Type of production/project: Digital Media hardware (Watch)
Funding Target: $100,000 (USD)
Funds Raised: $10,266,845 (USD)
The Company: Pebble Technology
Eric Migicovsky first came up with the idea for the Pebble Watch when he was still a student at the University of Waterloo. After graduating in 2009, he and a team developed the first iteration of the smart watch called InPulse, which was only compatible with BlackBerry.
Following a stint at start-up accelerator Y-Combinator and a round of angel investment fundraising, the newly named Pebble Technology decided to put its efforts into building a Kickstarter Campaign for the new Pebble Watch, which is now compatible with iPhone and Android devices through Bluetooth technology, and moved his company to Palo Alto, California.
Migicovsky turned to crowdfunding when his attempts to charm major investors fell flat. Although he did successfully raise $375,000 from angel investors, he was unsuccessful in raising larger sums or enticing venture capital investment. Migicovsky attributes his difficulty in drumming up financing to less-that-exciting sales figures for the earlier InPulse and the fact that investment in hardware is generally difficult to come by.
From the first day of its crowdfunding campaign it was already clear that the Pebble Watch would be a record breaker. Within the first 28 hours of the Kickstarter campaign Pebble Technology had raised $1 million (USD), after less than a week that number had surpassed the previous Kickstarter record of $3.3 million (USD), and within two weeks it had reached $8 million (USD).
Finally, two weeks before the end of the pre-determined funding campaign Pebble Technology decided to close the funding early, after reaching just over $10 million (USD) in funding, in order to focus on making the watches.
The Pebble Watch Kickstarter campaign used a primarily pre-sale Lending Model campaign, however they also offered one contribution level for any contributors who wished to support the project but did not want to purchase the product.
The Pebble Watch story demonstrates the potential behind crowdfunding to support and bring to fruition a project that might not otherwise be able to access more traditional funding or financing sources. Not only was Migicovsky able to prove that the watch was a good idea, but he was also able to instantly build a market for the product and has a large number of guaranteed sales.
The case study also demonstrates the power of a pre-sale crowdfunding model. The promise of a copy of a product that contributors are keen to support is a very powerful incentive.
A key to the success of the Pebble Watch campaign was also Migicovsky’s initial significant investment in creating high quality promotional materials, such as the promo video featured on the Kickstarter campaign page.