Kickstarter success Pebble Watch starts shipping as Australian crowdfunding industry reaches crossroads
Nearly a year after a group of engineers in Canada created a prototype watch which wirelessly connects to your smartphone, and raised over $10 million through a crowdfunding website, the Pebble Watch has finally started shipping.
The product has now started shipping to “backers”, people who paid the company money through the crowdfunding site Kickstarter. The campaign was one of the first on Kickstarter to raise such a huge amount of money, and proved bypassing financiers could be a viable route for small business.
But local experts say the success of crowdfunding internationally further highlights the current situation of the Australian scene, which has reached a key turning point.
“For a lot of stuff in this industry, I think there are a lot of unknowns,” says Pozible co-founder Alan Crabbe.
“We’d like to see some more information about the rules and regulations around the industry.”
The local crowdfunding industry was given a jolt last year when the Australian Securities and Investments Commission released a warning for users who participate in these types of events.
Backers, it said, were not actually financial investors. They do not receive equity. But it warned there may be some situations where giving money to a crowdfunding campaign could constitute a financial relationship which attracts all sorts of rules and regulations.
At the time, there was a lot of talk within the industry about being unable to provide online backers with equity. Currently, companies raising money on crowdfunding sites can only give “rewards”, like a copy of the eventual product in question.
Local players, such as Pozible, want the government to introduce laws such as those in the United States which provide companies with the possibility of giving out equity through crowdfunding platforms.
But as Crabbe says, there are still plenty of questions about how such a scheme would work, or if such a scheme would be appropriate.
“There are limitations around what can be done with crowdfunding in Australia, and there are still restrictions, which is the big issue.”
“We understand why these rules are here because there is the potential of exploitation, but there are a lot of unknowns.”
Crabbe’s co-founder in Pozible, Rich Chen, has spoken to SmartCompany before about introducing laws which allow for giving equity to backers. However, Crabbe says it really depends on the deal.
“For something like the Pebble Watch, would that have been a good situation to provide equity in the company?”
“Would there have been interest in investing in this company for a financial return, or did people just want to purchase the end product, which is the watch?”
The Pebble Watch has been the most famous example of crowdsourcing gone right. The original team scored more than $10 million with a target of less than $1 million. The watch has received media attention from across the world, with the company now pursuing other projects.
The watch has garnered attention for being able to sync with smartphones – users can read text messages and control their music, among other features.
But Crabbe says there has been a lack of these types of projects in Australia, where most projects have been focused on the arts industry.
Pozible wants to change that as soon as possible. For now, it says, the relevant authorities should release more guidelines for the industry on how it can operate. But Crabbe laments that there is currently no legislative push for the industry to evolve.
“The model is growing pretty quickly in Australia, and December was by far our biggest month since we launched.”
“But we’re looking at expanding different categories a lot more. We’d like to see more activity in these other categories, like technology.”
“We really just want to make a bigger pie for these categories that are not doing as well here, as they are in the United States.”