Bright idea: funding innovation

These days, a great idea without the capital to back it won’t get very far. Vision.ae explores the innovative ways that companies are getting their projects off the ground

When rumours started circulating recently that Apple’s next new product launch would be an “iWatch”, you would have forgiven the staff behind Pebble - a similar smartwatch already on the market - for being just a little downhearted. After all, their watch does everything that Apple’s is expected to - it connects to a phone using bluetooth, shows messages and e-mails, and runs a whole host of useful apps - but will probably never have the cache of an Apple product.
 
Try telling that to Pebble. This small company has already sold 85,000 of them. And its journey to the marketplace is a very 21st-century tale, packed with fascinating insights into how business might operate in the future.
 
After CEO Eric Migicovsky failed to attract investment for their invention in the traditional manner, his company turned to Kickstarter: a website where projects and companies essentially ask for money from the public to fund development and production of ideas, inventions and projects. Intriguingly, any monies paid are not an investment in the company in the hope of future returns, but simply accrue a “reward” - in Pebble’s case, a discount on the US$150 watch.

And if such “crowdfunding” sounds an impossibly hopeful way of conducting business, consider this: in just two hours, Pebble had met their US$100,000 goal. In just over a month they had raised a staggering US$10m.
 
Not every crowdfunded business is so lucky, of course, but the lesson is clear: to stand out in a crowded marketplace requires more than just a good product. It may also need to be innovative - quirky, even. Much lower down the scale, entrepreneurs are finding that initiatives such as Kickstarter really work.
 
“Our website would be live, and we would still be shipping orders, but we would have been in the position where we would have struggled to finance production runs,” admits AJ Hateley from Gametee, a UK-based company which style themselves as the world’s first luxury brand for videogamers.

Its t-shirts and merchandise are fascinating – instead of overtly screaming about multimillion-selling games such as Final Fantasy or Pokémon, they subtly and fashionably reference characters and situations in them. Which, cleverly, also circumvents licensing issues.

The two sisters behind Gametee only asked for £5,000 (US$7,400) – an £18 (US$30) donation got you a T-Shirt from the first run, a set of digital wallpapers and, rather sweetly, a personal message of thanks – but have already smashed that figure.

“Kickstarter gave us that huge initial boost we so desperately needed,” she says. “And at a time when starting a new business is notoriously hard, it enables supporters worldwide to invest in a small venture whilst also being rewarded for their trust and financial backing with a product – in our case, a t-shirt, mug, or art print. It's a way of doing business that takes the investment away from the banks and gives it to the customer that the product is intended for.” 

Hateley says we all love to see people with a good idea, creativity and a passion for what they do having their dreams realised. It’s a notion underlined by a recent policy paper from the Dubai School Of Government, suggesting that Dubai’s culture of innovation is driving new and unique businesses from across the spectrum.
 
One such business is Dial-a-Battery, which in 2011 began offering Dubai motorists with a flat battery a “superhero” to come to their aid and immediately replace it roadside, rather than having to waste time towing it to a garage. It’s now expanded to Sharjah and Abu Dhabi, and Managing Director Asad Badami, thinks he knows why.
 
“Consumers are looking for something other than the cookie-cutter approach,” he says. “Something unique and fresh. So we stake our reputation on our ability to literally “rescue” our customers. This emotional connection is one of our strongest points – many of our customers say they’ve called us before their spouses when they’re stranded roadside.”
 
Dial-a-Battery was funded using more traditional means than Gametee and Pebble, but the modus operandi is the same – to encourage customers via innovative, interesting and even quirky methods. The tried and trusted no longer provides a guaranteed result.
 
“We have to move away from that mentality,” says Badami.
 
It appears many agree with him.