David Alden doesn't like the idea of selling portions of his company for funding.
The Park City entrepreneur started Recoil, a company that makes universal cord winders just over a year ago.
"It is likely that I will have to part with percentages of the company over the course of the life of the company just to raise enough money to grow it," said Alden, who quit his job in real estate to pursue his business venture. "I'm very wary of giving up pieces of that company too early in the process."
Many startups in Utah are turning to Kickstarter, a New York-based fundraising website that allows individuals and groups to receive donations for their projects.
This allows low-budget entrepreneurs to find funding without selling ownership of their company for investments.
Alden and his wife Anne decided they would pay for the research and development out of pocket, which meant they would have to use their savings and sell off a car.
But research and development expenses reached about $75,000, which proved to be too much for a young family with an 8-year-old. That's when Alden discovered Kickstarter.
Users set up Kickstarter pages by posting information about the product or project and a video to introduce it. Then, they set a monetary goal to be reached in a user-determined donation period for up to 60 days.
Alden set a goal to receive $10,000 on the site over 40 days. He met his goal in three days. Donations increased by 36.8 percent over the past two weeks to $52,000 from more than 1,100 backers. With the donation period still currently open, those numbers continue to rise.
"We had hoped initially that we would have enough money to do the R&D, tooling and our first production order," Alden said. "But of course everything runs predictably over budget. It took a lot longer and a lot more money to invent this product than I expected."
Other companies have used Kickstarter to gauge customer interest while raising funds.
Eric Gilger, a 27-year-old in Salt Lake, developed a type of fire piston, a device used to ignite wood or cloth while camping. He named his company SparxGear and put it up on KickStarter.
"I decided that Kickstarter would be a good way to see how many people would be interested," said Gilger, who enjoys the outdoors with his wife. "I figured if I could get a reasonable amount of people from one spot, then maybe I could actually make it work.
Gilger set a goal to have $15,000 towards SparxGear and was funded in less than two weeks. Now the company has received more than $32,000 in funding with 683 backers.
The fire piston will be manufactured with the funds raised on the site. After the product is made, Kickstarter contributors will receive fire pistons for their donations, Gilger said. He also plans to take the product to outdoor expos with the hope of selling the product in retail stores.
Not all companies make their goal. When companies don't meet the set amount, they don't receive any funding, so it's all or nothing on the fundraising site.
But some Utahns have found success despite having fallen short of their goal.
Jeremy Saxton and Jake Hall, both 34-year-old BYU grads who work as product designers at Black Diamond Equipment Ltd., developed headphones that allow Apple Inc.'s iPod Shuffle to clip directly in, known as an ODDIO 1.
They set a goal of $45,000, but were only able to raise $14,447.
But the two business partners don't see the missed goal as a failure. Kickstarter provided publicity for the headphone design, which has caught some needed attention for the product.
Saxton says they are about to sign an agreement with a "notable, well-distributed company" to get the design into production.
"It's a product that fit into a lot of company's strategies," Saxton said. "Failure on Kickstarter doesn't necessarily mean it's a bad product."
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