How Toymakers Are Tapping into Crowd Power 

This article is the second in a series that TIA is publishing over the course of May in celebration of National Inventors Month. 

A toy inventor and her startup team launched a Kickstarter fundraising campaign on September 17, 2012. Four days later, they met their goal of $150,000. Within a month, they had raised more than $285,000 and had sold $1 million worth of product … all before they had even produced a single toy.

“It definitely exceeded our expectations!” said Debbie Sterling, founder and CEO of GoldieBlox, a young toy company that has become a poster child for the opportunities that crowdfunding sites like Kickstarter can offer independent toymakers.

Crowdfunding is a way to raise project funds by collecting small financial contributions from a large number of people, usually via the Internet. Modern-day crowdfunding emerged in the mid-2000s and has since spawned several websites, including Kickstarter, Indiegogo, RocketHub, and more. The practice of crowdfunding has gained swift popularity among tech startups, music bands, filmmakers and — increasingly— toymakers.

You can start a fundraising campaign by posting a description and video of your proposed product, and set a fundraising goal and deadline. If people perusing the site like your idea, they can pledge money to help make it a reality. Backers receive different “rewards” depending on the amount of their investment, ranging from branded apparel to full product sets. Typically, campaigns have to meet the full fundraising goal to receive any money.

Since the 2009 launch of Kickstarter — arguably the most well-known crowdfunding site —6.1 million people have pledged $1 billion, funding 61,000 projects.  

 “We chose to crowdfund on Kickstarter because we were confident that this was the best way to create a strong base of supporters and investors who truly believed in our mission,” Sterling explained. “Crowdfunding offers independent toymakers a sense of community and excitement when you begin interacting with your first fans.”

Sterling set out to inspire the next generation of female engineers through GoldieBlox construction toy and book sets, featuring Goldie, a kid inventor who loves to build. As children read the stories, they can use the construction pieces to build what Goldie builds and create their own imagined structures.

GoldieBlox was launched with the support of more than 5,500 backers. In 2014, the company won a free 30-second Super Bowl commercial from Intuit’s Small Business Big Game content — the first small-business commercial in history to air during the big game. GoldieBlox went on to win the Toy Industry Association’s 2014 Educational Toy of the Year Award, as well as the People’s Choice Award.   

CandyLab Toys is another Kickstarter success story. To get the company off the ground, founder and president Vlad Dragusin was reluctant to raise capital via traditional methods: if he and his business partner obtained a bank loan they’d have to pay interest, and if they partnered with a large investor, they’d have to give up equity. So in 2013 they turned to crowdfunding.

“The more we read about it, and the more we talked to people, the more we realized that this was in fact perfect,” Dragusin said. “The cost of failing is zero, minus your time invested in putting the campaign together. The worst-case scenario is that you don’t get funded.”

Dragusin and his team pitched the idea of producing heirloom wooden toy cars inspired by mid-century American design and car culture. Within 32 days, more than 1,200 backers had pledged $103,000, surpassing with flying colors CandyLab’s goal of $20,000.

It was a highly successful campaign. But “exceeding a certain goal is very dangerous,” Dragusin cautioned.

Raising additional funds does not translate into additional profit. Instead, it usually represents a larger number of backers who still expect to receive their product reward by the date it was promised.

“A couple of weeks into this euphoria, you start to realize you have to send out 2,000 toys, which is a whole different ball game from sending out 600,” Dragusin said. “From a backer’s perspective, a lot of people see this as a store. They say, ‘Where’s my order?’ But it’s not an order. It’s not sitting in a warehouse and will be shipped out in the following two weeks.”

On top of production costs, about 10 percent of raised funds go to Kickstarter fees, Dragusin said, plus taxes have to be factored in, and shipping costs can be significant.

Just meeting the fundraising goal is certainly no easy task. In 2012, College Savings Dolls launched a campaign on Indiegogo for their 15-inch dolls, which come with career outfits that encourage kids to role-play possible future professions. To help families prepare for college and all its costs, the company website offers tools and tips for tuition planning. However, the campaign did not succeed, raising 4 percent of their $25,000 goal.

“There have been successfully crowdfunded toy products in the last couple of years, but success depends on a few things: be visually appealing, have a compelling professional video, have a social media star featured in that video, and have many social media-savvy friends,” College Savings Doll Co-Founder Sarah Dugo said. “That way lots of people are aware of your unique product, share your story and get you on that front funding page,” where Kickstarter posts their staff picks.

Since 2012, College Savings Dolls has secured a loan from a non-profit microfinance company and will hit the market this June.

But a successful crowdfunding campaign can offer toymakers invaluable benefits, Dragusin and Sterling said. It’s a way to directly engage your potential market, test the strength of your idea, and gauge consumer response before production actually begins. It also serves as an exposure platform among distributors, retailers and industry experts, and can open doors to new business opportunities even while the campaign is still underway.

“I believe crowdfunding will definitely gain popularity among toymakers,” Sterling said. “Crowdfunding is a way for startups to break into all industries, including toys, and introduce new ideas and concepts to the space.”

Resources tailored for toy inventors and designers can be found on the TIA website.