When Janice Cheam came up with the idea for Neurio, a product designed to help householders save on electrical bills, she knew she had something householders would want.
What the president and CEO of Energy Aware Technology Inc. couldn't prove, however, was whether they'd be willing to pay for it.
"Since we had never sold to end consumers before, we needed to provide market validation for Neurio to our long-time supporters and potential funders to encourage them to back it," she said.
Without substantial funding to test her thesis, Energy Aware would struggle to get Neurio directly to consumers.
Along with Colby Gore, Dr. Ali Kashani, and Jon Hallam, Ms. Cheam co-founded Energy Aware Technology in 2005. Four years later, the Vancouver-based company was described as "the most promising start-up company of the year," by the B.C. Technology Industry Association.
Their newest product, Neurio, is a home intelligence technology that monitors the power a home uses, and calculates the cost of running individual appliances in real time.
"Our products aim to create better awareness of the way that we use energy," said Ms. Cheam, "so we can reduce energy waste, save money and contribute to more sustainably positive behaviours."
The open-source system operates using a Wi-Fi sensor installed in your breaker panel, and a cloud service which uses algorithms to detect and track power usage. It can also integrate with other applications to do things like send reminders when the washer is done or adjust the thermostat for when you come home.
"For years, we have been plugging in devices and controlling them manually with switches, knobs, and buttons, and there's a lot more that can be done to enhance our ability to manage our appliances more efficiently and see them as part of the home's ecosystem," said Ms. Cheam.
To prove that Neurio had market appeal, Ms. Cheam and her team launched a crowdfunding campaign on Kickstarter. It was proposed as a way to get the product out in the market ahead of time, gauge the interest level, and raise some money to fund the initial manufacturing costs.
They set a goal of $95,000 in a 30-day period between Oct. 16 to Nov. 15, 2013. Realizing that more than half of Kickstarter campaigns don't get funded, Ms. Cheam and her team knew they had to take extra steps to ensure their success.
The Energy Aware team brought on an additional resource to build PR, marketing and community outreach before their Kickstarter launch.
"We researched extensively to find niche bloggers, inform them of the campaign and share our brand story ahead of putting out an official press release to major media outlets," added Ms. Cheam. "The timing of these outreach activities was meticulously planned to achieve maximum impact for our launch."
Energy Aware reached its 30-day fundraising goal in just two weeks. As of Nov. 7, they raised $171,021 in pledges from 1,232 backers from 35 different countries, with 7 days remaining.
Ms. Cheam hopes Neurio units will be ready to ship to consumers next April at a retail cost of $250.
"In terms of funding a major new tech product, crowdfunding, even if you reach the standard limit of $100K, is not enough. Our success with Kickstarter meant that there was proof in the pudding for future investors and partners, that our product works and there's a substantial market for it," said Ms. Cheam.
Paul Cubbon is a marketing instructor at the UBC Sauder School of Business.This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Small Business website.