Vancouver Sun - Kids' ebook start-up finds success with crowdfunding
Internet publisher seeks financing online to let children make their own books
Three weeks into their "crowdfunding" campaign, Molly Schneeberg and Earl Hong Tai are working harder than ever to finance Kibooco, their children's ebook start-up.
Who knew that the bulk of the effort was to come after launching a crowdfunding campaign, not before?
"After it took way longer than we anticipated even to pre-pare for it, we're two days into the campaign, really excited to launch it, and we realize we've exhausted all of our personal relationships, contacts, friends, family and networks," Schnee-berg said. "We're left thinking 'What do we do now?'" "Crowdfunding" is a rapidly evolving means of raising small amounts of money from many sources online. Those seeking funds create an appeal that's hosted on a site such as indi-egogo.com. Visitors to the site contribute to appeals as they wish. Indiegogo charges four to nine per cent of the money raised. Contributions are generally set up as straightforward donations, pre-sales or licenses (a model being pioneered by Vancouver-based crowdfunding start-up, Sokap). This spring, the U.S. Senate approved legislation that will allow an equity model, but this is not yet legal in Canada.
Schneeberg and Hong Tai started Kibooco two years ago and from the start, the partners have been notably successful at raising money. That's not to say it has been easy.
Their first application for a $50,000 BC Film and Media/ BC Arts Council Interactive Fund grant bombed. "It was kind of the first time we put pen to paper on what we were doing," Schneeberg said in retrospect. "We just threw out our whole big, grand, business idea and I don't think we had the milestones."
An application to the Canada Media Fund's experimental stream went much better. "We fit the category very, very well," Schneeberg said. "We were still quite conceptual and this stream allows for that."
This time, Schneeberg's application included a robust and detailed competitive analysis. "We were able to say how we were innovative, how we were going to do what we were going to do," she said. She got a $275,000 repayable advance.
Schneeberg then reapplied to the Interactive Fund.
"The first time, we said we're building an interactive platform for kids to create and design books," she said. "It was a big, high-level concept. ... The second time we went in, we said we're going to use this money to generate two templates. We could say 'With your $50,000, we're going to spend on these two things which are very connected to B.C. film and B.C. arts. We're going to hire artists and illustrators to develop creative content. The book templates are going to look like this, and here is a specific timeline for deliverables. We got the $50,000.
"You learn that they want you to answer the questions they ask. We kept ourselves very focused."
Ultimately, Schneeberg and Hong Tai raised $350,000 - enough to create a small team and build almost an entire prototype - from a number of public funding sources including the National Research Council's Industrial Research Assistance Program and Mitacs, a national not-for-profit research organization.
But crowdfunding turned out to be a different animal altogether. For one thing, funding agencies are very clear about what they want to know - "You just have to answer the questions," Schneeberg said. In contract, trying to raise money from a crowdfunding platform such as indiegogo.com is like venturing into the Wild West, she said. Anything goes. Or nothing. "We decided to go the crowd-funding route first because it really allows us to connect directly with our market to see if the market actually wants what we're doing," Schneeberg said. She soon discovered that while the mechanism has a lively following among gaming and tech gadget aficionados, it is not yet well known among her target market of parents.
"I think some are confused about what we're asking for and why we're asking for it," she said. Three weeks into their crowd-funding campaign, Kibooco has raised $14,600 on a pre-sale model, and has made a respectable showing on indiegogo's success measures, but the partners are hoping for more. A week ago, they were behind only "Let's Build a Goddamn Tesla Museum," which had raised $940,000, and the
BugASalt Rifle, which had raised some $300,000 for a gizmo that shoots salt to kill bugs. "We're quite far behind them, but we're next at $14,000," Schneeberg said.
The partners have learned that Facebook "likes" don't translate into crowdfunding contributions, and social media campaigns don't reach as many people as they'd thought. They've learned they have to keep their campaign alive with constant updates.
"We've realized it's really about old-fashioned, per-son-to-person relationships," Hong Tai said. The partners have now created a giveaway "How To Draw" book for kids as a way of introducing them-selves. "People have to learn to trust you, to know what you are about."
"Social media has been a great tool for us, but we've really realized you can't hide behind it," Schneeberg said.
Wed Sep 5 2012
Byline: Jenny Lee