Swiss folk finance funky ideas
Through a public offering, Easy Glider, a budding manufacturer of innovative electric scooters, sold 600 of its products before a single one had been manufactured.
A kicker in the deal was that for every Easy Glider bought, the “investor” would receive a share of the profits - up to ten times the money.
The offer helped the firm to raise more than SFr500,000 ($380,000) so it could afford to go into production.
In the meantime its engineers figured out a cheaper way to manufacture its motor-powered skateboard-like vehicles.
It is a story that is encouraging others to try the unusual method of financing growth. Six-month-old AVIQ is the next in line with a pre-production product offering.
It will be the first high-tech, early-stage company to give it a try.
With only a prototype on hand, the start-up company, founded by former executives of Studer Professional Audio and Nagra Kudelski, has little chance of finding capital fast enough to have its products on the shelf by early next year before big name vendors emerge with theirs.
Consumers interested in its new all-in-one Digital Video Recorder, CD, DVD, radio and TV tuner now have the chance to pre-order it and pay in advance.
While feedback from potential investors has been positive, none have offered yet to bankroll the company's production at a Far East location.
What the company really needs is an angel with deep pockets that understands the consumer electronics industry, but it has been unable to find one yet and the clock is ticking. Chief executive Rudi Kiseljak says that timing is everything.
Another advantage the firm has over its competition, it says, is a piece of software in the box that makes it easier to find good television programming.
It uses something called the "electronic program guide" which is prepared by AVIQ on its server and downloaded to the system “media center”.
People’s share offering
Could this form of financing be a new trend? Experts, at least those who work in or observe the venture capital industry, say no. It is a blip, a reaction to the current strict approach to risk-taking, according to Max Burger Calderon, senior partner at Apax Partners.
“It is just a creative way of raising money in a difficult environment. [The entrepreneurs] would probably have preferred a simpler structure if it had been offered," he comments.
Creativity is key. “I think it will only work with really unique and sexy products. If it’s a ‘me-too’ kind of thing, people will not be moved to invest,” commented Peter Fehervari, Easy Glider founder and chief executive.
BrainsToVentures, a consulting firm whose business it is to help high-potential start-up firms find business angel capital, says companies that get funded in this way appeal to emotions.
"The companies might find the money they are looking for, but the reason people invest is not for a lucrative cash return, rather it is because they will get some nifty product,” says Florian Schweizter of BrainsToVentures.
“In addition, it is a chance to do something that makes them feel good,"
by Valerie Thompson
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