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Crowdfunding_Hopeo-Main

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It’s been a nervous few days for Danielle Rockel.

The co-founder of Hopeo, a Vancouver-based ethical underwear brand, Danielle watched anxiously as the Kickstarter campaign that would finance Hopeo’s first collection neared its deadline yesterday. The money was earmarked for materials and tools needed to manufacture Hopeo’s hand-made organic cotton garments.

When the campaign deadline arrived, Hopeo had raised more than $7,500 from nearly 100 donors, many of whom learned of the company from social networks and were keen to be early adopters of a buzzy new brand that combined cool, minimalist style with a strong sense of social purpose.

Yet with a final tally that fell short of its $10,000 target, Hopeo’s nest egg vanished; on Kickstarter, if you don’t reach your target, you lose everything.

Like many start-ups that turn to crowdfunding sites for a financial leg up, Hopeo had big dreams, a solid business plan and a story that inspired strangers to take action.

Danielle and partner Brian Saul came up with the idea for Hopeo last spring after hearing about the catastrophic collapse of the Rana Plaza garment factory in Bangladesh where more than 1,100 low-paid workers died and thousands were injured.

“I thought, ‘I shop at stores that make clothes at the factory where all those people got hurt’,” Danielle told Lingerie Talk. “We said, there’s got to be a better way.”

Danielle, a business teacher with a background in high-tech business development, and Brian, who owns a company that manages natural brands, conceived of a line of stylish unisex undies that followed fair labor and eco-sourcing practices, using cotton from the U.S. and manufactured at home in Canada.

“Our whole focus was that anyone who was involved in our supply chain had to be treated ethically,” she said. “We wanted a business model that is not just financially sustainable but sustainable from other perspectives as well.

“I’d like to use all the skills I’ve learned to make a positive impact on the world,” she added. “I have a family and I have to buy clothes like everyone else, but I want to feel good about what I’m doing.”

Kickstarter offered Hopeo the kind of immediate access to startup capital that would have been impossible a decade ago. Tapping into family, friends and the broad, multiplying reach of their social media connections, Kickstarter allows firms like Hopeo to establish a brand identity and build a customer base long before they sew their first garment or ship their first order.

But the boom in crowdfunding is fraught with pitfalls and many good ideas go unfunded. A successful campaign requires energy, creativity, persistence, originality, good timing — and lots of luck.

While Hopeo narrowly missed its funding target, a similar cause-driven newcomer called Thinx blew past its target and raised nearly $85,000 in two separate crowdfunded campaigns, and the fledgling NYC ethical label Ampere has already passed its $15,000 goal with a week to go in its campaign.

But savvy entrepreneurs, like Hopeo, don’t depend solely on the crowdfunding gamble to turn their dreams into reality.

“Our business plan is to move forward anyways,” Danielle said. “Kickstarter is a neat way to raise money, but it also helps raise awareness. The whole process is really fun and we’re really quite grateful for all the support.”

Crowdfunding_KLaskowska-2

Less than five years old, the widely imitated Kickstarter has already funnelled nearly $1 billion into the hands of small businesses.

The crowdfunding pioneer began as a way to finance creative works by independent artists — like your first indie CD, comic book or video game — and has a long list of restrictions to keep it from turning into an investment free-for-all (for instance, you can fund your lingerie collection, but not a new line of designer sunglasses).

Crowdfunding has been embraced by the lingerie and underwear industry, partly because it’s a niche of the fashion world that appeals to talented, artistic designers looking for exposure and an entry point into the business — exactly what Kickstarter and others like it had in mind. It helps that most are young, fresh from school, and know how to put social media and online networks to good use.

Karolina Laskowska, a UK student in De Montfort University’s Contour Fashion program that produces many of the lingerie industry’s future design stars, turned to the crowdfunding site Indiegogo not to launch a brand, but to give it a chance to grow. She had started her small, eponymous label (above) during her second year of school and couldn’t keep up with its surprising success. Sewing everything herself, she sometimes had to close her online shop due to the volume of orders coming in.

This July, Karolina turned to Indiegogo to raise £3,000 to pay for outsourcing of production at a Polish factory. The move, she said, would give supporters “far better opportunities to actually buy my designs.”

“My campaign was to help me launch a new collection and to take the step from sewing garments myself to having a factory produce them,” she told Lingerie Talk. “I was particularly touched by the kindness of strangers, many of whom didn’t even choose a reward/perk but simply wanted to see my new collection succeed.

“I’m sure I would have found a way around it if I hadn’t got the funding from IGG,” she added. “I’m rather a determined sort of person.”

Crowdfunding_Flint

Dozens of new lingerie and underwear brands have piggybacked on the crowdfunding boom in the past couple of years. All of them, to some degree, owe a debt of thanks to an American men’s underwear label that demonstrated the phenomenal potential of such campaigns.

Flint & Tinder set out in April 2012 to raise $30,000 through Kickstarter to pay for its first batch of premium undies but, after a wealth of press coverage that focused on its commitment to American-only manufacturing, it collected over $291,000 from more than 5,000 donors — nearly 10 times its goal — in 30 days.

Flint & Tinder became the highest-grossing fashion campaign ever on Kickstarter, turning a micro-business into a huge retail brand almost overnight. No wonder every young designer with a sewing machine started paying attention.

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The example of Karolina Laskowska‘s success as an indie lingerie label illustrates an important truth about crowdfunding: it can be much more than just seed money. Campaigns can be used to raise startup capital, for brand expansion, to buy equipment or materials, to pay for advertising, or to underwrite special projects.

The colorful L.A. label Private Arts is currently trying to raise $30,000 to branch into lounge and beachwear, while the Brooklyn label Daisy & Elizabeth used Indiegogo to help pay for a video to showcase their new collection.

Another hot, hip New York lingerie label, Relique (above), had one goal in mind when they launched a Kickstarter campaign last winter: to get into one of the Fashion Week trade shows so retailers could discover them. Relique founders Chelsea Carson and Kait Vasquez had established a successful Etsy shop selling their hand-dyed pieces, but needed to get the brand in front of boutique owners and wholesale buyers.

“The KS campaign was pretty crucial to the launch of the brand in that we were completely new, had little money ourselves from our personal jobs, and were not wanting to run a big risk with getting a loan from a bank where interests rates would have run us out of the game in our first season,” Chelsea told Lingerie Talk. “Being present at the trade show and talking to press there was the best way we were able to promote ourselves.”

Now, less than a year later, Relique is sold in many of the leading lingerie boutiques in the U.S. and is viewed as one of the country’s emerging fashion-forward labels.

Crowdfunding_Knix_1

People who donate to crowdfunding campaigns often see it as a simple transaction: pre-paying for products that are offered was “donor rewards” or “perks”, usually at discounted prices. But clever business managers also view crowdfunding as an essential marketing tool and a way of connecting with future customers.

Toronto entrepreneur Joanna Griffiths launched her brand Knix Wear (above) this summer on the strength of a wildly successful Indiegogo campaign that brought in over $60,000 — more than 50% higher than her goal. But getting cash wasn’t the most valuable outcome of the campaign, she said. It also helped her tweak Knix Wear’s business plan before her products reached the marketplace.

“The Indiegogo campaign gave us the opportunity to communicate directly with our customers and gain invaluable feedback on our brand positioning and product offering,” Joanna told Lingerie Talk. “Thanks to this feedback we were able to add a new style (our high-rise brief) and additional sizes (2XL) before our first production run. Our high-rise brief has gone on to become our top seller and we almost immediately sold out of 2XL.

“We made our crowdfunding customers a part of the development process and will continue to do so with all of our customers going forward.”

Knix Wear’s campaign attracted more than 500 donors, 85% of whom were strangers who learned of the label through press coverage and social media mentions triggered by the campaign itself. And all of that early buzz caught the attention of one game-changing new customer: Knix Wear was picked up for distribution by Hudson’s Bay, Canada’s largest department store chain.

“Without the opportunity to crowdfund it would have been very difficult to gain this kind of market research and distribution,” Joanna said. “It really did put us on the map.”

Crowdfunding_Play-Out

Entrepreneurs who view crowdfunding as a tool for brand development and promotion know something else: there really are no losers here. Campaigns that go unfunded still attract plenty of eyeballs, generate buzz and get young brands noticed.

New York newcomer Play-Out tried Kickstarter earlier this year to pitch a radical new idea: gender-neutral women’s underwear targeted towards the lesbian market but inspired, in part, by men’s briefs. Play-Out’s campaign attracted $11,000 in donations but fell well short of its $50,000 target.

By some standards, Play-Out’s experience would be considered a failure. But the campaign gave Play-Out’s founders an opportunity to engage with New York’s queer community and attracted enough pre-orders to help them finance a first production run, which ships this month. And the resulting media attention gave them enough momentum to leap into a second, expanded collection.

The bottom line here? As the saying goes, you can’t win if you don’t play.

Next: How Lingerie Brands Use Crowdfunding Campaigns

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