How 3D Printing Can Help Crowdfunding
Earlier this week, crowdfunding website Kickstarter posted new rules for projects in its Hardware and Product Design category. The news was delivered as a blog post entitled “Kickstarter is Not a Store.” The rules were designed to ensure that project creators set realistic expectations with potential backers. Apparently some people see Kickstarter more as a way to get the next cool thing first than as a way to back projects they see as having merit. The trouble with that is there is risk associated with crowdfunding that one wouldn’t normally encounter with a “traditional” ecommerce transaction (as if there’s anything traditional about ecommerce, right?)
The first rule change is that project creators must now answer the question, “What are the risks and challenges this project faces, and what qualifies you to overcome them?” A legitimate question for certain, and one that any other type of investor would probably ask as part of their due diligence. To be fair, most project creators were already making that obvious – it’s just gone from being a best-practice to becoming a rule.
From there it gets a bit more restrictive. Projects posted in the Hardware and Product Design category must now follow these additional rules:
- Product simulations are now prohibited. Products can only be shown as they are able to perform today – not how they might work in a future state of development.
- Product renderings are also prohibited. Product images must be of the prototypes as they currently exist.
- Projects are prohibited from offering multiple quantities of a product as a reward for a larger investment
While these new rules make it more difficult for projects to overpromise and under deliver, they also create real problems for project creators. First, prototyping can be an expensive process and depending on the product, can be iterative, taking multiple versions to perfect. Startups often use investment money to fund this process. Crowdfunding can and should be able to provide this type of capital. Second, most products are produced in mass, on assembly lines where set-ups and run quantity determine unit price. Project creators often base their minimum pledge amount and total funding goal on the most conservative scenario that will allow them to reach economies of scale. Removing the option to offer multiple quantities to one backer could reduce overall funding and place more of the risk on the project’s creator, which in turn could make the project less viable. Never mind the fact that many projects are successfully funded because backers want multiple units of the product they’re investing in.
So, what is 3D printing and how could it help? Wikipedia defines 3D printing as “the process of making three dimensional solid objects from a digital model.” 3D printing devices “print” in multiple substrates including plastic, ceramic, and metal, among others. Startups can use 3D printing to build working prototypes - often less expensively and more quickly than by other methods. In this way 3D printing can help a project’s creator demonstrate a working prototype in its most current stage of development.
3D printing can also be used for production in the case of low quantities or where the product features a high level of customization. Because 3D printed products are printed “on demand,” costs are fixed, allowing a producer to determine a consistent unit price. While the breakeven between this technology and traditional methods is very low right now, it will scale up. As an example, consider this current project where the creator is raising funds to build a full-size dinosaur using 3D printing technology, and plans to give each of his backers a 12” scale model. Right now it makes more sense to produce the models in mass, but as costs come down 3D printing could offer a great way to personalize each model while utilizing the same technology that will produce the life-size Dryptosaurs.
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(Photo of PrintrBot, a 3D printing device that was coincidentally funded on Kickstarter)