For engineers seeking funding to further research and development of a game-changing idea, crowdfunding could be the answer.
Crowdfunding is the practice of funding a project by raising money from the public, typically many people who each contribute a relatively small amount. The idea has been around for decades.
When Professor Graeme Clark was attempting to take the cochlear implant from prototype to testing on the first patient in 1974, he turned to crowdfunding’s early prototype: the telethon. Sir Reginald Ansett threw the might of Channel Ten behind the device, and viewer donations allowed Clark to raise enough money to take it to the next stage of development. The result was one of the most significant inventions of the 20th century.
Fundraising in the digital age
Fast-forward 50 years and the internet has supercharged crowdfunding’s potential.
The World Health Organisation crowdfunded its initial COVID-19 response in 2020. As The Lancet reported, the first 10 days of the campaign saw it raise $111 million from 170,000 individuals and organisations.
The Oculus virtual reality headset, purchased by Facebook for $3.13 billion in 2014, got its start with a Kickstarter campaign that aimed for $390,000 and ended up raising $3.75 million.
The SkyBell video doorbell is another unicorn of the crowdfunding model. The wifi-enabled doorbell, which streams live video of a home’s front door to the owner’s smartphone, sparked imagination on platform Indiegogo to the tune of $938,000 in 2013. These days, as reported by Forbes, it generates millions in revenue annually.
Leveraging the power of the crowd
So is crowdfunding the new black? Dr Jonathan O’Donnell is an expert on the subject. By day, he assists researchers at Deakin University navigate the intricacies of raising money for their research. In his downtime, with Tseen Khoo, he’s the Research Whisperer and has recently completed a PhD looking at crowdfunding for research.
“Crowdfunding is interesting because it’s not bound by the standard conventions and hierarchies,” he said. “Instead, it’s about connecting you directly with people by saying, ‘Here’s my idea, support it if you like’.”
Crowdfunding can be attractive for researchers because it raises money without giving up any equity in a company. But there are other benefits to the model that go beyond the financial.
It can help promote brand recognition and nurture a ready-made market of consumers. Feedback from early-stage donors can also provide valuable insights into R&D, allowing a product to be tweaked before it reaches the market.
Crowdfunding can also alleviate the time-sensitivity of projects.
As Engineers Australia noted in its 2023 Budget submission Engineering a better future for Australia, there is a long wait time between applying, being accepted and receiving the funds: “Waiting six months for funding after a successful application can mean the difference between survival or dissolution.”
Where engineering innovation and business intersect
Self-promotion might not be in the traditional wheelhouse of the engineering researcher. It’s important, however, for anyone attempting crowdfunding to tap into their entrepreneurial side.
A successful crowdfunding campaign needs to clearly explain why a product will be useful, O’Donnell said. Keeping donors updated about a project’s progress is also important. “It’s not a legal but an ethical requirement to be a decent human being and not ghost people.”
It’s also important to have realistic expectations. Unicorn case studies are captivating, but the amount of money raised is usually far more modest.
Most engineers can raise around $6000-$8000 from their immediate networks, O’Donnell said, and the rest is up to the amount of time they invest along with how attention grabbing their idea is.
A successful Australian example of crowdfunding in the engineering R&D space unearthed by O’Donnell concerns a UNSW project to build and test a solar-powered car. In 2013, it raised just over $27,000 (136 per cent of the target) from 262 supporters, followed by a second round raising more than $36,000 (121 per cent of the target) from 201 supporters.
The rise of micro-patronage
Micro-patronage, a related fundraising activity, uses platforms such as Patreon and Ko-fi, and is becoming a novel way to fund research, particularly research communication and open-source software development.
A standout example is Sydney-based electronic engineer David Jones, whose EEVblog is one of the most successful engineering channels on YouTube. His associated EEVblog on Patreon has more than 700 ongoing subscribers donating $2 or above each month.
“One of the things universities want academics to do is talk about their research,” said O’Donnell, whose own research has shown that, statistically, one to two per cent of a blog’s audience will give an ongoing donation.
“Success in micro-patronage is really just a proxy for success in communicating your research to the world or providing a service that people appreciate. If we’re trying to improve the world, telling people is a really important part of it.”