Why we chose crowdfunding to launch Meander
As we’re getting closer to launching the Meander Jacket on Indiegogo, one question keeps popping up from friends and family – What is crowdfunding?
I’m sure a lot of people reading this blog will be familiar with crowdfunding, you can go ahead and skip a couple of paragraphs, but for everyone else – this is for you.
Crowdfunding is a relatively new concept that helps start up’s and established businesses raise capital to launch and grow their businesses. There are several different types of crowdfunding, the most common being equity crowdfunding and reward based. This April we will launch a reward based crowdfunding campaign where our supporters will receive the Meander Jacket – as a reward for helping launch the Meander brand.
Equity crowdfunding is where backers (the crowd) receive a financial stake in the company in which they are investing. This is a similar concept to traditional stocks and share or angel investment except there are many more backers with investments starting from as little as £10 - going into tens of thousands. The main platforms in the UK for equity crowdfunding are Seedrs and Crowdcube. This can be a great opportunity if you’re a fan of a brand to get an early stake in an upcoming brand or business while supporting them to grow and develop. We’re not doing this right now, but it is something we might consider in the future.
Reward Based Crowdfunding
Reward based crowdfunding is typically used by new start-ups with a product that they want to launch and is particularly useful when there are manufacturing hurdles like factory and material minimum order quantities. Rather than speculatively placing a large order before attempting to sell to customers a company can set a fundraising target and offer a reward to their backers (usually the product), which they will receive if the campaign is successful. If the target is not reached, then the crowd are refunded in full by the platform and the goods won’t go into production.
The main platforms for reward crowdfunding are Indiegogo and Kickstarter. We chose Indiegogo after they approached us and offered their support. It was an offer too good to refuse and after speaking with several other campaigners I only heard positive feedback.
Other projects that have successfully launched on Indiegogo include the Cortez ski jacket which raised $355k, Grand Frank’s luxury merino sweaters, which raised $233k and astoundingly their most funded project is a DIY beehive, Flow Hive 2, which raised almost $15 million!
In our case the Meander jacket will be offered as the reward to our backers. Indiegogo offer a fixed or flexible goal and we’ve chosen a fixed funding goal of £15,000. If the campaign is successful and our supporters help us reach our target – we’ll be able to meet the minimum order quantity and put the first production of Meander into work.
Whist backers are pre ordering a jacket, they are much more than a customer or backer. They’re a network of supporters that help launch our brand to a global audience. Early adopters are like founding members that we hope will stay with us and continue to support us on this journey. Crowdfunding is really competitive and it can be really difficult to cut though the noise. Our dream is to reach the target very quickly and reach a global audience but we know it’s not going to be easy. Most successful campaigns usually hit at least a third of their goal in the first 24 hours. The theory being similar to busy restaurants attracting more customers and no-one wanting to sit in an empty restaurant. The same rule applies to crowdfunding. If you gain early traction, then everyone else starts to be interested and some campaigns sky rocket!
Our campaign will run for 35 days and over this period, backers will be able to go online and pledge their support. During the campaign we will be looking for the crowd to share our Instagram, twitter and facebook updates and spread the word. With our friends, family and social media followers behind us – we hope to reach an even bigger crowd and take Meander to a global audience.
The Campaign Timeline
Following our successful campaign fabrics and trims orders will be placed and production will commence. From placing the orders to delivering the goods – it will take approximately 5 months for our supporters to receive the Meander Jacket.
Fabric orders will be placed with the Italian mill. We’re working with a performance mill in Lake Como region of Italy and all fabrics will be made specially. It will take around 8 weeks for the fabrics to be made, dyed and finished.
Production space will be booked and Purchase Orders placed with our European factory in Sofia, Bulgaria. Steve and I visited the factory last year and were so impressed. The same factory makes for Joules and Barbour and are experts in waterproof outerwear.
When the fabrics are finished they will be sent to the factory. We will personally visit the factory at this stage and QC (quality control) the first jackets off the production line and ensure we are happy with the quality before proceeding with the production order.
Production will take approximately 8 weeks to make all the garments and do quality control.
The final phase will be logistics and shipping the goods to our very first Meander customers.
How crowdfunding enables us to offer great value to our customers.
At Meander we’re creating a sustainable brand for outdoor lovers and commuter cyclists and we don’t believe that we fit in a box. With the exception of a few cool cycle stores, the vast majority of bicycle chain stores cater for lycra clad, neon cyclists and it’s not the right direction for our brand.
We want to create a brand that offers high quality and value to our customer. We could have approached department stores, which is great because they take risk of holding stock, but that would increase the retail price by 180%. This could mean that a product that costs £100 to produce can end up with a selling price of over £500. We’d either have to cut cost and quality or increase the price – neither of which we’d be happy with.
By working direct with the manufacturer and selling direct to the consumer we’re able to offer quality design and high performance Italian fabrics for a fair price. This would usually mean funding an entire production run in advance and running the risk of ordering to much or too little, but this is where crowdfunding really helps by taking orders in advance and knowing the exact right amount to produce. We want to prove our concept and start a journey with a great crowd of supporters behind us that we hope will remain lifelong customers.
We’re on a mission to build a community with like minded urban adventurers seeking stylish and sustainable clothing. We’ll offer great quality at true value to our customers and bringing our first product to market though Indiegogo allows us to do this.
Join our journey, follow us on Instagram, twitter and facebook or even better – sign up and we’ll give you a special discount when we launch as a thank you for joining us and help fund our first production run.