Sometime soon, it could be easier for entrepreneurs like Dennis Oakley to raise money to commercialize an idea.
Fresh off a successful pitch on Kickstarter, the online site known for “crowd funding” — letting artists, musicians, inventors and others ask the public for help in financing projects — Oakley has money in hand to fine-tune a prototype and manufacture the first lot of his Original BarBack Multi-Tool, an all-in-one bartender’s aid.
He raised just over $16,000 in a month’s time from 176 donors who pledged at various levels — $1 to $1,000 — to support the production of 1,000 BarBacks, a kind of Swiss Army knife with such fold-out implements as wine key, corkscrew, lemon-twist peeler and garnish knife. About half of the donors pledged $39 each — the expected cost of the patented tool — and by summer could own one.
That’s because the users of crowd-funding sites can only offer perks to donors: T-shirts, refrigerator magnets, pre-orders of the product being financed. But legislation approved this week in Washington will allow these entrepreneurs to offer a piece of their project instead — an equity stake that could yield monetary rewards if the idea succeeds. Known as the JOBS Act (Jumpstart Our Business Startups), the legislation loosens a handful of regulations on raising capital — including letting small businesses seek up to $1 million in investments annually via crowd funding — that can stymie startups.
Oakley wouldn’t be opposed to trading equity for investment; he’d even be open to a licensing agreement under which someone else produced the BarBack and he received royalties. But he says everyone he talked to about investing in the product wanted to hold the stainless steel tool in their hand and work its hinged implements — something he couldn’t offer without the money to produce a refined prototype.
So he turned to Kickstarter, a funding source suggested by the Florida attorney who helped him get the BarBack patented. Oakley put his pitch on Kickstarter Feb. 15 with a 30-day goal of raising $15,000; it closed March 16 at $16,018. Many of the pledges came from family and friends, but Oakley used Facebook and Twitter to raise awareness of the funding campaign, too.
Oakley, 37, has worked since college as a bartender and bar consultant, and now is bar manager at The Paddock Lounge in Saratoga Springs. He got the idea for the BarBack while consulting in Kingston in October 2006 as he made a list for bartenders of the tools they should have on hand. That was his “eureka” moment. Oakley applied for a patent in March 2007 and received it last September.
He’s working with UMC Global of suburban Seattle on perfecting the BarBack design — an embedded flashlight and retractable magnifying glass have posed some challenges — and producing the initial batch run. The 1,000 units should be ready by the summer; 300 are promised as donor perks and the rest he’ll sell through his website and on other sites that agree to take orders.
Oakley sees a market for the BarBack not only in bars and restaurants (in the industry, a “barback” is an employee who assists a bartender by keeping the bar stocked), but in boats and campers where space for utensils is limited.
How confident is he in the product? His Kickstarter pitch offered this prediction: “The Original BarBack is destined to exist and will have a permanent place in modern daily life, ending up in hotels, restaurants, golf carts, boats, RVs and every kitchen drawer in America — and one day, the world.”