A year and a half ago I saw a need for a tool that would allow artists, filmmakers, writers, musicians, anyone with a project, to tap their network of fans, family, and friends to raise the money for their next project. In effect, allowing fans to pre-order the result of a project at various levels from a digital download of an album to a custom work of art.
I put the idea on the back-burner and, thankfully, Kickstarter read my mind and began working on what they launched a few months ago which is an almost perfect manifestation of what I had envisioned. (I also wrote a general overview of crowdfunding with a ton of examples back in June, 08. Here are more examples over at the crowdfunding wiki. If you don’t like the term crowdfunding, perhaps you would prefer “collective ex-ante fundraising”.) Creators have long had the option of posting a paypal link and begging for money, but this provides the infrastructure and eases the process along with much more powerful tracking tools available.
How it works:
- Post a specific, potential project, listing available pre-order/pledge levels
- Set an amount to be raised and a deadline
- Promote to your fans and wealthy friends.
- If you hit the amount raised before the deadline the project is a go, otherwise, you don’t get the money.
Check out what appears to be the largest fund-raising projects so far: a book called Designing Obama. Looking to raise $65K and so far have made it to $42K.
Now, there is a certain amount of trust necessary in this process. Kickstarter writes: “Project creators are wholly responsible for their promises. Kickstarter is a venue, like eBay or Etsy.” In the early stages, I would imagine this won’t be a much of a difficulty, but it will be something to look out for. But, in the end, most of the people pledging will either know or know of the person/group and will have some kind of existing relationship with them. That or the projects themselves will be so clever or worthwhile that people with no connection will pledge as well.
So, how is this an innovation?
Feel a part of the process, a deeper connection with the project creator.
Can help make a project possible.
Get access to capital and some way to survive while they work
Get real feedback on the desire of supporters for a particular project, measured in cold cash
Decrease the risk of a project: if you have essentially pre-sold the first run of your project, you’re much farther along
Just as microfinance provider Kiva allows for the direct, small, impactful loan between individual and entrepreneur, so does this allow for the same in the form of a pledge/preorder.
It’s just amazing when something of value catches on and people pile on to provide funds for a worthwhile project that would likely have never seen the light of day, but for crowdfunding. And the best part is, usually, you have something to show for it: a book, an album, an event to go to, or a good deed done.