Do You Need a Kickstart or a Kickfurther?Chris Schwalbach · March 7, 2017 · 4.1 min
Traditionally, crowdfunding is an inherent risk for all involved parties; for the investor, since there’s nothing to ensure their money is being spent appropriately, and for the manufacturers, whom are typically launching a new product and navigating uncharted waters bringing it to market. Take it from a former Kickstarter investor that’s gotten burned one too many times; once Kickstarter takes their cut, the rest of the money is put to immediate use with no guarantee of a return, even for pledged rewards.
The next step up in the funding cycle from Kickstarter is Kickfurther. Launched in 2014, Kickfurther is designed exclusively for existing businesses too small to secure substantial bank loans. Companies who manufacture or distribute products and are looking at their 2nd or 3rd production run can now crowd source capital for those inventory purchases directly from the public. There’s a key difference between the two platforms regarding where their clients are in the business lifecycle; Kickfurther businesses can be startups or more mature companies, but they are established businesses looking to fund existing purchase orders. On the other hand, Kickstarter companies are companies who are launching their product for the first time, and are typically trying to pre-sell products that have not been made yet through the Kickstarter platform. Since Kickfurther investments are, by nature, tied to established demand for an existing product, investors have less risk associate with their investment, and therefore are willing to invest much larger sums of money (per investor) in Kickfurther offerings.
Further emboldening potential investors, Kickfurther uses a proprietary social media algorithm to vet strong businesses, screening potential clients across several metrics from customer engagement and brand identity to their history on similar platforms (including Kickstarter). This keeps the less worthy products off the platform and helps to ensure that investments are going to more capable businesses.
Investment size is up to the discretion of the investor, with a minimum of $25 and a high of tens of thousands. This gives the investor valuable flexibility, and further distinguishes Kickfurther from Kickstarter, which has rigid investment amounts tied to specific reward tiers. When a funding goal is met on Kickfurther, that inventory is then purchased on consignment, sold by the company raising the funds, and a percentage of each sale is returned to the backer each month. Annual returns on Kickfurther investments are typically between 16 – 18%; a nice return for investors, although somewhat expensive capital for the company. It’s still worth it since funding can be relatively quick (minutes to days) and alternate funding sources may not be possible. And to the savvy investor, owning physical inventory and getting repaid a percentage of revenue through Kickfurther is a much more attractive prospect that a pre-determined reward on Kickstarter, which is not required to change even if funding goals are exceeded.
Because backers own the inventory bankrolled on Kickfurther, they have more say and recourse in the behavior of the company after their initial “investment”. If a Kickfurther company doesn’t hit their sales benchmarks, backers can vote on what to do next, including trying alternate sales methods, liquidating the inventory, or lowering the price.
Kickfurther’s community is still small and tight-knit, which actually serves as a benefit to companies utilizing the service. Once you have success once on Kickfurther, the backer community is more eager to continue their engagement with you on subsequent offerings since your profits are their profits. On Kickstarter, for comparison’s sake, a successful fundraising campaign results in the promised rewards to backers, but repeat offerings are rare.
Kickfurther has already been immensely popular, with many projects funded within minutes or even seconds of going live. To ensure project access for all of Kickfurther’s 650 (and growing) investor-users, they launched the Kickfurther “project key”, or a token that an investor can use once a month to invest in a project before it goes live to the general user base. This allows an investor to take part in a project without logging in immediately before a project goes live every day, and is a testament to the success and reception of the Kickfurther platform.
So, does your business need a Kickstart, or a Kickfurther? The answer depends on whether you’ve already brought the product to market yet, and the status of your company. Have you already learned to produce at scale? If so, you’re not looking for a Kickstart, you’re looking for a Kickfurther, i.e., money for inventory to grow your business. On the investor side, the questions are similar: do you want to invest in a concept or idea, or an established product? If you’re looking to invest in cutting edge ideas and a return on your investment is not necessary, you might want to peruse Kickstarter. If you’re looking to bankroll an established company and receive a pre-established percentage of sales, Kickfurther is the service for you.
By Sean Conte
AVL Growth Partners, 2017