Cocoon Raises $3M In Seed Round

We’re excited to announce that we’ve just closed a $3M seed investment from Aviva Ventures (LON:AV), Breed Reply Investments (BIT:REY) and our early stage investors. This adds to the earlier investment from Breed Reply Investments of $1.3M which came just after Cocoon’s successful Indiegogo campaign in December 2014, supporting our vision of enabling people to seamlessly protect the most important place in their life.

“This significant investment will help us deliver our innovative Subsound™ technology and the first stage of our operational plan, complementing the support our Indiegogo backers have shown throughout the process of bringing Cocoon to life” said Cocoon Co-Founder, Sanjay Parekh. “We’re already putting the funding to good use, aggressively expanding our engineering teams, marketing plan, and ensuring that we have sufficient capital to launch successfully in the first half of 2016.”

Cocoon Lined Up Design

Ben Luckett, Managing Director Aviva Ventures, said: “Aviva Ventures aims to invest in the best new technology and digital businesses around, so it’s highly appropriate that our first investment is with Cocoon. It is an exciting new business which combines a unique product, pioneering technology and a strong management team in a home security sector which is set for significant growth.”

Emanuele Angelidis, CEO of Breed Reply, said: “At Breed Reply we are very pleased with the progress the company has achieved so far and we are also delighted to welcome a company of Aviva’s stature to this exciting opportunity. We have been working with Cocoon since February 2015 and believe this additional investment will spur them to disrupt the home security market.”

Cocoon home security team

We believe that home security should be effortless, and that protecting the most import place in every person’s life should not only provide peace of mind but also a great experience. Our vision of enabling everyone to protect the people and places they care about most, takes a big step forward today.

Over the past year Cocoon’s team has more than tripled in size and we’re still growing, with positions available for smart, dedicated people who want to build and bring something incredible to market. We have big plans for Cocoon in 2016. Be part of it.

– Team Cocoon.

About Cocoon

Cocoon is a UK-based smart home company changing the way we all secure our homes. Cocoon protects your whole home from one device, without the need for additional sensors, using Subsound™ technology to detect subtle sounds and vibrations from activity in any room, on any floor in your home.

Cocoon’s first product is a complete security system in a single device, enabling everyone to effortlessly protect the people and places they care about most. For more information visit our website or follow us on Twitter.

Crowdfunding: finding superfans

You can tick all the boxes we at Cocoon HQ feel are important when introducing a new technology; innovation, quality, value. But the thing that is vitally important to us is the customer. Without their support, Cocoon might still be an idea. After all, it’s our fan base that has allowed us to get off to such a flying start.

If you’re thinking about crowdfunding as a way of turning an idea into a business then it’s worth considering how you find your superfans.

Finding your early supporters

It’s crucial when engaging with the first people who show interest in your campaign to make a telling impression. Like eye contact and a firm handshake at a job interview, no matter how good you know your product to be, breed confidence with a professional approach. If you have time, read ‘The Curve’ by Nicholas Lovell as it looks at how to find and turn people with a casual interest in what you do into superfans, so you and they can better enjoy your product and brand experience.

Research is key in identifying the people your product will appeal to. In crowdfunding, momentum is the difference between success and failure, so to waste time reaching out to the wrong people could prove terminal.

A contact point is a simple way of driving this communication: set up a website with information about your product and direct traffic from Facebook (using Facebook ads) and ask people to sign up to a mailing list. We found Facebook Ad much cheaper and effective than Google Adwords for newsletter signups – about £0.08 per ad clicked vs more than £2.00 per ad clicked on Google. That said, Google Adwords is much more effective if you are trying to reach people who are actively looking to purchase vs just looking to find out more.

Finding your superfans early results in escape velocity. That means getting promoted on email and gaining positive press attention – adding to the momentum and further propelling your business towards success. It also means getting on the front page of your chosen crowdfunding platform, but in order to do this, you have to hit 40% of your crowdfunding target, ideally within 24 hours.

Platforms like Indiegogo and Kickstarter use algorithms to work out who they should promote to fan bases that register in the millions. Although it sounds like a tough ask, hitting that magic 40% aids the algorithm and helps secure a celebrity slot on the crowdfunding platform’s newsletter, which can be worth an extra 40%-60% of your target.

Cocoon Smart Home Security Crowdfunding

Developing Superfans

Borrowing the job interview analogy for a second time, it’s vital to build on that good start. Whether you think the grilling by a panel of people in matching suits has gone well or not, it’s always sensible to thank them for them time and smile on the way out. With superfans, reward their interest with your time and effort.

We kept a database of early supporters details so we could email updates and let them know about our launch. After a month of people signing up to the newsletter we politely asked them if they would take part in an interview to understand who they were, their interests, etc, so that hopefully we could find more people like them. This was part of a personal approach we believe is incredibly important, not just so that we learn quickly but also to reassured our early backers if they invested time in us, we’d spending our time finding out what they really want and need.

Also consider opening your campaign to your earliest supporters early; two days before public launch. This keeps your promise to your early supporters to ‘be the first’ and empowered them to further help our campaign by assisting with research, promoting the product and hopefully making referrals.

Hitting your target

The momentum made from strong early engagement with fans can be used to drive sales, raise your social media profile and spread the message via word of mouth.

We started slowly but surely, with small tests over a few months between August and September. In October we increased our investment and spent around £3,500 on Facebook ads to drive around 1,800 newsletter sign-ups over a ten day period. Through this we had our list of early supporters!

We tried to learn as much about our customers as possible, asking people to take time out of their day to help us better understand their needs, who they are and why they were interested in Cocoon. One of the questions we asked our supporters was to rate their interest in actually buying a Cocoon. From that we worked out that about 25% of our newsletter would be highly likely to buy and that gave us the confidence to push ahead with our campaign, safe in the knowledge that we’d have all the early supporters needed to hit our 40% target when we launched on October 31.

Cocoon Blog Market Validation Hitting Milestones

Everyone was kept up-to-date with all the latest goings on at Cocoon – and we hit 40% within 24 hours.
Our early supporters’ wallets benefited from their show of faith with a sale price of $179 (60% off RRP) as a thank you from our team, which also helped spur demand.

Seed funding announcement: Cocoon is Best in Breed

Cocoon has secured a significant round of seed investment from Breed Reply, the Internet of Things (IoT) focussed corporate venture arm of Milan listed Reply Group (REY.MI). The funding will help us further expand our team and development efforts in the run up to our April 2016 shipment to Indiegogo supporters.

Cocoon team

Our investment partner brings with them a range of capabilities to help us overcome the challenges of bringing an innovative device like Cocoon to market. Their backing of Cocoon is a sign of how attractive our new take on home security is.

As many of our early supporters are aware, we are saving all funds raised during our successful Indiegogo campaign for the material production of Cocoon. Activity outside of that has and will continue to be funded separately. Our taking investment from our friends at Breed Reply is further proof of our commitment to our earliest supporters.

We’d also like to take this opportunity to welcome on board some fantastic new additions to our team in Leeds, UK. Mark, Kimberley, John, Rob and Will join the Cocoon founding team at our new HQ – more of that to come in a future update!

Cocoon Team in Leeds

Team Cocoon.

Crowdfunding: The basics

It starts with that ‘Eureka!’ moment…

Often as these things do in life there’s a moment of clarity, the stars align and after considerable time spent researching the market you determine that there is a need for your idea. Pat yourself on the back, you’re on the road to creating a startup!

Now is the time to watch The Social Network for tips on keeping ‘developer hours’, grow your hair and getting a Mac, as you’re soon going to hit the harsher reality be prepared to make sacrifices to your lifestyle – no more popping to Starbucks when you feel like it and kiss goodbye to that gym membership that you never use!

The team in Leeds for Cocoon Alpha Test - SUBSOUND

Develop and validate your proposition before crowdfunding

After some intense activity pulling together a fantastic team of co-founders you set to work bringing your passion to life. Crowdfunding is brutal – success or failure, and there is nothing in between. Around 60% of crowdfunding campaign fail to meet their campaign goals. If you don’t hit your crowdfunding target straight away, the probability is that you campaign will fail and worse, you won’t know why. It’s unlikely that you’ll get the insights that you need to develop your initial idea into a proposition from the campaign itself so plan, test and learn before you press that button and go live.

Get out of the building, speak to some prospective buyers and use their feedback to develop your pitch to the point where a reasonable number of them at least say they’d support your campaign. Crowdfunding can help you validate product/market fit but not until you’ve validated problem/solution fit.

In my opinion most crowdfunding campaigns fail because they went from idea to campaign without enough in between. Your crowdfunding campaign should be validating what you’re pretty sure you’ve already established using methods with richer customer feedback.

Establish your reasons for choosing crowdfunding

If we skip ahead about six months you’re now at the stage where you’ve validated your idea with research, you’ve certainly convinced yourself that there is a need for your product and you’re about to set the world on fire with a launch…

Long gone are the days of ‘build it and they shall come’, but you already know that because you’re a ‘millennial’ and you’re considering crowdfunding. Establishing your reasons for choosing crowdfunding will help you work out if you have been successful or not and inform your approach to a campaign.

Your’s may differ but the reasons for our campaign were simple:

1. Market Validation

You’re not a business until you sell something. To make a successful business you need to be able to sell enough to cover your costs and drive a profit.

We decided to validate demand and price. We set an ambitious target of $100K in just over 30 days to confirm market demand and would release batches of the product priced low to start with and over time moving closer to our expected retail price monitoring the response. These are all important ‘learnings’ that will help but bear in mind that your product could require $50K or $500K.

Cocoon Blog Market Validation Hitting Milestones

Remember that each person who buys your product is investing their hard earned money into you and your business. Indiegogo revenues are a small part of our funding mix but if crowdfunding will be your only source of funds, if you can’t bring your product to market with $50K then set your target to the amount you need – you have a moral responsibility to fulfil the order or hand back the cash if you can’t.

2. Customer Feedback and Promotion

There is no greater resource for helping to grow your business than willing customers. Customer feedback helps you improve your product, avoid mistakes and understand how and where to sell to when you launch.

Even established businesses are being advised to start testing the water with crowdfunding projects before launching. But beware, you won’t get feedback from the people that didn’t buy so it’s important to continue to reach outside your community of early supporters as you develop.

Cocoon Customer Feedback Blog Image

3. Access to Funding

Hardware is expensive to bring to market. Without validating the market through pre-order/sales any investor would only have your team/concept on which to base a valuation. Validation should translate into easier access to equity funding at a much better valuation. In the medium to long term you’ll have more time to focus on product development as funding is crucial to success.

Simply launching on Indiegogo or Kickstarter doesn’t guarantee you a successful campaign. Planning every step of your activity is key to success, and having a firm base from which to start your activity is crucial. Agree your reasons for choosing crowdfunding and continually measure your progress to make sure you’re on the right track!

How far are you through your launch planning?

Have you chosen your crowdfunding platform yet or are you still in the initial research stage? Let us know here, on Facebook or on Twitter @Cocoon.