Kickstarter helped beverage firm Genki-Su launch, but may not be ideal platform for foods & drinks

“We had a couple of friends who used Kickstarter to raise a good amount of money,”​ but “we found it was difficult for a food product on Kickstarter because we felt like a lot of the following on Kickstarter is in the tech and design spaces,”​ and not in the food arena, Tan said.

Because Kickstarter did not passively attract as many investors interested in food as in tech, Genki-Su had to drive a lot of its own traffic to the website, which was more work than expected, Tan said.

“After launching the project, we had full time jobs contacting the media and generating press so we could direct as many people as possible to the Kickstarter campaign,”​ she said.

Once there, potential investors learned how Japanese drinking vinegars “are entirely different from cooking vinegars,”​ in that they contain half the acidity and are flavored with infused fruit. The concentrates are either mixed with water, juice or cocktails to create a “crisp, refreshing drink,”​ according to the site.

The website also explained in text and a video created by Tan and her co-founder Takako Shinjo how Genki-Su is a drinking vinegar concentrate based on Shinjo’s family recipe from Okinawa, Japan, that includes a mild-tasting coconut vinegar, rather than the apple-cider vinegar that is favored by some American-based drinking vinegars, and it is flavored with the Japanese citrus fruit Yuzu and Japanese basil Shiso. It also is sweetened with honey and stevia, not sugar, and is caffeine-free.

“We only want to put natural and pure ingredients into our bodies and we don’t want any sugar or caffeine in our beverages,”​ Tan explains in the website’s video. She added creating a drink with all-natural ingredients was important to her and Shinjo “because nature is impossible to surpass.”​

Despite the unexpected challenge of generating traffic, the campaign was a success – raising $14,450 from 279 backers. Indeed, it worked so well that the company launched a second Kickstarter campaign less than a year later to help fund the line extension Tart Tonic – a ready to drink version of the original Genki-Su concentrate that is pre-mixed with sparkling water.

Weighing costs and benefits​

As with the first campaign, an unexpected challenge limited the value of Kickstarter as a fundraising platform for the ready to drink beverage, Tan said.

The platform works by allowing start-ups to offer “rewards”​ to backers for different levels of support. For example, for a $27 contribution, Genki-Su offered a bottle of each Tart Tonic flavor: Shiso, Yuzu and Ginger, plus one mini-bottle of original Genki-Su.

The vast majority of the amount contributed, however, went to shipping the heavy, liquid-filled glass bottles, Tan said, noting that sometimes the cost of shipping was more than the product’s value.

The young firm lowered the value of the product to try and reduce the overall cost to backers, but this cut into its already slim margin for the bottles, which sell for $3.99 each, Tan said.

Genki-Su also tried to raise the perceived value of the rewards by adding lighter components to ship with the drinking vinegar, such as postcards and tee-shirts. This helped convince backers they were getting their money’s worth without stripping out Genki-Su’s margins.

Kickstarter also offered unexpected perks, Tan said. She did not expect the feedback from backers that Genki-Su could incorporate into future lines and to improve service, Tan said.

Funding foods on Kickstarter​

Other finished food products might not have the same struggles as Genki-Su, Tan said. For example, she noted another project running at the same time as Genki-Su’s was for gourmet marshmallows that sold at a much higher price point and were lighter and less expensive to ship.

With that in mind, she recommends companies considering Kickstarter campaigns include the cost of delivering rewards in their cost-benefit analysis when determining what the rewards will be and whether a Kickstarter campaign can raise enough money.

Despite the few hiccups Genki-Su encountered, its second Kickstarter campaign raised an additional $20,431 from 243 backers – substantially more money than the first campaign and with fewer backers – demonstrating investors are willing to pay higher prices.

According to the Kickstarter website, Genki-Su’s projects are just two of the 76,850 projects successfully funded by Kickstarter by 7.7 million people who pledged more than $1.47 billion to projects, which the website claims is more than every other crowdfunding site combined.

Of this, $63 million has been pledged to 3,377 successfully funded food projects that range from finished packaged goods to restaurants and food trucks to cookbooks, according to Kickstarter. The website adds that it collects a 5% fee from successfully funded projects, but nothing from projects that fall short of their goals. It also stresses that innovators keep 100% ownership and control over their work.

Maximizing investments​

Companies interested in raising money through Kickstarter also should consider the timing of their campaigns, Tan said, adding if possible they should launch them near a relevant holiday to attract gift-givers, who are looking for something unique to give.

If a company takes this route, she added, it needs to consider shipping time and any potential delays that might be encountered during busy shipping seasons. One option is to run the campaign enough in advance of a holiday that rush-shipping is not an issue. Or firms can offer to send an email announcing the gift, which could then be shipped after the holiday rush, she said.

Overall, Tan said Kickstarter “is a good platform to have, even if we didn’t know it was going to be so difficult for food. But we learned a lot from it and we met our goals.”​