Gretha Oost has adopted an unusual approach to raise capital. The Melbourne mum, designer and Pitch Club contestant has decided to trial a ‘crowdfunding’ approach to launch her award winning product 321 Water.
What is Crowdfunding?
Crowdfunding, made famous by the likes of film-maker Pete Postlethwaite and US President Barack Obama, describes the collective cooperation, attention and trust by people who network and pool their money together, usually via the Internet, in order to support efforts initiated by other people or organizations.
In late 2004, when the word had yet to be coined, Anthill wrote about startup beer-makers and pioneering ‘crowdfunders’ Brewtopia.
The product of three local beer loving entrepreneurs, offered prospective customers a share allocation with every case of beer sold.
Taking the concept one step further, shareholders were given the opportunity vote on the company website, influencing everything from alcohol content to bottle design, in an early example of ‘crowdsourcing’ (again, before this term was created).
Oost is already familiar with the power of collaboration and harnessing the views of many. Last year, she won the People’s Choice award, voted by the viewing public, on Australia’s ABC New Inventors program.
321 Water – What is it?
We all know that the plastic generated by by bottled water creates large volumes of largely unbiodegradable waste.
As the mother of two little girls and a desire to rid the world of “environmentally disastrous bottled water”, Oost has designed the reusable, and (dare we say) stylish 321 Water bottle with a built in filter that is BPA free (the harmful chemicals that can leach into water from plastic bottles.)
321 Water is named for the 3 litres of water it takes to make 1 litre of bottled water.
Rather than seeking the support of VCs or other sophisticated investors, Oost’s crowdfunding model needs 10,000 pre-orders from the Australian public.
She already has 1,000 pre-orders – 10 percent of what she needs to go ahead with production.
Oost pitched her product idea at Pitch Club’s most recent event in Melbourne.
Is crowdfunding a good idea?
The crowdfunding approach, like any viral campaign, has the power to accelerate a launch or create a clever funding model for a project or movement. Much has already been written about Obama’s fund raising success.
But to put his experiences in context, in February 2008, Obama’s political opponent John McCain raised $11 million for his presidential bid. That same month, Obama attended no campaign fundraisers and, instead, used social networking tools to raise $55 million in those 29 days.
However, problems associated with the method arise when a return is promised – whether that be in the form of a product or dividend. If that doesn’t take place, the crowdfunder is not stuck with one or two unhappy investors but a small army of disgruntled customers.
In the ‘case’ of Brewtopia (pun fully intended), the success of the initiative also created unexpected problems, lumping the company’s founders with an increasingly complex share ownership structure and, quite possibly, a big handbrake on the successful acquisition of future funding rounds.
Oost is inviting customers to order her product online, at the “special introductory price of $32.10 (including GST and postage) and be part of this visionary product’s journey to the market. ”
In short, she is only seeking expressions of interest… for now. So, if the inititive simply gurgles down the drain, it’ll all just be water under the bridge for prospective customers.