Internet of Things

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Dr John Riley is passionate about improving the innovation process, having first hand experience of large enterprises, small business, academia, and government. As Managing Editor of Computer Weekly (1992-2008) he championed true business value from IT and founded the CW500 Club for IT Directors. He was until recently Strategic Advisor to Erudine, an early adopter of agile technology, campaigning for the wider UK SME community. He was a founder of the UK Innovation Initiative and is active across the IT community.

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Crowd Funding: gains whether you win or lose

How this model works for the Internet of Things community

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Take a look at the Good Night Lamp project currently looking for funding on Kickstarter. It is on a bold and ambitious scale and illustrates new directions in IoT crowd-funding.

Unlike many Internet of Things related projects seeking funding, which set their targets in the low five figures (see Table below), Alexandra Deschamps-Sonsino is looking to raise £360,000 to set up a realistically scaled manufacturing programme for her Arduino-based product.

Traditional investors looking at her detailed budget sheet would recognise that she is pitching at a realistic level. And any entrepreneur looking beyond a quick punt should take a serious look at that budget - that's the ball park for the sort of cost thinking to take your application idea and scale it as a mainstream consumer-oriented product.

At the time of posting this, 481 people have pledged £39,296. There are just two days left before the shutters come down. So barring some big late investments this project has challenges.

But that does not mean failure.

In today's start-up world crowd-funding is a route well worth taking. The Good Night Lamp is a simple idea. One big Arduino-based bedside-style lamp activates other small lamps anywhere in the world. It's designed to enable friends or family to share some of an absent loved one’s daily routine as they switch their light on or off. That idea may not resonate with the geekier than average Kickstarter community but the interest so far shows it could have legs elsewhere.

The experience does, however, give Alexandra a sound track record, referenceability, and basic quantified feedback. Just being on Kickstarter boosted her credibility at the recent Consumer Electronic Show in Las Vegas. (she was one of only three Kickstarter projects there, which illustrates the disconnect between the corporate community and the front-line innovators in their start-up garages).

If she doesn't make her target she will not get any of the £39,296 pledged. Kickstarter is all or nothing. The pledges, by credit card, are held in escrow by Kickstarter and only activated if the full target is reached. But against that, there is little cost (before self marketing) and no risk of ceding any shares in your company. This route may bring her to a somewhat better assured traditional investor and will certainly help with future projects.

The model is a bit like subscription publishing in the 19th century for books - open hardware is well suited to that model as the products are tangible and relatively cheap and provide rewards for backers.

Illuminated Prayer Mat - art meets technology
One example of a Kickstarter project that didn't make it is Soner Ozenc's Illuminated Prayer Mat that links a digital compass with an electroluminescent wire based design (of the Blue Mosque in Istanbul) woven into a Muslim prayer mat which lights up when pointing towards Mecca.

Speaking at a London Internet of Things Meetup late last year Soner related how he gained pledges of $47,128 against his target of $100,000. So being with Kickstarter funding being all or nothing, he got nothing.

Or did he?

At minimal upfront cost his KickStarter presence generated major publicity in the international media, his associated YouTube video has had 415,000 views. That has put him on a strong footing, with a demonstrable track presence, for future projects and products.

Talking to Soner today, although the mats are selling as prestige products (they are not only functional but art too - the Museum of Modern Art in New York bought an early prototype) he has not yet secured money for mass marketing. However he says that he's found the whole experience positive and encourages any other entrepreneur to try that route.

So what projects do make it?

Kickstarter can be spectacularly successful. For example, the Pebble watch in just a little over five weeks last May raised $10,266,845 from 68,929 people. It was actually seeking only $100,000 to raise funds for its customisable watch which interlinks to Androids and the i-Phone.

That's the big exception that inspires the rest.

That sort of success does happen from time to time on a lesser scale. In September last year the Digispark, a micro-Arduino USB development board, looking for just $5,000 raised $313,218 from 6,264 subscribers. Galago, an ARM-chip based alternative for an Arduino based prototyping board, looked to get $30,000 and got $73,000.

Also, a good proportion of entrepreneurs looking for 5,000-30,000 have been successful, many of them receiving >200% of what they ask. One bid for £6k to set up a printed paper Raspberry Pi magazine from an online e-magazine raised £29k (see Table below for more).

All this bodes well for a thriving Internet of Things ground-up based development community.


The future for Internet of Things crowdfunding rests with the consumer

To the corporate world these may seem fringe activities but that is the very point: this innovative activity is out in the open. It's not being conducted in skunk works in large corporations, or in their shadow, and is not initially beholden to investors wanting a safe bet and a big shareholding.

This innovation is going on openly within a self funding globally networked community. It'll get even moire interesting when ordinary consumers join in. Then the dynamics will change again. That's when consumer facing Internet of Things applications and products such as Good Night Lamp or the Illuminated Prayer Mat may soon find their time has truly come!


Some Successful KickStarter IoT Projects in 2012 (Source www.kickstarter.com)

(Mainly US)

Product                                                                 $ Asked     $ Received   %Over  Backers

Digispark - micro Arduino USB development board       $5,000       $313,218    6264%  5964
LUMOback - smart posture sensor                           $100,000      $200,503      200%  1614
Arduino powered 6-legged robot                                 $13,000      $168,267     1294%   861
SmartArduino development tool                                 $23,000      $157,571       685%   982
Miniature Arduino compatible platform                        $10,000      $109,699     1096%  1186
Galago ARM-based prototyping board                        $30,000        $73,383       244%  1319
ARM-based development board                                   $5,000       $70,874      1417%  1572
Wattvision - smart energy sensor                               $50,000       $67,292        134%   487
Smart sensor keyboard controller                               $20,000        $45,556       227%   230
Wireless colour scanner sensor                                 $15,000        $39,473       263%   273
Open source Arduino based tracking device                $10,000       $38,421        384%   221
Wireless modem for Arduino                                      $18,000        $33,618       186%   340
Arduino based Bluetooth communicator                        $6,000        $16,498       274%   252
Wireless bridge for Raspberry Pi                                  $1,600        $11,986        749%  113
4-D interactive fire art installation                                $ 5,000          $6,847       136%    22
Arduino compatible solderless breadboard                    $4,200          $5,156        122%   92
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