More Companies Like Canon Should Use Crowdfunding Websites
When I first learned that Canon was planning on using a crowdfunding website to launch a new product, I thought to myself “this is going to be a PR disaster.” My knee jerk reaction was to think that it’s unacceptable for a company like Canon to use websites like Indiegogo in order to launch a product. Surely it has more than enough money available to develop products without asking for it from the public.
Crowdfunding Is Not Necessarily About Raising Funds
The main misconception is that people assume crowdfunding websites are used entirely as a means to fund the development and launch of a product. This isn’t always the case, especially when it comes to manufacturing.
The costs associated with developing and manufacturing a new product are almost never covered by the income received from crowdfunding sources. In many situations, companies are required to seek further investment after a crowdfunding campaign has been successful. This is also one of the key reasons so many campaigns fail after they’ve seen success on a crowdfunding website. Many new companies severely underestimate the actual costs required and burn through any cash very quickly.
Crowdfunding websites are generally used as a way to determine the demand of a product. This is one of the key benefits of using a website like Indiegogo. Raising a few million on a crowdfunding website is a brilliant way to measure the demand for any new product and mitigates a significant amount of risk. If your product does not have the demand to be successful on a crowdfunding site, then you can simply move on with minimal losses. If, however, your campaign is successful then you have an incredible pitch you can put forward to potential investors.
The way Canon seem to be using crowdfunding is to determine the demand for a new product it would like to produce. If there is sufficient demand, then it can green-light the project and actually develop the IVY REC camera (terrible name by the way). Essentially Canon is the investor and the crowdfunding campaign is a pitch to itself in order to determine the product’s viability.
Why This is Brilliant
The photography industry has become extremely difficult to compete in. Many new products that are launched within this industry have failed and the losses have been significant. Take Nikon’s attempt with its KeyMission cameras. Nikon probably poured a great deal of time and money into developing those products only for them to generate losses for the company.
Camera sales have been in decline for the last few years and investing in new products is riskier than ever before. The main reason for this is that income from cameras sales has been on the decline, and any loses on new projects are compound losses. That puts a company on the back foot and prevents them from being as innovative as they’d like to be.
What crowdfunding allows these types of companies to do is properly asses the demand for a product before completely committing to it. This prevents huge losses and more importantly, it allows companies to experiment and try new things. Companies can be as innovative as they’d like to be and present new concepts and products to the market before they fully develop them.
Products that they wouldn’t have ever normally produced can now be attempted on websites like Indiegogo. We could start to see more interesting and niche products being made by larger mainstream companies. The main production lines of these companies can operate as normal and smaller more nimble departments within the company can try completely new concepts.
Crowdfunding is a fantastic way to prevent significant losses and it’s about time larger companies started looking to these types of websites for new and quirky concepts.
Is Crowdfunding Going Mainstream?
The last few years have not been great for many crowdfunding websites. Several notable failed projects have made backers wary of the concept. Companies have been found making completely ridiculous claims about the kind of product they are developing. Some projects have been nothing more than quick money-making schemes for “companies” who essentially planned on using the money for nothing but parties. Once the money runs out, simply declare bankruptcy and none of the backers receive refunds or their products.
This is quite obviously going to leave backers with a pretty bad taste in the mouth. The fact that Canon has opted to use a crowdfunding platform could be the best thing to happen to these kinds of websites. We may start to see more and more mainstream companies operating on crowdfunding platforms. This is fantastic because these are companies with a huge deal of experience and a proven track record to deliver what they promise. Mainstream companies have more to lose, so the chances they would renege on any agreements with their backers are slim to none.
I’m assuming most backers would prefer to support companies with decades of experience and a proper customer support system over companies that may or may not be able to deliver the goods.
The way I see it is that the IVY REC camera is probably just a project for Canon to determine how viable it is to use crowdfunding as a means to develop new products. If this is successful, we may start to see more and more larger companies operating on the site. I believe this is great news for backers because not only do they have added peace of mind, but they also have the ability to receive products from these companies with steep discounts.
The downside is that start-ups and smaller companies may struggle to get the attention of backers, making it far more difficult to compete.
Personally, I think that backers have the right to more security and accountability. If this makes it more difficult for smaller companies to compete then it is unfortunate, but it is also necessary.
Crowdfunding websites have received a fair amount of bad press. If they are in-fact attempting to attract larger companies then this could turn things around quite drastically for them. The income potential could be much greater too and the chances of failure are significantly reduced. In a lot of cases, when a niche company goes mainstream, it’s perceived as being a bad thing; however, in this case, I think it’s probably the best thing to happen to the industry.
About the author: Usman Dawood is the lead photographer of Sonder Creative, an architectural and interior photography company. The opinions expressed in this article are solely those of the author. You can find more of his work on his website, Instagram, and YouTube.