Flomio's Kickstarter campaign product needing funding: FloJack, which enables NFC for iOS devices
Outcome: $96,145 pledges in 447 pledges ranging from $2 to $10,000
That's the end of the story. Flomio, the Miami startup that develops NFC (Near Field Communication) infrastructure, blew through its goal of garnering $80,000 in donations to fund production of the FloJack, which enables NFC capabilities for Apple's mobile devices. Under the rules of the popular crowdfunding site Kickstarter, a project will not get the money pledged unless it makes its goal. The success rate on Kickstarter is just under 44 percent, and the vast majority of projects are seeking under $10,000. So why and how did Flomio defy the odds? I asked founder and CEO Richard Grundy. Here are excerpts from the conversation.
Flomio has raised more than $500K in angel funds so why Kickstarter? Said Grundy: "The demographic that Kickstarter draws -- a lot of techy, do it yourselfers -- aligned very well with FloJack. We wanted to excite the early adopters -- it was as much a marketing play as it was a fundraising campaign. This allowed us to garner a lot of like-minded early adopters in one place, survey them, and gain enough confidence to bet the company on that one device. We needed to complete the ecosystem of NFC. Kickstarter allowed us to get the social proof ... as well as the funding."
It won't fund all the development -- that will cost about $125,000, Flomio estimates. "The FloJack may look small and simple but it is one of the most technology intensive devices out there in NFC. It's the smallest NFC reader on the market that I have seen."
The planning for its November campaign started in February. One key to success: social media, particularly Twitter, Facebook and LinkedIn. Although social media directly reeled in only about 30 pledges, there were unexpected benefits. "What was most interesting was to see all the different applications NFC really has in the marketplace, and a lot of those came out of engaging on social media. It provided a stage to talk to people ... We were pedal to the medal every minute of the day and night to understand our market as much as possible."
Kickstarter campaigns, 34 days long, generally see the most in the first and last days. That was true for Flomio, too; it came out of the gate raising its first $10,000 or so within two days. But after the first five-six days, Flomio started to trail off. "So we were immediately trying to come up with ideas to engage the base we had already accumulated and hopefully get them to evangelize our position, because they are going to find other like-minded people easier than any article in the national press."
The upshot: More than 60 percent of its pledges directly came from the Kickstarter network. "That tells you the kickstarter community is willing to take a chance and likes to see what is new and interesting."
So what got the team of six through the long mid-section of the campaign? "Within the first week in a half, we started getting leads from big enterprises interested in using the FloJack for their businesses. Throughout the campaign we gathered 35 of those. They want to order several hundred if not thousands of units, like in logistics, mobile wallet solutions, access control... Those are the enterprises that funded the spikes along the way. We would be flat-lining and then we'd get a $10,000 spike. Each one of spikes was an enterprise deal where we convinced them to funnel their donations to us through Kickstarter. One of the issues we encountered was how do they do that? They don't have a process for funding a Kickstarter. Can they put it on their corporate credit card? How are they going to be reimbursed?"
But with that startup mentality, Flomio found ways to make it happen. Flomio received five %10,000 pledges.
What else did Flomio do when donations started to slow down? "We started looking for ways to engage our user base. We asked our base -- the first people who pledged -- questions like why did they pledge, what did they find interesting, what were they going to use it for, what were their biggest complaints? We created a matrix in order to determine what would be worth investing our time into. That's how we came up with offering the FloCase. That was added to the project as another pledge level ($99). We did that because we were getting a lot of people pledging at lower levels and that was a higher donor value, to help cover our gaps. We did get a spike but not as much as we expected."
Toward the end of the campaign, Flomio hired Max Borges agency to help it with the press, and that resulted in writeups in Mashable, Huffington Post and other blogs.
So I asked Grundy: When did you really know you would be successful? About 12 days in, a big logistics customer reached out. The company has tags that can track the temperatures of packages en route (think pharmaceuticals, flowers, etc.) After that Flomio started getting inquiries from point-of-sale solutions, too.
Grundy said Flomio will begin taking pre-orders for FloJacks in the next few weeks on its store but won't ship until it has fullfilled all the gifts from Kickstarter pledges. He estimates that will be around March.
The CEO wanted to make it clear that FloJack is just one part of Flomio's overall strategy. "Users want a lot more than an NFC reader. They want to create an end-to-end experience that uses touch to trigger it, whether it is to open the door in their home or turn on the light, to identify themselves online, unlock their work station, payments, anti-counterfeititng ... they may want to do an in-store retail experience that is seamless. The FloJack is one piece of that very large puzzle. What Flomio has been developing for over two years now is that infrastructure that allows that end-to-end solution very quickly. That's what Flomio really is."
Hear Flomio showcase its technology and tell more about its Kickstarter experiences at an event at 7 p.m. Dec. 10, which coincides with a screening of "The Startup Kids." It's at the LAB MIami's new location, 400 NW 26th St., Wynwood. Sign up here.
Speaking of Kickstarters, another Miami startup had a successful campaign this summer: Sew Love, which hit its $20,000 goal. The founders have received Twitter love lately for the video they sent out thanking their supporters -- see their video here.