Crowd funding has become a common way to raise money to launch a new watch brand, and also generate early sales for a fledgling brand.
The majority of these online projects fail but, occasionally, they take off in spectacular style.
Filippo Loreti, an Italian luxury watchmaker, has just set a new record for raising money on crowd funding site Kickstarter, raising almost €4 million in under a month.
The Kickstarter campaign began on November 17 with an initial target of just €20,000, which would be spent on creating the first collection; with almost all of the first production run allocated to the investors who backed the project.
The company’s co-founding brothers, Matas and Danielius Jakutis contacted Watchpro on December 5 to explain the business, which promises to deliver luxury mechanical watches that have the quality of a €1000 timepiece, but sell for only €200.
The business model is simple: “We skip wholesalers, distributors and retails fees to offer $1000+ Italian luxury timepieces for less than $200,” Mr Jakutis explains.
Exclusivity is assured by limiting the production run of each Filippo Loreti model to just 1641 pieces, and the company says that the watches are made from the same luxury materials, including premium Italian leather for the straps, that are used by well-known high street brands. Each watch is assembled by hand, the company says.
“Years ago we were searching to buy a quality timepiece and were surprised how much ones does actually cost. We did the research and found that the average watch retails for 10-40 times what it costs to make, due to wholesalers, distributors, retail mark-ups and expensive ad campaigns involved in the process,” Mr Jakutis recalls.
The idea to strip out middlemen to bring down cost is not new, but the momentum of the Kickstarter fundraising is. Mr Jakutis believes that the company’s inclusive approach to its crowdfunding campaign has been key to its success. “I would say it’s a combination of product, brand values and community around it. Every backer joins our journey from the concept to final product; we’re sharing behind the scenes moments every step of the way,” he explains.
The company has managed to raise €4 million from investors despite offering nothing more than early bird prices for Filippo Loreti watches. These investors can’t even research what goes into the watches that they are paying for. For example, the Kickstarter listing does not state whether people are ordering watches with quartz or mechanical movements, or which movement manufacturer the company is using.
“Essentially, our backers are not just passively buying the product but are involved in its creation. We implement their feedback and suggestions in real time, creating the product together,” Mr Jakutis concludes.