Thursday, May 13, 2010

Crowd-funded sites find stock market style

Online retail just became a lot more interesting and interactive.

With the advent of social networking, many fashion websites are heeding technology’s call to utilize a new business fad aptly named “crowd funding” to provide clients with support.

Crowd funding first appeared in France in 2004 and has since spread to the business worlds of the United States and other European countries. The basic idea behind this Internet phenomenon mixes social networking and monetary donations to provide business sponsorship.

Fashion sites using this medium include from the United Kingdom, the Chicago-based and the upcoming uses a system in which adult visitors to the site living within the UK or Ireland can invest in a designer — based on photographs of sample pieces — in increments of 11 pounds to fund a collection by that designer. Once a designer reaches their funding goal, which could be anywhere from 5,000 to 50,000 pounds, the designer then has six months to produce and sell a clothing line earning at least equal revenue to what the investors had given.

If all goes as planned and the collection earns as much as what it cost to produce, a percentage of the profits goes to the users who previously invested in that designer.

This kind of stock market approach to the fashion industry promises great benefits for both consumer and designer. Customers decide which creative minds to invest in, and the up-and-coming fashion designer receives the funding he or she might not have otherwise had to produce his or her own clothing line. This creates a support group for new designers, giving them the monetary and social backbone needed to survive in the fickle fashion industry.

However, risks are always present in any stock market. If a designer does not meet his or her funding goal, the line never launches, and investors lose the money they had advanced to the designer’s aid.

Although only allows for UK and Ireland residents 18 years of age or older to financially back designers, the site does receive and ship orders to and from the United States and Europe. is set to launch very soon and will provide the United States with a version of in which American consumers can become active shareholders of designers.

So the next time you have dreams of being a fashion star, try asking for donations from your friends or family members to fund your line. Just make sure you have enough money to go around once you become famous.
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