channel is that he is an expert that can offer insight into advanced design techniques.
« Last Edit: October 27, 2018, 03:53:20 pm by coppercone2 »
 

Online coppercone2

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #14 on: October 27, 2018, 04:00:31 pm »
with AVE though, if he just uses the CNC as a time saver, and still makes the projects so that you can replicate them without weird advanced tools and does not start thinking in a way that basically makes everything exponentially more complicated to suit his 5-axis CNC capabilities, that's different and the channel will still stay close to the roots.

But the whole 'community owned' shit he was talking about just made be laugh because it sounds like 50's commie propaganda, maybe its honest but it sounds awfully like a 'oh shit what the fuck did i just buy with your money... yea.. its not mine... i spent your money to buy YOU something' defense. I am sure we all had parents do this to us, i.e. spending present or vacation money on home improvement or a car and sugar coating the fact that we were gonna go to camp and instead dad looks better at work because he got new wheels.
« Last Edit: October 27, 2018, 04:05:40 pm by coppercone2 »
 

Online blueskull

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #15 on: October 27, 2018, 04:03:59 pm »
I don't see why dave would do a test service, the idea behind his channel is that he is an expert that can offer insight into advanced design techniques.

Without offense, and I believe Dave is a very competent engineer, but just from his videos, I didn't see I get more education than entertainment.

I'm more interested in his test equipment porns and random shit from mailbox.

I'm sure Dave has a huge fan base of hobbyists and amateur DIYers, but there are also a whole lot of very professional people watching his channel and loitering on this forum just for fun.

BTW, ToT also has a CNC, and yesterday he just uploaded a video on a (seemingly) very expensive Schneider stepper.
 

Online blueskull

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #16 on: October 27, 2018, 04:07:05 pm »
But the whole 'community owned' shit he was talking about just made be laugh because it sounds like 50's commie propaganda

It's very effective for people without money to buy the tools but needs them.
Considering EDA software pooling (an IC R&D park owns a site license of Cadence Virtuoso, then it allows all tenants to use the software to drive down the cost).
Also, the step after EDA -- MPW, is also based on the same concept. How many IC startups can survive without EDA license pooling and MPW?
At a lower end, Makerspaces run on the same concept. Don't want to buy a scope? No worry, just pay a small monthly fee and you can have them all.
 

Online coppercone2

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #17 on: October 27, 2018, 04:07:41 pm »
I mean, you have a PhD right? 6 years ago or whatever when I first watched the blog it was pretty advanced for me, now I already know alot of the stuff because when you do electronics full time you end up just getting this stuff.
 
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Online coppercone2

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #18 on: October 27, 2018, 04:17:52 pm »
But how are you gonna do community owned by mail? Is ave going to become a low-cost CNC operator? Does he even want to manage a business of mailing people parts?

If you are making people sub assemblies for cheap how do you ensure that someone is not taking advantage of your labor?

I think the EEVblog u-current and meter were different because IIRC Dave Jones was not crowd-sourcing the design or anything like that, I mean he asked like 'what would you like to see' but it was pretty basic (i.e. the battery powered power supply) in terms of discussion and stuff... he just decided to make and sell some stuff, and what we provided him with did not really have anything to do with it (since he had a list of projects going back way before in magazines and stuff I think).

With ave:
I can't see someone complying with "yea you got some money on patreon, I will mail you some aluminum, make me 50 of these" without being paid nicely. With a CNC what can AVE do for the community other then provide selectively applied really cheap labor?  In that case you stand to make money off of him if he likes you or your idea. How can custom parts benefit a community as a whole?
« Last Edit: October 27, 2018, 04:20:26 pm by coppercone2 »
 

Online blueskull

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #19 on: October 27, 2018, 04:21:02 pm »
With ave:
I can't see someone complying with "yea you got some money on patreon, I will mail you some aluminum, make me 50 of these" without being paid nicely. With a CNC what can AVE do for the community other then provide really cheap labor?

Time is NOT FREE. He has all the rights to ask to be paid for the time he spent on programming and grinding metal.

What's more. his Patreon money IS HIS MONEY. He can blow them up on Louis Vuitton if he likes to.

He's being kind on feeding back the money to the community on building someone's dream. That's at least better than buying handbags, right?
 

Online blueskull

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #20 on: October 27, 2018, 04:23:07 pm »
I mean, you have a PhD right? 6 years ago or whatever when I first watched the blog it was pretty advanced for me, now I already know alot of the stuff because when you do electronics full time you end up just getting this stuff.

I never said Dave shouldn't make fundamental Friday videos, and I never said AvE should ditch his hand works.
I'm just saying a more variety of contents can attract more people from different levels and backgrounds.
No one has a beef with more subscribers, right?
 

Online coppercone2

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #21 on: October 27, 2018, 04:41:26 pm »
With ave:
I can't see someone complying with "yea you got some money on patreon, I will mail you some aluminum, make me 50 of these" without being paid nicely. With a CNC what can AVE do for the community other then provide really cheap labor?

Time is NOT FREE. He has all the rights to ask to be paid for the time he spent on programming and grinding metal.

What's more. his Patreon money IS HIS MONEY. He can blow them up on Louis Vuitton if he likes to.

He's being kind on feeding back the money to the community on building someone's dream. That's at least better than buying handbags, right?

yea but then how is it a community thing if you don't provide cheap labor? Most older CNC places probably already paid off the NRE for their multi axis machine. Like why would the community go to him for parts rather then just getting it milled else where?

If you read my post carefully you will see that 'i can't see anyone complying with', meaning that I agree that working for free would be unheard of.

A makerspace is different because you have code which you bring but you still end up babysitting the machine, loading it, etc.. ave would have to do all of that.

 Once you factor in the physical distance there is almost no difference to mailing your 3d file to a machine shop. It's just AVE's machine shop.

Maybe its cheaper because its one guy, you have basically no turn around time requirements (a business spends alot of money to organize itself to be prompt).

personally with AVE i think if he spent all that money on beer it might make for even more entertaining television, more so then with a 5 axis CNC lol

He can't even work that thing while drunk because a typo is going to destroy the cutter, its more sensitive to errors then a hand operated machine.
« Last Edit: October 27, 2018, 04:44:07 pm by coppercone2 »
 

Offline xaxaxa

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #22 on: October 28, 2018, 10:41:03 pm »
Also don't confuse patreon with kickstarter.

Patreon money is strictly a gift. Once you donate someone money it is up to them how they want to spend it. They are not obligated to do any work for you or even keep producing videos. It's up to you to stop giving him money if you don't agree with what he is spending it on.
 

Online langwadt

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #23 on: October 28, 2018, 10:58:26 pm »
Also don't confuse patreon with kickstarter.

Patreon money is strictly a gift. Once you donate someone money it is up to them how they want to spend it. They are not obligated to do any work for you or even keep producing videos. It's up to you to stop giving him money if you don't agree with what he is spending it on.

afaiu patreon have now banned giveaways to patreons, because they are concerned that it might violate gambling laws in some countries
 

Offline LiTTT_up

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Re: Best Practices for Crowd Funding Electronic Hardware/Devices
« Reply #24 on: October 29, 2018, 05:57:09 pm »
That's good advice. One issue I've run into is getting larger companies with mid to high volume manufacturing capability to take you seriously unless you've got money written all over you. Even if you're a privately held upstart with proper branding and a web presence - I've found you've got to press quite a bit to get you're RFQs taken seriously. Many of the companies consider an RFQ on tooling or assembly, etc that shows up out of blue to be a null "no lead / no quote".

It was a fight getting my LED frames/connectors quoted. In fact, the best I get is a window on the tooling cost because they don't want to write themselves into a corner and commit until there's a surety or trust deposit exceeding 5K to 10K. For an established company that shouldn't be a huge problem, but for an upstart it is. I've got every detail of my crowdfunding project hammered out down to the dollar, on everything except tooling which I had to take the median estimate on since their window has a $10K margin on it. The reason for such a margin is tooling, and more than one quote shows that among three manufacturers I could even get to respond, they all had a similarly large margin on the assembly.

Just for reference, I'll list what I'm talking about here as just a link: http://kck.st/2z5hhzw

So that's my project in the link above. The injection molding with multi-cavity dies was no problem to quote. The overmolding had a tight and safe margin on it, but assembly before overmolding is still a small risk factor, mostly for me since it's tight enough that I can still deliver the goods, just with less profit if they hit the high end of the quote in the real world. With three hard-won quotes under NDAs, I've gone middle ground when pricing the backer packages. Product fulfillment wasn't hard to estimate either. But it seems to me, there's heavy capital companies moving in on the Kickstarter scene, coolermaster, ziplock, other big names with very serious pre-launch marketing campaigns that force their projects to the top of the list on kickstarter. Sounds like normal capitalism, but kickstarter didn't start out that way. It is inevitable though. Wherever there's money to be made the deep pocket sharks move in with a fury.

Reference image below:

« Last Edit: October 29, 2018, 06:00:41 pm by LiTTT_up »
 


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