*Or why social funding won’t go away any time soon.
When 2 people close to me, (Josh and Maya) get their films fully funded via 2 different crowdfunding platforms, Indiegogo and Pozible, I sense a seismic shift. Both platforms and their most famous counterpart, Kickstarter, have quietly revolutionised the way product developers and producers can get their film, product, business model, or entrepreneurial dream off the ground.
What these crowdfunding platforms do is to connect those with great ideas, to those people who want to see the ideas brought to life – the crowd – i.e. the audience or market. And the logistics are very simple – a $10 donation by 400 people can mean the world to someone like Joshua Shaffer, the animal shelter worker who dreamed up Kitty Corner – a privacy screen designed to calm frightened cats taken in to animal shelters, and help the shelters save money on bedding that had previously been destroyed by cats’ desperate need for privacy.
The crowdfunding platforms act like brokers. Fees usually amount to a percentage of the total amount raised, but most will only pay out if the full amount is raised.
The benefits of crowdfunding go beyond the monetary. It’s a way of gauging the market or audience before the product/service/artistic endeavour is fully developed, and the donors can “participate” in the process via feedback or simply cash. Meanwhile, interest garnered can help reassure larger investors that further money or development is worthwhile. Crowdfunding has helped democratise producing and product development, no longer the preserve of the well connected or companies with enough R&D to throw into a new product line.
And it’s also a genuinely social way of developing – only those products or endeavours which capture the crowd’s imagination get the money to progress, giving a whole new meaning to the term “tough crowd”.
There are now almost as many crowdfunding sites as there are niches for product development, and here are the top ones in Australia and globally:
Pozible is Australian arts focused, only fully funded (100% successful) campaigns get to keep the funds.
Kickstarter – product focused, global and only fully funded campaigns get the cash.
Indiegogo – global, arts focused, partially funded campaigns keep their cash, with a fee penalty. It’s the world’s earliest (founded in 2008) crowdfunding website. They have helped to raise millions of dollars for more than 30,000 campaigns, across 194 countries.
Quirky – a site for inventors, complete with retail partners.
WeFunder – a site where 15,523 investors plan to invest $44,800,250 in startups
Until recently, giving the money for the ideas didn’t always guarantee a successful result or product at the end of it. Many entrepreneurs just don’t have product dev skill sets.
Which has given rise to Crowd Supply – one of the latest crowdfunding platforms to launch in March 2013, – a departure from the broker model. Crowd Supply partners with its project creators from the beginning, and takes a 5 percent fee for support. A team of six engineers offer assistance on everything from engineering advice to crafting a production plan.
Crowdfunding is here to stay, so whether you’re an entrepreneur with an idea for a mobile app or a funder wanting to buy the Hapi fork (it vibrates when you eat too quickly) when it’s ready, check out the sites for inspiration and maybe donate some cash while you’re there.