Part III: A Rift in Time
Welcome back to Part III in our series on crowdfunding successes. In our first two articles we profiled that beekeeping game-changer the Flow Hive, and the savvy little colour oracle, the SwatchMate Cube. Staying on a tech theme we go outside Aus for the first time to set up the backend of our series which highlights why it may be useful to go beyond rewards-based crowdfunding and into the brave new world of crowd sourced equity funding. Without further ado, we present the short history of the company that used to be a company and is now part of Facebook.
Campaign: Oculus Rift (US)
Platform: Kickstarter (US)
Campaign type: Rewards
Capital raised: $2.4m
What is it?
Despite sounding like the Transformer that was adopted out at birth, Oculus Rift is the next-gen virtual reality headset that has so much latent potential Facebook bought it for a lazy USD$2 billion. We’re not sure what Facebook plans to do with it but in the words of its’ illustrious developers, the Rift is “the first truly immersive virtual reality headset for video games”. Fair enough. In other words it allows gamers full 360 degree head tracking, stereoscopic 3D view and, reading between the lines, is like totally whacked out awesome!
What did donors get for their money?
Anything from a virtual pash ($10) to a VIP all-expenses paid trip out to Long Beach CA to hang out with the Oculus gang and get your game on ($5,000). Most of the rewards are some version of the headset including a DIY kit you can assemble (read: mangle) yourself. Full list here.
Why was it successful?
Designed by gamers for gamers, which is why we here in the CrowdReady cowshed are still struggling to understand the finer points, but all reports are that the Rift experience is so immersive you can literally see yourself changing your mind. In an $80b+ annual industry, this is big. It’s…..disruptive. It’s not surprising that the biggest crowdfunding campaign of all time is a video game, the Star Citizen behemoth, and has raised over $74m to date and counting. The Rift is a groundbreaking product in a huge market, with an equally huge and loyal following. Basically all they had to do with the pitch was to show up and not vomit on camera and the sexiness of the Rift did the rest.
Tip: if you’re a gamer and have an awesome idea that other gamers will think is awesome too, crowdfunding its development and sell the IP to a big tech company call CrowdReady and we’ll help you out with that.
This leads us very nicely into why you might want to consider crowd sourced equity funding – both as an entrepreneur, but in this highly-publicised case, especially relevant to the investor.
Imagine instead of a crappy beta version of a now obsolete headset, your $300 instead bought equity in the company. A company that later scored a cool two billion in the Facebook buyout. Estimates for return on investment are around 100-200x which makes your $300 worth about $45k if we take the midpoint of the ROI. Not life-changing by any means, but would certainly facilitate one mother of a hangover.
This is not to suggest that this offer was ever on the table, despite the outpouring of sour grapes when Oculus Rift hit paydirt. However, this amply illustrates the fact that equity crowdfunding has the potential to revolutionise investment and open up deals with huge earnings potential to the retail-level investor which were hitherto available only to the pointy-shoed small-batch gin swilling set in investment banks and VC firms. As with all investing, buyer beware and any liberalisation of equity crowdfunding is likely to have modest caps to protect the gullible, but nevertheless represents a huge opportunity for ventures and younger and savvy retail investors to get together and get jiggy.
Well that rounds up part three in our series and hopefully gets the grey matter swirling in the direction of the rewards- versus equity-based crowdfunding argument. Thanks for coming and again avail yourself of the shameless plug for the CrowdReady website for pithy insights, links and articles and email us if you’re feeling increasingly toey on the crowdfunding front. Until next time, hope the crowds are beating down your door and throwing cash at you quicker than you can get the intern to pick it up.