“What makes us unusual in terms of crowdfunding,” says Geoff Matthews, Red Witch director, “is that we don’t need money for product development. We’ve already spent years on product development – now the only thing stopping us is money for marketing and management execution.”
While the company’s plans are ambitious, Matthews says that the actual numbers being proposed are fairly modest.
“We’re looking at increasing marketing spending by 450% for a twofold increase in revenue in the first year. We’re very real about the numbers. We’ve got our feet on the ground and our figures are very much rooted in what we think we can do.”
Matthews says that the company has been biding its time for the last few years, focusing on product development as well as strategies to address failings in the global distribution market.
“In terms of distribution, the effect of the GSC was really felt, particularly in the music industry,” he says.
“Distribution systems have really had to reinvent themselves in the five years since the GFC. We had two distributors in a row change their business model to one where they simply stopped putting people on the road.”
If that sounds like a trivial issue for a company considered amongst the industry’s best, it’s not. Red Witch had built their market share by creating personal relationships with retailers, starting on the shop floor of music stores.
Conceived in 2003 in rock capital of the Southern hemisphere, Paekakariki, Red Witch founder, director and designer Ben Fulton had got his foot in the industry door by hawking his garage-built pedals the old fashioned way: by talking to retailers. One early relationship – with iconic Los Angeles guitar store TrueTone – led to the company’s much publicised endorsement from Police guitarist Andy Summers, an event which started the ball rolling towards Red Witch’s current position as darling of the boutique guitar pedal scene.
Image: The Police and Andy Summers rocking out with the Deluxe Moon phaser (Skip to 3:10)
Skip forward a decade or so and the circumstances seem to be perfect for Red Witch’s next move.
“New distributors have come onboard, some of the dinosaurs are gone and the reinvigorated ones have come to the fore,” says Matthews.
“There has been a real resurgence in the pedal market in the last year and analogue has been leading the way. We’ve gone past a digital pedal that can do a thousand things. People just want that tonal authenticity now.”
“That’s the interesting thing with the whole analogue vs digital debate. We’ve just received a five star review in Germany for the Deluxe Moon Phaser, and that pedal came out nine years ago. Analogue just doesn’t date like digital technology.”
Matthews say that while crowdfunding, like all fundraising, can be a laborious task, it can also produce some unexpected benefits.
Image: Geoff Matthews, director, Red Witch Analog
“Private equity has got a minimum turnover of 5$ million, so crowdfunding, with a maximum fund raise of $2m, is the right threshold for us, but still, it’s a lot of work. There’s as much work putting together an offer for a $700k crowdfunder as putting together a multimillion dollar offer.”
“Crowdfunding is not for the faint hearted. You have to really understand what you’re doing. But if you can get your offer to market, you will have really learned a lot about your business. You’ll understand more about the market, the company and your direction than before you started.”
“Even if we didn’t raise a dollar we’d be a better company for it.”
Idealog has been covering the most interesting people, businesses and issues from the fields of innovation, design, technology and urban development for over 12 years. And we're asking for your support so we can keep telling those stories, inspire more entrepreneurs to start their own businesses and keep pushing New Zealand forward. Give over $5 a month and you will not only be supporting New Zealand innovation, but you’ll also receive a print subscription and a copy of the new book by David Downs and Dr. Michelle Dickinson, No. 8 Recharged (while stocks last).
Idealog is part of ICG. We work with clients like Woolworths New Zealand, All Good, Huffer, Liquorland, Resene, Citta Design, TVNZ, Spark and FCB on their event activations, in-store, in-office or out-of-home signage, content creation and vehicle wraps.