Light Harmonic, LH Labs, & Indiegogo
LH Labs is a subsidiary of Light Harmonic, formed to produce affordable digital products with the help of crowdfunding sites. Stephen Mejias reported on LH Labs' collaboration with Kickstarter in the January issue's "As We See It" and "Entry Level" columns, which produced the $249 Geek Out USB DAC, which made its debut at CES. But for the Geek Pulse, LH Labs collaborated with Indiegogo to raise more than $1.1 million by the time the funding ended on December 27, 2013.
At a 7:30am press conference the first morning of the show, titled "How Indiegogo Will Help Save an Old Dying Industry," LH Lab's Gavin Fish (left), introduced a panel of, from left to right) Light Harmonic's Larry Ho, Hardware Marketing Director for Indiegogo, Kate Drane, HeadFi's Jude Mansilla, and Cookie Marenco of Blue Coast Records. All were enthused by the idea of the social network aspects of crowdfunding, which was realized by the Geek Force forum for funders. The Geek Pulse will be a "consumer-designed product," said Fish, with LH Labs benefiting by being able to bring to market a product that is not only pre-sold but will have exactly the features its owners find most desirable.
Unlike KickStarter, where the company being funded doesn't receive a dollar until the goal is reached, with Indiegogo the donors' credit cards are charged and the money credited to the company when they make the pledge, regardless of the goal. LH Labs will therefore have the use of that $1.1m until they start shipping the Geek Pulse.
"So what?" you might ask. But this is a huge benefit to LH Labs. I was reminded of the UK's Luncheon Vouchers. These are vouchers given to employees of other companies that they can use to purchase meals. The employer pays face value for each voucher that are then redeemed by the employee for the same amount. How, then, does the Luncheon Vouchers company make any money? Because there is a delay of days or even weeks between the vouchers being purchased and redeemed, LV has the use of that money for that time, which can generate a significant return from short-term investments.