Below trend growth to continue
Father and son entrepreneurs Stuart and Cedar Anderson of Flow Hive™ fame overshot their original crowdfunding target of $97,000 by about $16.8 million. How did it happen and where do you go from there?
In case you’ve missed the Flow Hive story, here’s a summary. In early 2015, Byron Bay father and son team Stuart and Cedar Anderson decided to crowdfund an invention they’d been working on for more than a decade — a revolutionary new frame for beehives that allows beekeepers to harvest honey without opening the hive and disturbing the bees. Their goal was to raise $97,000 to enable the production of the Flow Hive. They raised $16.9 million.
What made them choose crowdfunding rather than a traditional business loan? “It was very difficult to figure out what the response would be,” says Stuart. “It was brand new, a big innovation in beekeeping, really nothing quite like it in 150 years. We had let a few commercial beekeepers into our secret — some were amazed; some were lukewarm; some said it would be good in other countries, but not here. We got varied responses, so we didn’t know whether this was going to be picked up. Or whose house we would put up as collateral for a loan!”
But it wasn’t just their uncertainty around the success of their product that made crowdfunding an appealing option.
“Crowdfunding was very attractive because not only does it potentially raise you the finances, but it also announces to the world that you’ve made this invention.”
Stuart and Cedar were concerned that as soon as their idea became public, people would copy it, so speed to market was really important. In fact, they considered it even more valuable than patents — they simply didn’t think they could afford to start slowly.
Initially, they were thinking of going with Kickstarter as their crowdfunding platform, but Indiegogo made them a better offer and they liked the 24-hour support provided.
The temptation is to think their crowdfunding appeal ‘just’ went viral by itself. The truth is not quite that simple. Stuart points out that they put a lot of thought into how to approach it, and before they opened the appeal, they released a preview video.
Again, this was not your typical amateur YouTube affair — Stuart’s stepdaughter is a filmmaker, and she and Cedar spent a lot of time finessing the video. But they certainly weren’t expecting the response they got.
“It surprisingly did go viral, it had millions of views even before the crowdfunding started,” says Stuart. “And that was the purpose of it, but it was more successful than we imagined. The fact that it went viral was news, separate to the actual content of it.”
Dealing with the massive influx of funds turned out to be much more difficult than they had envisaged. The companies that handle payments have stringent policies to protect consumers — which is fantastic for consumers, but can trip an unwary vendor. As the funds began to pour in, the huge amounts set off alarm bells, and the process to sort it out became, in Stuart’s words, “an accountant’s quagmire”.
It was a steep learning curve, but they now have a certified accountant working as their financial manager and things are on track. They also opened an account with NAB because it could receive US dollars from a US based credit card processing company.
Right now, their focus is on fulfilling the 30,000 orders from more than 130 countries that have been placed to date. To put that in context, when they started crowdfunding, they had moulds that could have produced 5000 to 6000 Flow Hive frames a year. Upscaling production has taken longer than predicted, but they’re now producing at full scale to meet their December deadline.
And the future? Stuart says they are looking forward to getting back to more of a ‘business as usual’ approach, which will include moving to work with commercial beekeepers as well as amateur beekeepers. Interest from commercial beekeepers has been massive, but they’ve not yet had time to set up a professional beekeepers’ arm of the business.
Clearly, it’s not just the bees who are going to be busy.
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