Crowdfunding Aviation Projects

The phenomena of crowdfunding to finance new products, companies or projects has taken off. For those of you unfamiliar with this concept, the best definition which describes it is from Wikipedia: “Crowdfunding is the process of funding your projects by a multitude of people contributing a small amount in order to attain a certain monetary goal. Goals may be for donations or for equity in a project.”

Like most other industries, aerospace and aviation have also been affected by this, and there are many differing types of ideas for which individuals and companies are requesting financial support. Some of these are to develop products or services and others are more artistic or philanthropic endeavors relating to the industry or its past.

Due to many reasons (primarily safety issues), aviation can be considered a rather ‘closed’ industry in which outside influences can only penetrate at a slow rate, or once they have been proven out elsewhere. With the encroachment of consumer electronics and software into aviation, it is becoming easier than ever for those with good ideas to launch their new ideas and obtain funding from others. For this set of reasons, crowdfunding is expected to bring a rash of innovative products and services into the aviation market in the coming years.

Crowdfunding: An Overview

The rather recent era of crowdfunding begin back in 2003 with the initial focus being on creative artists seeking capital. This soon burgeoned into other areas and in 2013, ~$5.1B was raised by projects around the world. In the U.S. alone, there were ~191 crowdfunding platforms active in 2013 and this figure has grown. Global growth in such funding is exploding as Europe and Asia have also jumped on this bandwagon.

This statistic in the chart (courtesy of Statista and Kickstarter) shows the number of launched and successfully-completed projects on crowdfunding website Kickstarter.com from 2010 to 2013. In 2013, 19,911 projects successfully raised their pledged amount of seed capital in agreement with the web site’s all-or-nothing funding method.

There are two basic types of crowdfunding: rewards-based funding and equity funding, as well credit-based crowdfunding (a different type of lending that we are not covering here). With rewards-based funding, which has received the most attention, people who donate to an idea either receive discounted products or services, or merely accolades for contributing to help a dream get off of the ground. The funding you provide in this type of scenario does not provide you with any equity in the project, besides the good karma you get for being a supporter (which is priceless).

On the other hand, equity investing is essentially similar to being a venture capitalistic or early-stage investor. In this type of crowdfunding, companies sell ownership stakes in the form of equity or debt, and the investor shares in the upside if a company becomes successful. It is debatable if it is better to be a rewards-type funder where you are nearly guaranteed to receive something in return to helping a small emerging company or an individual get their dream started, or, whether to risk your outlay on a startup in which a large majority never return a penny of an investment. Caveat emptor!

Where Can You Get Crowdfunded?            

There are many web sites that have sprung up recently to address this need, and we will concentrate our focus on rewards-based sites due to the reason that equity sites require you to qualify yourself as an investor first. These are not for everybody and they have far less information available on possible investments until you sign up. Of the hundreds of sites around the world, here are six notable U.S.-based platforms to consider:

1. Kickstarter.com– This most-well-known crowdfunding site encompasses all types of projects and has more aviation/aerospace-focused projects than any of the other sites.

2. IndieGoGo.com – This site initially focused on film and artistic endeavors, but now has grown to challenge Kickstarter. It also has a number of aviation-related projects.

3. RocketHub.com– It handles science and creative projects, and has a small number of aviation-focused ideas asking for funding.

4. Fundly.com – This site has a reduced-cost approach for funders (as compared to some of the other sites), and has a fair amount of aviation projects asking for funding.

5. Experiment.com– It funds scientific research in general and is more focused on detailed research projects.

6. Fundable.com – This is a general-purpose site and has a small number of aviation projects seeking funding.

For a more complete list, check the Wikipedia web page at http://en.wikipedia.org/wiki/Comparison_of_crowd_funding_services.

Notable Aviation Projects

Kickstarter has 69 projects listed that include the term aviation. Seven of these are still active in seeking funds, and 27 were successfully funded. (Kickstarter operates on an all-or-none model, where if the financing goal is not met, no funds are distributed to the project and no one is charged). There are a few more unique projects that show up under the terms ‘aircraft’ and ‘aerospace’, but there is some overlap with these search terms for the ensuing projects. Here are five notable live or recent projects:

1. Teaching high school kids how to build an airplane– “Aviation is a powerful way to teach kids about science and technology in an area that they love to engage in! Help build our plane!”

2. Balloon launch of the Vulture 2 rocket-powered spaceplane– “The world’s first 3-D-printed, rocket-powered aircraft will lift off from Spaceport America, New Mexico.”

3. Pioneer Flight Museum – “The Pioneer Flight Museum restores pre-1940 aircraft. We are erecting a WW1 era Army hangar for our new visitor center.”

4. Synergy aircraft project –They are building an airplane in a garage and it will be intended for use by ordinary people (i.e., non-professional pilots).

5. AirDog: world’s first auto-follow drone for GoPro camera–This is a small, agile, foldable quadcopter that uses a GoPro camera.

IndieGoGo has 136 projects listed that include the term ‘aviation’, and of these 16 are still active in seeking funds. This site allows funding to reach projects until a deadline expires, so it differs from Kickstarter in the approach. Notable projects include:

1. Windimager –laser technology for renewable energy, aviation and firefighters – “Over the last three years we have been working with NASA to develop a long-range Laser sensor, Windimager, that can not only ‘see’ the wind but can measure wind speed and direction out to 16 km (10 miles).”

2. Save our small airports and get kids involved in aviation– “Pilots start their training at small airports and learn in small aircraft. We need to save our small airports, but they are closing at an alarming rate. We also need to inspire children to be excited by airplanes and flying.”

3. Canopy for aircraft maintenance– “A portable and modular enclosure for helicopters. That provides a cavernous amount of enclosed square footage that you can utilize as needed.”

4. Aircraft bird anti-strike (ABAS) – “Scans the area in front of the aircraft using an infrared camera to detect any objects and provides warnings on possible collisions.”

5. STERNA very light aircraft for everyone– “Inspired by the history and the future, we wanted to develop the airplane for everyone. STERNA VLA is the first complete end-to-end flying solution.”

The other crowdfunding sites have fewer projects, but some of these are a bit more ambitious, such as:

1. On Fundable.com, there is the “Strategic Security Air — an Aerial Data Operations Company” which seeks to provide a solution that fits in between satellite services and low-level drones to deliver intelligent actionable data to governments for border protection, agricultural and land-use owners, facilities operator and others. Another is a startup airline named Baltia Air Lines and it hopes to serve the U.S. and Eastern Europe.

2. Fundly.com contains many appeals to fund non-profit aviation requests (museums, schools, and students who seek funding for their tuition), among other requests.

3. Experiment.com has no aviation-specific projects (at the time of writing this article), but has plentiful experiments that apply to various types of research that concerns materials, solar energy, propulsion, display technology, biofuels and other topics that are potentially directly applicable to aerospace use.

4. RocketHub.com has various aviation projects, with notable ones being the ”Vaero Dynamics — patented electric VTOL aircraft” and “Near-space balloon with iPhone and HD camera”.

There are also hundreds of projects that handle all types of technology, software apps and related ideas which could be used in aviation or travel. These include such projects such as various Arduino-based controllers and components, various types of sensor technology, high-resolution LED lighting kits, biofuels and solar power. Many of these could easily be applied to aircraft or aviation facilities.

Kick Start the Future

In a few short years, a niche mechanism that was initially intended for starving artists to find benefactors has gone mainstream and now supports the needs of individual inventors, startup companies, non-profit uses and existing companies that need outside funding for new products. The most glamorous examples of successes includes the Pebble smart watch, which raised more than $10 million from almost 69,000 backers. In the aviation sector, we have not only had flying cars, drones and various other types of aircraft ventures, but also airlines asking for funding. Not all of these were able to raise funds successfully, but the free publicity they generated also benefited these companies and motivated others with better mousetraps to consider stepping forward.

It will be interesting to see if more experimental or core technology ideas seek funding, such as those trying to create lighter materials (for differing types of aircraft product applications), better or more creative lighting applications from LED components, or possibly flexible displays for cabin and cockpit use. The cost to certify aircraft products is considerable, but with the help of crowdsourcing platforms and perhaps NASA (which is trying to help small companies with such problems), we might be able to bring more innovation into our industry.

Established industries that experience some type evolutionary change create opportunities for new companies to step in and innovate to meet the business needs of the changed environment. How much would this benefit the inventor in a garage personally?

The early visionaries rarely profit from the innovation they initiate, and it is the follow-on entrepreneurs who are able to develop profitable ventures once a technology has been ‘stabilized’. Bill Gates, Michael Dell, Steve Jobs and countless other billionaires are prime examples of this. In mature industries where the barriers to entry are high for new entrants, entrenched companies typically step in and buy out promising young companies once a technology is proven out.

Such a scenario provides independent innovators with an ‘exit strategy’, and could motivate those who have an excellent idea but no means of executing it into a finished product to now move forward with it.

With the dozens of crowdfunding sites emerging onto the world stage, this might start an era of innovation which the world has not seen before, and may never again. Let’s hope that this article motivates some of the readers to either start a venture or side project, or help others in reaching their dreams.  

John Pawlicki is CEO and principal of OPM Research. He also works with Information Tool Designers (ITD), where he consults to the DOT’s Volpe Center, handling various technology and cyber security projects for the FAA and DHS. He managed and deployed various products over the years, including the launch of CertiPath (with world’s first commercial PKI bridge). John has also been part of industry efforts at the ATA/A4A, AIA and other industry groups, and was involved in the effort to define and allow the use of electronic FAA 8130-3 forms, as well as in defining digital identities with PKI. His recent publication, ‘Aerospace Marketplaces Report’ which analyzed third-party sites that support the trading of aircraft parts is available on OPMResearch.com as a PDF download, or a printed book version is available on Amazon.com.