- BY LORA KOLODNY , WSJ
manufacturing services firm called Dragon Innovation has launched a specialized crowdfunding site that allows select makers of consumer hardware to “pre-sell” their inventions online, including in large, wholesale volumes.
- Courtesy of Mimo
- The Mimo, a wearable baby monitor, is one of the hardware projects raising cash through Dragon Innovation.
Unlike general crowdfunding platforms IndieGogo and Kickstarter, DragonInnovation.com runs strict due diligence research before allowing any entrepreneur to post a campaign and helps approved hardware makers refine their designs, determine the real costs of making their products in big batches, and set a realistic schedule for delivery to their project backers.
“The idea is not to disappoint or upset your earliest adopters,” Chief Executive Scott N. Miller said.
Seventy-five percent of Kickstarter-funded hardware projects shipped late to backers, according to research from an assistant professor at Wharton, Ethan R. Mollick. Only 3.6% failed to deliver at all, but that failure rate is still too high for Mr. Miller’s liking.
The CEO said he had personally observed several dubious projects seeking funding on generalist crowdfunding sites. He pointed to one project that “thankfully” did not attract the full amount of funding it sought, but billed itself as “the first free energy thought magnifier.”
Eventually, Boston-based Dragon Innovation plans to charge hardware ventures an initial consulting fee of $5,000 before they start fundraising. The fee should deter scammers, pranksters or tinkerers without a wish to do serious business, the CEO says. The site also takes a small portion of funds raised.
Flybridge Capital Partners’ Matthew Witheiler, an investor in Dragon Innovation, notes hardware projects on general sites must compete for support against projects from Oscar- and Grammy-winning celebrities, or against campaigns for charitable causes. He believes some hardware makers will prefer a platform that cultivates an audience of technophiles.
According to Kickstarter’s own stats page, of its 49,368 successfully funded projects, only 964 fell in the “tech” category (not all of them consumer hardware).
Prior to getting in the crowdfunding game, Dragon’s clients included several venture-backed hardware startups: Pebble Technology Corp., Makerbot Industries LLC (now part of Stratasys Ltd.), Sifteo Inc. and Romotive Inc.
Initially rejected by venture capitalists, Pebble raised $10 million on Kickstarter.com and experienced delays producing and shipping the smartwatches they’d promised. They worked with Dragon Innovation to remedy their manufacturing issues and later secured a $15 million round led by Charles River Ventures.
As a show of support for the DragonInnovation.com approach to crowdfunding hardware, Pebble is “pre-selling” a special edition smartwatch there.
Of the eight pilot projects launched on DragonInnovation.com, three hit or surpassed their total fundraising goals in under a month, and the remaining five still have time to take orders. Some of these companies are seeking seed- or venture capital.
The fully funded projects include:
*The Tessel, an Internet-connected, programmable microcontroller
*The Dash, an educational robot kit for budding engineers
*The Ollie, a flat, metal card with various holes and markings that make it a useful tool for opening bottles, assembling furniture, measuring lines, angles and more
Projects currently raising money on DragonInnovation.com include:
*The Mimo by Rest Devices, a kind of wearable, smart baby monitor in the form of a machine-washable “onesie.” Parents can use Mimo to check a newborn’s breathing, body temperature and other data points that indicate distress or well-being as they sleep.
*The Run-N-Read by Weartrons, a device that treadmill-runners or commuters can clip to a headband or their shirts to make the screens of their tablets readable. It senses the users’ motion, and in real time moves text in sync with their eyes.
*Hammerhead Navigation, a safe navigation tool for bicyclists. The T-shaped device is handlebar-mounted and shines LED lights to show bikers where to go. It connects to a cyclists’ smartphone, and employs GPS and map data from apps like Strava and MapMyRide.
*A flexible, stretchy, microcontroller, called the LIMBERBoard, for makers of lightweight or wearable technology.
Dragon Innovation is part of a growing movement of specialized crowdfunding sites that focus on a particular product or industry, like GamesPlanetLab for video games, OffBeatr for the “adult industry” and CraftFund for craft beer and food.