Venture & Angel Capital April 27, 2011 By Rieva Lesonsky
Social media has made it cheaper and easier for small business owners to market their companies. Now, social media companies might be making it easier for small businesses to raise capital, too.
Back in January, I posted on Small Business Trends about the rise of crowdfunding as a possible solution for small business owners seeking financing. Closely related to peer-to-peer lending sites, such as Prosper.com, crowdfunding goes one step further. While peer-to-peer lending focuses on individual transactions, crowdfunding uses the Internet to encourage many individual investors to contribute small amounts, adding up to substantial capital.
Today, individual investors are clamoring for a piece of hot social media companies like Facebook and Twitter, but those companies don’t want to go through the complex legal disclosures current securities laws require. As a result of this demand, reports VentureBeat, the Securities and Exchange Commission (SEC) has decided to study the crowdfunding issue. “[The] staff is taking a fresh look at our rules to develop ideas for the Commission about ways to reduce the regulatory burdens on small business capital formation in a manner consistent with investor protection,” says SEC Chairman Mary Schapiro.
Easing restrictions on crowdfunding would let Facebook and Twitter raise money from thousands of investors –and could also benefit small business owners looking to bootstrap their businesses without having to give up control to venture capitalists. For example, if you wanted to raise $100,000, you could sell $100 shares to 1,000 individual investors via Facebook.
Of course, although these individual investors are investing only small amounts of money, there’s still a risk involved–and that’s what the SEC is concerned about. Back in 1992, the SEC allowed small companies to issue shares of up to $1 million to ordinary investors without any going through the usual regulatory hoops, such as full disclosure of the company’s financial information. In 1999, however, that regulation was changed because of concerns about fraud.
A petition that would allow crowdfunding of up to $100,000 has been backed by 150 organizations and individuals. What do you think about the SEC’s move?
To Learn More click Here
Showing posts with label crowdfunding. Show all posts
Showing posts with label crowdfunding. Show all posts
Thursday, April 28, 2011
Sunday, March 13, 2011
Finding Vivian Maier a $100,000 by Kickstarter.com
Tomorrow a Kickstarter.com project entitled "Finding Vivian Maier" - a feature length documentary with a pre-production funding target of $20,000 will have overreached its target with a culm of $104,207 as of this posting. What makes "Finding Vivian Maier" - a feature length documentary film such a winner...Well the answer is in the authenticity of the project and most of all the person the film is ultimately about. Vivian Maier nanny and street photographer who caught history in time and asked for nothing in return will unfold in this feature length documentary and take her humble place in the pantheon of undiscovered talent while alive, only to become globally famous upon her death and with the discovery of her pictures a truly amazing story will finally be told thanks to John Maloof, Anthony Rydzon, and award-winning Danish documentary film maker, Lars Mortensen.
Sunday, February 27, 2011
Palm Beach County millionaire creates 'crowdfunding' web site to help people in need
At microgiving.com, anyone can raise money for a creative project, worthy cause or to help pay bills
Say you want to release your debut album but need funding for CDs and marketing materials.
Suppose you're unemployed, broke and need a little cash to pay your rent.
Maybe you want to raise money to help end genocide.
There's a website that can help. The brainchild of Palm Beach County multimillionaire John Ferber, the MicroGiving Foundation links donors to creative projects, start-up businesses, worthy causes and people in need.
People who need money post their project, cause or business idea on http://www.microgiving.com along with how much money they need to raise. They typically offer donors a small token in return: a promise to pay it forward, a copy of a CD, a special thank-you note.
And then they wait for the money to roll in.
"We're sleeping and it's raising money," said Boca Raton High School teacher Sharona Kay. Students in her Holocaust class started a nonprofit organization in 2007 that sells colorful triangles in memory of Holocaust victims and uses the money to support global anti-genocide programs.
The group posted a profile and video on MicroGiving a couple of months ago and has raised more than $3,000.
MicroGiving.com is part of a growing phenomenon called crowdfunding, in which people with similar interests pool their money online to support a specific project or cause.
Ferber, who will be one of the featured millionaires on ABC's new reality show "Secret Milionaire" calls it the digital version of passing the hat.
A number of crowdfunding websites have popped up in the recent years. Each specializes in a particular area.
KickStarter, for instance, allows creative types to post their projects — a film, an art exhibit, an invention.
Kiva allows donors to provide microloans to poor people around the world to start businesses. At Donors Choose, people contribute to education projects in needy classrooms.
Ferber's initial idea for MicroGiving was to directly connect donors with people in dire straits.
In the aftermath of Hurricane Katrina, Ferber, 37, donated money to a major U.S. charity but it wasn't satisfying to him, and it wasn't feasible for him to travel to New Orleans.
"I wanted to do more," he said. "I wanted to help people directly."
It was the same frustration he felt when his sister-in-law died of cystic fibrosis. He gave to charity, but he wondered: Where is this money going? Who am I helping?
Then in 2006, Muhammad Yunus won the Nobel Peace Prize. The Bangladeshi economist developed the concept of microfinancing, providing loans to poor entrepreneurs who can't get traditional bank loans.
"I had a eureka of an idea," Ferber said. "Instead of a loan, it's a gift."
He decided to create a website.
To Learn More Click Here
Monday, February 14, 2011
Say Goodbye to the Permission Business!
Soon you won't need permission to make films, set up TV channels, publish books or try out inventions. No wonder the old industries are scared
by Adrian Hon
Adrian Hon is the Founder and Chief Creative at Six to Start, an online games company; he originally trained as a neuroscientist at Cambridge and Oxford. He takes a strong interest in the controversies surrounding intellectual copyright.
One of the most annoying things in life is asking for permission: permission to build an extension, permission to volunteer at a school, permission to start a business. It’s always irritating to imagine some distant bureaucrat with little interest or understanding of your life in control of your fate.
Almost every sphere of life and work – from education to science to media to retail – involves us asking for permission every time we want make or do anything, whether it’s to start a project, raise funding or get access to the market. The ‘permission system’ suffocates creativity, but it’s so pervasive that we can hardly imagine a different world. Yet it’s finally being dismantled, brick by brick, by the internet, and we’re all going to benefit.
Imagine you’re a bright young filmmaker with a brilliant idea for a new documentary. When you approach a broadcaster, you find that they’re only concentrating on five subject areas this year, so you change your idea accordingly. After some emails, you finally get to pitch your idea to a commissioner who tells you that they’re already making a similar show, so you’ll either have to wait a year or change it drastically. You opt to change it, trying to ignore the feeling that this is a mistake.
Now the commissioner likes your idea, but they’ll have to check what channel controller thinks. A week passes, and unfortunately it seems that your idea doesn’t fit within the channel’s strategic priorities, but you should definitely try again.
After a few rounds of this, you become good at guessing what commissioners will like, and following some dedicated networking, you discover what the channel priorities really are. You learn how to craft ideas that will have the right mix of buzz and relevancy and risk, and you’re rewarded with commissions. In short, you’ve become an expert at creating mediocre ideas to order.
I don’t mean to be hard on the TV industry. The few commissioners that I know are all good people who want to do a good job. But when you’re bombarded by dozens of ideas a week and you always need to get permission from your bosses, it’s safer to stick with tried and tested idea than taking a risk – after all, they don’t want to get fired.
The same story applies to every other industry where the cost of production has been high and the amount of ’shelf space’ has been limited, whether for books or clothes or computer programmes. Back in the days where it used to cost a lot more to print a book or manufacture a new product and you could only fit so many into a shop, it made sense to be cautious and ensure that investments were made carefully; and since there were fewer people coming up with ideas, the ‘permission bottlenecks’ were also less of a problem.
But the world has changed. With new technology, the cost of producing consumer goods has plummeted; with the internet, we have unlimited shelf space; and with better education, we have billions of people who are capable of coming up with good ideas.
TECHNOLOGY
Almost every week now, we hear about some student who’s created a hit movie or iPhone app from their bedrooms. It’s hardly surprising – cutting-edge computers, cameras, and software have all become affordable (and just as importantly, accessible) to millions. When you can produce an entire radio show or game for free, you don’t need anyone’s investment or permission, giving you complete creative freedom; what’s more, initiatives like Creative Commons make it possible to ‘automatically’ licence music, photos, and artworks for your project.
It’s not stopping with media, either. The next revolution in production is likely to come from 3D printing, a technology that allows people to ‘print’ successive layers of plastics or metal to create fantastically complex and intricate 3D shapes. Thousands of people are already taking advantage of 3D printing services like Shapeways to create mechanical parts, prototypes, sculptures, and toys, at a cost and speed that would have
been simply impossible just five years ago. Best of all, you don’t need permission to print your new 3D toy; companies are perfectly happy to just take your money.
FUNDING
Of course, some projects will still need serious investment, like producing a major movie or building custom cars, and the more money you need, the harder it gets to find someone who’ll share your vision and give you ‘permission’.
Once again, though, the internet is eliminating this bottleneck. Crowdfunding sites like Kickstarter and Indiegogo make it possible for
creators to solicit pledges (a cross between pre-sales and donations) from anyone with a computer and a credit card. As long as there are a few dozen or hundred people in the entire world who like your idea, you can raise thousands of pounds, opening the door to much more niche or original or risky projects; and if your idea is popular, you can raise hundreds of thousands.
I’ve just started a project on Kickstarter myself, to help print a book I’m writing called A History of the Future in 100 Objects (inspired by the excellent Radio 4 show). In just four days, I raised my target of $2500 and donations are still coming in, mostly from people I’ve never met before. I didn’t need anyone’s permission to start that project – I just did it.
Displaying products is stores is no longer crucial
ACCESS TO MARKET
Making your product is only half of the challenge – getting access to the marketplace is just as important. Every aspiring inventor knows how difficult it is to convince retailers to display your product, even if you offer it for practically free. It didn’t matter how good your product was – you still needed permission from a buyer to sell it.
But now, Amazon and Apple have completely upended the system; the internet provides unlimited shelf space, making it possible to stock and display as many products as people want to sell. Why bother holding people up by making them ask for permission?
Some industries have proved more resistant; for example, people still understandably prefer to buy clothes and fashion accessories in person, leaving traditional retailers with outsize power. Yet even then, marketplaces like Etsy that sell handmade items (with over $300 million in sales last year) have proved that change is possible.
TELEVISION
The TV industry is an interesting case, particularly in the UK where a handful of broadcasters like the BBC and ITV not only commission and fund the biggest programmes but also control the means of distribution. As a result, you can’t get anywhere without asking a whole host of commissioners and executives for permission. It’s a lot of power for only a few people to have, especially when they claim to speak for the public.
That’s why YouView, the ‘next-generation Freeview’, is so important to the broadcasters that fund it (BBC, ITV, C4, and Five); they’re absolutely terrified of a future where people turn on their Google or Apple TV and, instead of being welcomed by BBC1, they’re shown video content from YouTube and Netflix that could have been made by anyone, anywhere. Filmmakers won’t need broadcasters’ permission to reach an audience – and broadcasters will have lost control.
YouView is the one thing that will ensure the first five channels on TV will still belong to the old broadcasters, at least for a few more precious years. Unfortunately for them, YouView’s launch has slipped into 2012 (hardly surprising given the terrible track record of British broadcasters’ forays into technology).
The defence of the ‘permission system’ lies in the belief that the best way of allocating limited resources is by getting experts to
figure out what the market wants, having them identify the best ideas, and then doling out money accordingly.
But not only is technology rendering this system superfluous; the plain fact is that the system never worked well in the first place. Publishers and commissioners like to imagine that their skills and experience are the only way to unearth the diamonds in the rough, conveniently ignoring that fact that Harry Potter was rejected by twelve publishing houses before Bloomsbury picked it up, and that the majority of what’s printed and on TV is mediocre.
Let’s face it, no-one can really predict what the market will want. JK Rowling didn’t think “I know what, wizards and boarding schools are fashionable!” before she wrote the fastest selling books in history; Philip Pullman didn’t worry about whether a subtle, complex story about sin and free will would work for children. But what publishers and commissioners can do is echo buzzwords and fund me-too products like reality shows and action blockbusters, which succeed largely thanks to expensive marketing and a lack of alternatives. Thankfully, the success of films like The King’s Speech and Inception shows that audiences are not quite as stupid as we might imagine.
So, if you can’t reliably predict success, what do you do? A recent study of highly successful entrepreneurs by Saras Sarasvathy suggests that making a product and putting it out into the market as soon as possible is the best strategy; when asked about what kind of market research they would conduct for a hypothetical product, one entrepreneur said:
“OK, I need to know which of their various groups of students, trainees, and individuals would be most interested so I can target the audience a little bit more. What other information… I’ve never done consumer marketing, so I don’t really know. I think probably… I think mostly I’d just try to… I would… I wouldn’t do all this, actually. I’d just go sell it. I don’t believe in market research. Somebody once told me the only thing you need is a customer. Instead of asking all the questions, I’d try and make some sales. I’d learn a lot, you know: which people, what were the obstacles, what were the questions, which prices work better. Even before I started production. So my market research would actually be hands-on actual selling.”
That’s real capitalism. What we have right now isn’t capitalism or a free market, it’s an unholy mashup of a (poorly) planned economy and an oligopoly, and it even extends to completely different sectors like academic research, where you often have to abase yourself before trend-driven, risk-averse, time-poor funding committees.
With every extra person who can say ‘no’ to an idea, the more likely it is that mediocrity will prevail. That’s the problem when companies and governments become too large – there are too many people whose job it is to simply say ‘no’. The notable exceptions are publishers like Amazon and Apple, who have learned that it pays to be permissive.
Navigating the obstacle course of everyone who can say ‘no’ has a truly chilling effect on creativity. You start doubting your ideas,
and you enter a tiring game of guessing what the gatekeepers want rather than what you think or hope will be successfully. You stop caring. As a person who designs games and writes for a living, I find it’s hard to overstate exactly how liberating it is to be freed from the permission system.
The brave new ‘permissive world’ isn’t perfect, though. Freedom can be overwhelming, and creatives will be exposed to more competition (such as the 300,000 iPhone apps). But these downsides are more than balanced out by the fact that you can take on more creative risk; and that when the middlemen are taken out of the equation, you waste less time and earn more per sale, making niche ideas more viable. You don’t need a million buyers to be successful – just a thousand true fans can be enough. Your success no longer rests on the whims of a few ‘experts’.
A permissive world will let us pursue projects we truly care about, and that can only mean good things for the power and quality of our work. Once upon a time, any artist who bucked the system and demanded creative control over their work ended up on a one-way trip into penury. No longer.
This isn’t the first time that the permission system has changed. In the 19th century, the Academie des Beaux-Arts in Paris dominated the world of art; to succeed, artists had to toe the line and stick to traditional, approved painting styles. It was only when Monet, Renoir, Pissaro and Sisley scandalously created a new, independent association to exhibit their works directly to the public that Impressionism – and arguably, modern art as a whole – could truly flower.
People, throughout all the ages, have chafed against the need to gain permission to create what they want. When we’re young, we’re amazed and furious at how unfair and arbritrary this is, but as we grow older, we internalise the rules and start censoring our own ideas.
Ultimately, we become part of the permission system. We begin to say ‘no’ to others because that’s what we grew up with, and that’s the way the world works. For many, it’s profoundly frightening to think that one day, they won’t be able to say ‘no’ – what will they do? What will happen to their jobs?
But there is a different way. We can give people freedom, we can save money and time, and we can unlock a wealth of creativity, just by saying one simple word: ‘yes’.
To Learn More Click Here
by Adrian Hon
Adrian Hon is the Founder and Chief Creative at Six to Start, an online games company; he originally trained as a neuroscientist at Cambridge and Oxford. He takes a strong interest in the controversies surrounding intellectual copyright.
One of the most annoying things in life is asking for permission: permission to build an extension, permission to volunteer at a school, permission to start a business. It’s always irritating to imagine some distant bureaucrat with little interest or understanding of your life in control of your fate.
Almost every sphere of life and work – from education to science to media to retail – involves us asking for permission every time we want make or do anything, whether it’s to start a project, raise funding or get access to the market. The ‘permission system’ suffocates creativity, but it’s so pervasive that we can hardly imagine a different world. Yet it’s finally being dismantled, brick by brick, by the internet, and we’re all going to benefit.
Imagine you’re a bright young filmmaker with a brilliant idea for a new documentary. When you approach a broadcaster, you find that they’re only concentrating on five subject areas this year, so you change your idea accordingly. After some emails, you finally get to pitch your idea to a commissioner who tells you that they’re already making a similar show, so you’ll either have to wait a year or change it drastically. You opt to change it, trying to ignore the feeling that this is a mistake.
Now the commissioner likes your idea, but they’ll have to check what channel controller thinks. A week passes, and unfortunately it seems that your idea doesn’t fit within the channel’s strategic priorities, but you should definitely try again.
After a few rounds of this, you become good at guessing what commissioners will like, and following some dedicated networking, you discover what the channel priorities really are. You learn how to craft ideas that will have the right mix of buzz and relevancy and risk, and you’re rewarded with commissions. In short, you’ve become an expert at creating mediocre ideas to order.
I don’t mean to be hard on the TV industry. The few commissioners that I know are all good people who want to do a good job. But when you’re bombarded by dozens of ideas a week and you always need to get permission from your bosses, it’s safer to stick with tried and tested idea than taking a risk – after all, they don’t want to get fired.
The same story applies to every other industry where the cost of production has been high and the amount of ’shelf space’ has been limited, whether for books or clothes or computer programmes. Back in the days where it used to cost a lot more to print a book or manufacture a new product and you could only fit so many into a shop, it made sense to be cautious and ensure that investments were made carefully; and since there were fewer people coming up with ideas, the ‘permission bottlenecks’ were also less of a problem.
But the world has changed. With new technology, the cost of producing consumer goods has plummeted; with the internet, we have unlimited shelf space; and with better education, we have billions of people who are capable of coming up with good ideas.
TECHNOLOGY
Almost every week now, we hear about some student who’s created a hit movie or iPhone app from their bedrooms. It’s hardly surprising – cutting-edge computers, cameras, and software have all become affordable (and just as importantly, accessible) to millions. When you can produce an entire radio show or game for free, you don’t need anyone’s investment or permission, giving you complete creative freedom; what’s more, initiatives like Creative Commons make it possible to ‘automatically’ licence music, photos, and artworks for your project.
It’s not stopping with media, either. The next revolution in production is likely to come from 3D printing, a technology that allows people to ‘print’ successive layers of plastics or metal to create fantastically complex and intricate 3D shapes. Thousands of people are already taking advantage of 3D printing services like Shapeways to create mechanical parts, prototypes, sculptures, and toys, at a cost and speed that would have
been simply impossible just five years ago. Best of all, you don’t need permission to print your new 3D toy; companies are perfectly happy to just take your money.
FUNDING
Of course, some projects will still need serious investment, like producing a major movie or building custom cars, and the more money you need, the harder it gets to find someone who’ll share your vision and give you ‘permission’.
Once again, though, the internet is eliminating this bottleneck. Crowdfunding sites like Kickstarter and Indiegogo make it possible for
creators to solicit pledges (a cross between pre-sales and donations) from anyone with a computer and a credit card. As long as there are a few dozen or hundred people in the entire world who like your idea, you can raise thousands of pounds, opening the door to much more niche or original or risky projects; and if your idea is popular, you can raise hundreds of thousands.
I’ve just started a project on Kickstarter myself, to help print a book I’m writing called A History of the Future in 100 Objects (inspired by the excellent Radio 4 show). In just four days, I raised my target of $2500 and donations are still coming in, mostly from people I’ve never met before. I didn’t need anyone’s permission to start that project – I just did it.
Displaying products is stores is no longer crucial
ACCESS TO MARKET
Making your product is only half of the challenge – getting access to the marketplace is just as important. Every aspiring inventor knows how difficult it is to convince retailers to display your product, even if you offer it for practically free. It didn’t matter how good your product was – you still needed permission from a buyer to sell it.
But now, Amazon and Apple have completely upended the system; the internet provides unlimited shelf space, making it possible to stock and display as many products as people want to sell. Why bother holding people up by making them ask for permission?
Some industries have proved more resistant; for example, people still understandably prefer to buy clothes and fashion accessories in person, leaving traditional retailers with outsize power. Yet even then, marketplaces like Etsy that sell handmade items (with over $300 million in sales last year) have proved that change is possible.
TELEVISION
The TV industry is an interesting case, particularly in the UK where a handful of broadcasters like the BBC and ITV not only commission and fund the biggest programmes but also control the means of distribution. As a result, you can’t get anywhere without asking a whole host of commissioners and executives for permission. It’s a lot of power for only a few people to have, especially when they claim to speak for the public.
That’s why YouView, the ‘next-generation Freeview’, is so important to the broadcasters that fund it (BBC, ITV, C4, and Five); they’re absolutely terrified of a future where people turn on their Google or Apple TV and, instead of being welcomed by BBC1, they’re shown video content from YouTube and Netflix that could have been made by anyone, anywhere. Filmmakers won’t need broadcasters’ permission to reach an audience – and broadcasters will have lost control.
YouView is the one thing that will ensure the first five channels on TV will still belong to the old broadcasters, at least for a few more precious years. Unfortunately for them, YouView’s launch has slipped into 2012 (hardly surprising given the terrible track record of British broadcasters’ forays into technology).
The defence of the ‘permission system’ lies in the belief that the best way of allocating limited resources is by getting experts to
figure out what the market wants, having them identify the best ideas, and then doling out money accordingly.
But not only is technology rendering this system superfluous; the plain fact is that the system never worked well in the first place. Publishers and commissioners like to imagine that their skills and experience are the only way to unearth the diamonds in the rough, conveniently ignoring that fact that Harry Potter was rejected by twelve publishing houses before Bloomsbury picked it up, and that the majority of what’s printed and on TV is mediocre.
Let’s face it, no-one can really predict what the market will want. JK Rowling didn’t think “I know what, wizards and boarding schools are fashionable!” before she wrote the fastest selling books in history; Philip Pullman didn’t worry about whether a subtle, complex story about sin and free will would work for children. But what publishers and commissioners can do is echo buzzwords and fund me-too products like reality shows and action blockbusters, which succeed largely thanks to expensive marketing and a lack of alternatives. Thankfully, the success of films like The King’s Speech and Inception shows that audiences are not quite as stupid as we might imagine.
So, if you can’t reliably predict success, what do you do? A recent study of highly successful entrepreneurs by Saras Sarasvathy suggests that making a product and putting it out into the market as soon as possible is the best strategy; when asked about what kind of market research they would conduct for a hypothetical product, one entrepreneur said:
“OK, I need to know which of their various groups of students, trainees, and individuals would be most interested so I can target the audience a little bit more. What other information… I’ve never done consumer marketing, so I don’t really know. I think probably… I think mostly I’d just try to… I would… I wouldn’t do all this, actually. I’d just go sell it. I don’t believe in market research. Somebody once told me the only thing you need is a customer. Instead of asking all the questions, I’d try and make some sales. I’d learn a lot, you know: which people, what were the obstacles, what were the questions, which prices work better. Even before I started production. So my market research would actually be hands-on actual selling.”
That’s real capitalism. What we have right now isn’t capitalism or a free market, it’s an unholy mashup of a (poorly) planned economy and an oligopoly, and it even extends to completely different sectors like academic research, where you often have to abase yourself before trend-driven, risk-averse, time-poor funding committees.
With every extra person who can say ‘no’ to an idea, the more likely it is that mediocrity will prevail. That’s the problem when companies and governments become too large – there are too many people whose job it is to simply say ‘no’. The notable exceptions are publishers like Amazon and Apple, who have learned that it pays to be permissive.
Navigating the obstacle course of everyone who can say ‘no’ has a truly chilling effect on creativity. You start doubting your ideas,
and you enter a tiring game of guessing what the gatekeepers want rather than what you think or hope will be successfully. You stop caring. As a person who designs games and writes for a living, I find it’s hard to overstate exactly how liberating it is to be freed from the permission system.
The brave new ‘permissive world’ isn’t perfect, though. Freedom can be overwhelming, and creatives will be exposed to more competition (such as the 300,000 iPhone apps). But these downsides are more than balanced out by the fact that you can take on more creative risk; and that when the middlemen are taken out of the equation, you waste less time and earn more per sale, making niche ideas more viable. You don’t need a million buyers to be successful – just a thousand true fans can be enough. Your success no longer rests on the whims of a few ‘experts’.
A permissive world will let us pursue projects we truly care about, and that can only mean good things for the power and quality of our work. Once upon a time, any artist who bucked the system and demanded creative control over their work ended up on a one-way trip into penury. No longer.
This isn’t the first time that the permission system has changed. In the 19th century, the Academie des Beaux-Arts in Paris dominated the world of art; to succeed, artists had to toe the line and stick to traditional, approved painting styles. It was only when Monet, Renoir, Pissaro and Sisley scandalously created a new, independent association to exhibit their works directly to the public that Impressionism – and arguably, modern art as a whole – could truly flower.
People, throughout all the ages, have chafed against the need to gain permission to create what they want. When we’re young, we’re amazed and furious at how unfair and arbritrary this is, but as we grow older, we internalise the rules and start censoring our own ideas.
Ultimately, we become part of the permission system. We begin to say ‘no’ to others because that’s what we grew up with, and that’s the way the world works. For many, it’s profoundly frightening to think that one day, they won’t be able to say ‘no’ – what will they do? What will happen to their jobs?
But there is a different way. We can give people freedom, we can save money and time, and we can unlock a wealth of creativity, just by saying one simple word: ‘yes’.
To Learn More Click Here
Tuesday, February 8, 2011
Is Crowdfunding Working? Here’s What We Know
By Robert Andrews @robertandrews Feb 8, 2011 10:28 AM ET
Crowdfunding’s growing up.
On one such site, 13,512 people recently raised nearly $1 million for a Chicago designer. And fan-funding sites are now bankrolling albums from established music acts, not just dodgy indie bands.
But just how much are these services making for members, and for themselves?
I’ve spent the last few weeks collecting data on the sector, by talking with all the main crowdfunding platforms…
My conclusion: an estimated $80 million has been pledged through these sites, by fewer than a million supporters. But not everyone gets funded, and returns for the sites themselves appear modest.
Leader of the pack
New York’s Kickstarter is kicking it amongst the head of the pack. Since it started, it’s taken pledges worth $30 million for over 12,000 hopeful projects.
Such sites typically make their money by taking a commission of the amounts they pay projects - but most sites only pay money if projects’ pledges meet a pre-specified target amount.
In the case of Kickstarter, which takes five percent, about 45 percent of submitted projects hit their target - so the amount Kickstarter has made for itself is five percent of something far less than $30 million, and probably of about $8 million.
Growing scale
Still, the overheads required by such sites are low - essentially, web hosting and growing notoriety within creative communities.
Kickstarter is now on a perpetual growth curve - the nearly $1 million its users raised last month for the designer of an iPod Nano wrist-watch strap is one of its biggest hits to date.
It may be the birth of a new kind of funding, a more direct relationship between producer and consumer, without the need for major backers like investors or record labels.
Fixing the system?
In music, which has long been enamoured with the fan-funding model, recognisable names like Cornershop, The Subways, Gang Of Four and Funeral For A Friend are amongst the big acts employing the model through PledgeMusic. Marillion and Idlewild have done it themselves independently. Public Enemy financed its last effort through Sellaband.
It may be no coincidence that, as the incumbent entertainment industry contracts and breaks down, out-of-contract major-label artists are increasingly turning to such platforms...
“We’ve been witnessing first hand the struggles of the independent artist,” says Jamie Lokoff of FeedTheMuse.net, an artist-funding site started out of Lokoff’s Philadelphia recording studio, itself bootstrapped using borrowed cash in May 2009. “The music industry is in such a state of disarray, with no real concrete answer, that we felt it important to at least get our hat in the ring, to be part of the solution.”
After years of engaging with fans through social media and gathering their email addresses, artists are increasingly betting they have a readymade constituency of potential financiers.
Says SonicAngel founder Bart Becks: “Our goal is to launch three artists per quarter per country. We will continue to involve fans in every step.”
New entrants are still coming
Though the market is headed by these popular platforms, that’s not stopping smaller crowdfunding sites from emerging to offer their own spin, nor expanding in to new countries.
One such site, 8bitfunding, launched in January, to fund independent game developers specifically. Ulule, which launched from Paris in October, is already planning a Portugal launch, despite not yet taking any commission.
But newcomers should be warned. The popularity of the likes of Kickstarter and IndieGoGo may suggest room in the space for smaller niche platforms, which may well go on to support many more small creatives - but it’s not yet clear that even crowdfunding’s biggest exponents are yet successful businesses in their own right.
To Learn More Click Here
Crowdfunding’s growing up.
On one such site, 13,512 people recently raised nearly $1 million for a Chicago designer. And fan-funding sites are now bankrolling albums from established music acts, not just dodgy indie bands.
But just how much are these services making for members, and for themselves?
I’ve spent the last few weeks collecting data on the sector, by talking with all the main crowdfunding platforms…
My conclusion: an estimated $80 million has been pledged through these sites, by fewer than a million supporters. But not everyone gets funded, and returns for the sites themselves appear modest.
Leader of the pack
New York’s Kickstarter is kicking it amongst the head of the pack. Since it started, it’s taken pledges worth $30 million for over 12,000 hopeful projects.
Such sites typically make their money by taking a commission of the amounts they pay projects - but most sites only pay money if projects’ pledges meet a pre-specified target amount.
In the case of Kickstarter, which takes five percent, about 45 percent of submitted projects hit their target - so the amount Kickstarter has made for itself is five percent of something far less than $30 million, and probably of about $8 million.
Growing scale
Still, the overheads required by such sites are low - essentially, web hosting and growing notoriety within creative communities.
Kickstarter is now on a perpetual growth curve - the nearly $1 million its users raised last month for the designer of an iPod Nano wrist-watch strap is one of its biggest hits to date.
It may be the birth of a new kind of funding, a more direct relationship between producer and consumer, without the need for major backers like investors or record labels.
Fixing the system?
In music, which has long been enamoured with the fan-funding model, recognisable names like Cornershop, The Subways, Gang Of Four and Funeral For A Friend are amongst the big acts employing the model through PledgeMusic. Marillion and Idlewild have done it themselves independently. Public Enemy financed its last effort through Sellaband.
It may be no coincidence that, as the incumbent entertainment industry contracts and breaks down, out-of-contract major-label artists are increasingly turning to such platforms...
“We’ve been witnessing first hand the struggles of the independent artist,” says Jamie Lokoff of FeedTheMuse.net, an artist-funding site started out of Lokoff’s Philadelphia recording studio, itself bootstrapped using borrowed cash in May 2009. “The music industry is in such a state of disarray, with no real concrete answer, that we felt it important to at least get our hat in the ring, to be part of the solution.”
After years of engaging with fans through social media and gathering their email addresses, artists are increasingly betting they have a readymade constituency of potential financiers.
Says SonicAngel founder Bart Becks: “Our goal is to launch three artists per quarter per country. We will continue to involve fans in every step.”
New entrants are still coming
Though the market is headed by these popular platforms, that’s not stopping smaller crowdfunding sites from emerging to offer their own spin, nor expanding in to new countries.
One such site, 8bitfunding, launched in January, to fund independent game developers specifically. Ulule, which launched from Paris in October, is already planning a Portugal launch, despite not yet taking any commission.
But newcomers should be warned. The popularity of the likes of Kickstarter and IndieGoGo may suggest room in the space for smaller niche platforms, which may well go on to support many more small creatives - but it’s not yet clear that even crowdfunding’s biggest exponents are yet successful businesses in their own right.
To Learn More Click Here
Thursday, January 27, 2011
Zuckerberg's Facebook Page Hacked
Perhaps it is not that Zuckerberg's page was hacked, but what the hacker wrote...
(CNN) -- Facebook founder Mark Zuckerberg's fan page was hacked Tuesday -- a high-profile breach on a site that constantly faces scrutiny about its handling of its members' private data.
So the hacker was complaining that, why has Facebook not crowd funded its members especially when they have 600,000,000 of them. Why indeed?
(CNN) -- Facebook founder Mark Zuckerberg's fan page was hacked Tuesday -- a high-profile breach on a site that constantly faces scrutiny about its handling of its members' private data.
The message that appeared on Zuckerberg's page under his name read: "Let the hacking begin: If Facebook needs money, instead of going to the banks, why doesn't Facebook let its users invest in Facebook in a social way? "Why not transform Facebook into a 'social business' the way Nobel Prize winner Muhammad Yunus described it?" the message continued, referring to the founder of the Grameen Bank which has transformed millions of lives by extending micro-loans to poor people.
Zuckerberg's fan page has more than three million followers and is probably managed by media assistants to the social networking magnate, according to cyber-security experts.
The message received more than 1,800 "likes" before it was removed from the page. Facebook's representatives have not returned calls seeking comment.Zuckerberg's fan page has more than three million followers and is probably managed by media assistants to the social networking magnate, according to cyber-security experts.
So the hacker was complaining that, why has Facebook not crowd funded its members especially when they have 600,000,000 of them. Why indeed?
Tuesday, January 25, 2011
How to 'Crowdfund' Your American Dream
By STEVE STRAUSS
Politicians do it, and now more and more people are finding money to start their businesses thanks to small contributions from supporters.
Back in 1992, former and current California Gov. Jerry Brown ran for president against, among others, Bill Clinton. As Clinton emerged as the favorite, endorsements -- and more importantly, money -- started to flow his way. And as a result, the other candidates in the field began to drop out as votes and money dried up.
But not Jerry Brown. Brown had hit upon a then-unique fundraising idea in a pre-Internet day that kept his quixotic campaign alive: He created an 800 telephone number and asked people to call in and donate small sums to his campaign. No more than $100. It turned out that his supporters were more than happy to help him if it didn't cost a lot and was easy to do.
He didn't win, but Jerry Brown was one of the first to 'crowdfund' his campaign.
A more recent example from the business world: Filmmaker Kieran Masterton used crowdfunding to fund his startup, raising more than $12,000 in the process. And maybe even better, like Jerry Brown, Masterton did not have to pay people back with cash, since people who donate to crowdfunding projects expect to be repaid in ways other than money.
Pretty nifty, eh?
Crowdfunding is a process whereby people with projects or business ideas ask the crowd to donate to the cause in exchange for some sort of reward. Typically the reward has something to do with the businesses or project. In Masterson's case, he was starting a website that would distribute the work of independent filmmakers, so he asked them for $100 each – in exchange for getting listed on the website. It worked, big time.
Another example: SellaBand.com is a crowdfunding platform which offers bands something it calls "fan funding." Let's say an indie band has a new tour or album it wants to produce and needs funding for the project. The band would list it on the Sellaband website, and in exchange for donations, would "repay" participants with "free downloads... exclusive CDs, T-shirts, free lunches etc."
Not surprisingly, crowdfunding -- an idea that began as a way for various artists to fund their projects, has morphed into a tool for entrepreneurs to fund their own dreams. As Time puts it, "Politicians do it. Charities too. And now for-profit entrepreneurs are tapping the Internet to get small amounts of money from lots and lots of supporters. One part social networking and one part capital accumulation, crowdfunding websites seek to harness the enthusiasm -- and pocket money --o f virtual strangers."
If this makes sense to you and looks like a way for you to get some funding for your own project, here are some sites you will want to check out:
Kickstarter.com. Listing a project on Kickstarter is free, although KickStarter keeps 5 percent of all money raised, as well as a small portion of all credit-card processing fees.
One interesting thing about Kickstarter is that projects must raise 100 percent of their funding goal, or they receive nothing. Here's why that's a good thing: Let's say that you are trying to raise $10,000 to self-publish a book and that you offer credits in the book in exchange for investments at $50 a pop. If you only raise $5,000, it would not be a very good deal for all of those people who gave you $50, since the book would never get published. So it's 100 percent or nothing at Kickstarter.
IndieGoGo. Similar to Kickstarter, IndieGoGo is a "collaborative way to fund ideas." The difference is that it does not does not require 100 percent funding, although if you do not raise the full amount, they charge you 9 percent as opposed to 4 percent.
Here is one last nice benefit about using crowdfunding to fund your dream: Because it gets people interested in your venture early on, those folks become (literally) invested in your success and thus become your cheerleaders.
Starting a business with a built-in audience and getting funding without having to repay it in cash? Sweet.
To Learn More Click Here
Politicians do it, and now more and more people are finding money to start their businesses thanks to small contributions from supporters.
Back in 1992, former and current California Gov. Jerry Brown ran for president against, among others, Bill Clinton. As Clinton emerged as the favorite, endorsements -- and more importantly, money -- started to flow his way. And as a result, the other candidates in the field began to drop out as votes and money dried up.
But not Jerry Brown. Brown had hit upon a then-unique fundraising idea in a pre-Internet day that kept his quixotic campaign alive: He created an 800 telephone number and asked people to call in and donate small sums to his campaign. No more than $100. It turned out that his supporters were more than happy to help him if it didn't cost a lot and was easy to do.
He didn't win, but Jerry Brown was one of the first to 'crowdfund' his campaign.
A more recent example from the business world: Filmmaker Kieran Masterton used crowdfunding to fund his startup, raising more than $12,000 in the process. And maybe even better, like Jerry Brown, Masterton did not have to pay people back with cash, since people who donate to crowdfunding projects expect to be repaid in ways other than money.
Pretty nifty, eh?
Crowdfunding is a process whereby people with projects or business ideas ask the crowd to donate to the cause in exchange for some sort of reward. Typically the reward has something to do with the businesses or project. In Masterson's case, he was starting a website that would distribute the work of independent filmmakers, so he asked them for $100 each – in exchange for getting listed on the website. It worked, big time.
Another example: SellaBand.com is a crowdfunding platform which offers bands something it calls "fan funding." Let's say an indie band has a new tour or album it wants to produce and needs funding for the project. The band would list it on the Sellaband website, and in exchange for donations, would "repay" participants with "free downloads... exclusive CDs, T-shirts, free lunches etc."
Not surprisingly, crowdfunding -- an idea that began as a way for various artists to fund their projects, has morphed into a tool for entrepreneurs to fund their own dreams. As Time puts it, "Politicians do it. Charities too. And now for-profit entrepreneurs are tapping the Internet to get small amounts of money from lots and lots of supporters. One part social networking and one part capital accumulation, crowdfunding websites seek to harness the enthusiasm -- and pocket money --o f virtual strangers."
If this makes sense to you and looks like a way for you to get some funding for your own project, here are some sites you will want to check out:
Kickstarter.com. Listing a project on Kickstarter is free, although KickStarter keeps 5 percent of all money raised, as well as a small portion of all credit-card processing fees.
One interesting thing about Kickstarter is that projects must raise 100 percent of their funding goal, or they receive nothing. Here's why that's a good thing: Let's say that you are trying to raise $10,000 to self-publish a book and that you offer credits in the book in exchange for investments at $50 a pop. If you only raise $5,000, it would not be a very good deal for all of those people who gave you $50, since the book would never get published. So it's 100 percent or nothing at Kickstarter.
IndieGoGo. Similar to Kickstarter, IndieGoGo is a "collaborative way to fund ideas." The difference is that it does not does not require 100 percent funding, although if you do not raise the full amount, they charge you 9 percent as opposed to 4 percent.
Here is one last nice benefit about using crowdfunding to fund your dream: Because it gets people interested in your venture early on, those folks become (literally) invested in your success and thus become your cheerleaders.
Starting a business with a built-in audience and getting funding without having to repay it in cash? Sweet.
To Learn More Click Here
Thursday, December 16, 2010
Will TikTok+LunaTik Multi-Touch Watch Kits - a Kickstarter Project reach a $1,000,000 in pledges?
by James de Rin
If ever there was a project to reach a million dollars in crowdfunded pledges TikTok+LunaTik Multi-Touch Watch Kits is the project to do it. With only a $15,000 goal the funding pledges have rolled in to the tune of $880,529 as of today. There are eleven hours to go. That's quite an endorsement of Kickstarter and this project. Not so long ago a $5,000 funding requirement was seen as ambitious, now a select few projects are achieving venture capital levels of crowdfunding. Congratulations to Kickstarter for their vision but it is the projects that are the true stars and this one was created by a real professional as you can see from the pitch video.
TikTok and LunaTik simply transform the iPod Nano into the world's coolest multi-touch watches. The idea to use the Nano as a watch was an obvious one ever since the product was announced. But we wanted to create a collection that was well designed, engineered and manufactured from premium materials and that complemented the impeccable quality of Apple products. Not just clipped on a cheap strap as an afterthought. We wanted to create a product that your friends and strangers would stop you and ask "WTF is that??? And where can I get one?!"
To Learn More Click Here
If ever there was a project to reach a million dollars in crowdfunded pledges TikTok+LunaTik Multi-Touch Watch Kits is the project to do it. With only a $15,000 goal the funding pledges have rolled in to the tune of $880,529 as of today. There are eleven hours to go. That's quite an endorsement of Kickstarter and this project. Not so long ago a $5,000 funding requirement was seen as ambitious, now a select few projects are achieving venture capital levels of crowdfunding. Congratulations to Kickstarter for their vision but it is the projects that are the true stars and this one was created by a real professional as you can see from the pitch video.
TikTok and LunaTik simply transform the iPod Nano into the world's coolest multi-touch watches. The idea to use the Nano as a watch was an obvious one ever since the product was announced. But we wanted to create a collection that was well designed, engineered and manufactured from premium materials and that complemented the impeccable quality of Apple products. Not just clipped on a cheap strap as an afterthought. We wanted to create a product that your friends and strangers would stop you and ask "WTF is that??? And where can I get one?!"
To Learn More Click Here
Can You Spare a Quarter? Crowdfunding Sites Turn Fans into Patrons of the Arts
Published: December 14, 2010 in Knowledge@Australian School of Business
Susan Lee looks intently at the camera and launches into her story. She left an emotionally abusive marriage of 16 years to find herself in a mid-life crisis that is not at all like the exciting adventures detailed in Elizabeth Gilbert's memoir Eat Pray Love: There is no journey to an ashram and she didn't fall into a romantic relationship. Instead, Lee's life in her 40s is a harsh yet touching journey of self-discovery and acceptance. She is chronicling her experiences in a play she wrote called "Diary of a Mid-Life Crisis," and asking people who see her video on the IndieGoGo website to support her production. The play is about going through a real, not fantasy, mid-life crisis and eventually emerging "a little smarter and a little wiser, but hopefully whole in our own incredibly beautiful way," she says. Lee's plea worked. Six people gave her a total of $581, exceeding her $500 goal, with 10 days left for the fundraiser.
Welcome to the world of crowdfunding -- a style of fundraising that taps support from fans and other interested parties. While politicians and charities have used this method for ages, the adoption of social networking makes crowdfunding feasible even for the average citizen with a dream and some creative talent. The Internet age has made distribution easy; these days, anyone can upload a video to YouTube or otherwise post their work online. But getting paid for that work is another matter. Crowdfunding is one solution to the problem and several websites have sprung up in response to the trend, such as IndieGoGo, Spot.Us, Pledge Music, ArtistShare, Kickstarter and others. These sites have democratized support for creative endeavors that had been dominated by large companies -- record labels and movie studios, for example -- by letting fans finance the work of artists directly.
This is how it works: An individual or group requests funding for a specific project at one of the crowdfunding websites. Supporters can donate varying amounts -- often starting with as little as $1 -- to the project within a specified amount of time, usually a few months. Some sites wait until the goal amount has been reached and only charge supporters if the project is successful, while others take the contributions from donors even if the campaign doesn't hit its stated goal. The crowdfunding sites earn money by taking a percentage of the funds raised, ranging from 4% at IndieGoGo to as much as 30% at ArtistShare. Kickstarter reportedly collects 5% of the total and has reaped an estimated $2 million in revenue this year, according to Business Insider. Artists usually interact with their supporters in hopes of strengthening their fan base.
"The idea is to get your fans to support your work," says Kendall Whitehouse, Wharton's director of new media. "In some ways, it's back to the future; it's history repeating itself. This was how most art was funded in the 17th and 18th centuries. A wealthy patron would pay to have music composed, for example." The difference now, of course, is that instead of receiving the entire sum from one wealthy individual, the artist gets a little bit of money from a lot of (often non-wealthy) contributors. In return, donors get something in kind, such as a signed CD, a T-shirt, or -- for a larger donation -- credit as a producer on a film or the thrill of having a song composed especially for them. Such deals are easier to do in the digital age. Adds Whitehouse: "It's the web's ability to communicate to a large fan base and then aggregate a significant number of small donations" that makes this work well online.
A Decade in the Making
Crowdfunding sites in the U.S., at least for music, go back a decade with the creation of ArtistShare. Founder and CEO Brian Camelio remembers being surrounded by skeptics when he started his website in 2001. "Napster was a big issue at that point with file-sharing," he notes. "I was starting to worry about the future of music -- how music is paid for and how artists are compensated." A musician himself, Camelio thought the best solution to fight the "destructive technology" of music file-sharing would be to give fans a more engaged relationship with the artist -- in hopes they would be willing to finance the music. He bet fans would pay to watch their favorite musician work or get a chance to be online inside the studio during a recording session. People scoffed, he says. "The reaction was mostly dismissive." But he had the last laugh: ArtistShare musicians have won four Grammys and snagged 11 nominations.
In recent years, several other crowdfunding sites of a more general nature have popped up on the web. Slava Rubin co-founded IndieGoGo in 2008 with Danae Ringelmann and Eric Schell after discovering there was no efficient way to raise money for bone marrow cancer research, which had killed Rubin's father. In two years, San Francisco-based IndieGoGo has launched 12,500 campaigns -- including films, charities, businesses and recordings -- and funded millions of dollars of projects in 139 countries. "Everybody in the world is passionate about something," Rubin points out. "We make it easier [for them] to raise money."
Libbie Schrader, an alternative pop rock musician in New York, has raised $8,000 to finance her fifth album through Pledge Music. Including another $2,000 she will pitch in herself, the sum is enough to bankroll five songs and will be used to find a producer, rent a recording studio, hire backing musicians, and pay for other production costs. She tapped her 2,500 fans for support -- people who saw her perform at colleges or as opening acts for other groups. Schrader turned to crowdfunding because it's difficult to sign with a label even though she had a demo deal with Atlantic Records at one point. "It's the most impossible thing to do on the entire planet," Schrader says. "It's crazy."
Paul King shelled out about $1,000 to support Schrader so she could keep recording even without a label. "I was worried she wasn't going to reach her goal" and that she would abandon her album, notes the Nashville, Tenn., computer technician. "I'm very selfish. I want my music. There are very few artists I like and she's one of them." For his support, Schrader will compose a song just for King and his wife based on their life together. "This is where the Internet is taking us, to where a fan will say, 'I will give you money to write a song about me and my wife'," Schrader says. "Some people want to Skype into the recording session or watch while the producer talks to the guitarist.... It's becoming more and more mainstream."
Such artist-fan bonds are key to the success of crowdfunding sites. "Personal relationships are very powerful," notes Jonah Berger, a marketing professor at Wharton. "Seeing someone on stage and knowing you had something to do with it is exciting." There is also a certain caché to spotting the next big act before the masses, and crowdfunding lets people do that, Berger points out, adding that proletarian funding of projects and causes can be applied to many things, even building projects. Internet trends that harness the power of the collective, whether it's Wikipedia or crowdfunding, are here to stay, he adds, but whether all the current sites will last is another matter.
Mainstream Hits or Niche Players?
The challenge for crowdfunding sites is to make sure fans come back to support an artist's subsequent projects. Camelio says he has learned what works when it comes to nurturing the musician-fan relationship. For example, he encouraged Maria Schneider, a jazz musician with ArtistShare who had been nominated for a Grammy, to invite a top supporter to the award ceremonies. She ended up winning, and the fan got the memory of a lifetime. IndieGoGo's Rubin, on the other hand, uses technology to boost giving. He found out, for instance, that posting the average contribution of a campaign prompts people to give more than that amount.
David Cohn, founder and CEO of Spot.Us, is taking a different approach to keeping his nonprofit viable in the long run. The site, which funds journalists to allow them to pursue news stories missed by the mainstream media, is signing up sponsors like Hewlett-Packard in addition to receiving foundation grants. Spot.Us also is planning to embed its fundraising technology in media websites so that local newspapers, TV and radio stations can ask consumers to support certain articles. "We really are a technology platform and not a news organization," Cohn notes. "In that respect, we scale really well."
Yet Peter Fader, Wharton marketing professor and co-director of the Wharton Interactive Media Initiative, does not see crowdfunding sites becoming much more than niche players. "They have been around a long time under different guises," he points out. While it's alluring to think that the masses will be able to spot the next Justin Bieber, the truth is that professionals have a leg up in identifying the next big star and, as such, they will never be completely replaced. "They are very, very good at identifying talent, much better than the crowd," Fader says. "If you put two musicians next to each other, they both seem fine, but one of them will do well. It's much easier for a professional music person to make that judgment than a bunch of random people."
Big recording labels and major studios also know how to groom, refine and market the performer to appeal to a large audience. It's that sheen of sophistication that artists on a small budget can't replicate. "Who would have ever identified Lady Gaga [as the next big music star]?" Fader asks. "Studios knew if she dressed a certain way and sang certain songs, people will respond. She's an extreme artist." After all, many artists flock to crowdfunded sites because they are not visible enough to be noticed by the big players. The most popular videos on YouTube are those of famous groups, not homemade movies, Fader adds. "For every YouTube sensation, there are 100,000 who aren't," he says.
But once in a while, a crowdfunded project breaks through. Emily Hagins, an 18-year-old film director, raised nearly $6,000 in three days at a comic book convention after airing a trailer of her movie, "My Sucky Teen Romance." Hagins will use that money, raised through IndieGoGo in November, for post-production of her film. During the summer, she raised $9,250 in a month to make the movie, which is about vampires crashing a science fiction convention. The romance comes in when one of the bloodsuckers falls for a human. "It's really silly," the Austin, Tex., high school senior says about the movie. Still, the response has been so positive that "we're hoping to send it out to the [film] festivals, the biggest ones. We just want to aim high."
To Learn More Click Here
Susan Lee looks intently at the camera and launches into her story. She left an emotionally abusive marriage of 16 years to find herself in a mid-life crisis that is not at all like the exciting adventures detailed in Elizabeth Gilbert's memoir Eat Pray Love: There is no journey to an ashram and she didn't fall into a romantic relationship. Instead, Lee's life in her 40s is a harsh yet touching journey of self-discovery and acceptance. She is chronicling her experiences in a play she wrote called "Diary of a Mid-Life Crisis," and asking people who see her video on the IndieGoGo website to support her production. The play is about going through a real, not fantasy, mid-life crisis and eventually emerging "a little smarter and a little wiser, but hopefully whole in our own incredibly beautiful way," she says. Lee's plea worked. Six people gave her a total of $581, exceeding her $500 goal, with 10 days left for the fundraiser.
Welcome to the world of crowdfunding -- a style of fundraising that taps support from fans and other interested parties. While politicians and charities have used this method for ages, the adoption of social networking makes crowdfunding feasible even for the average citizen with a dream and some creative talent. The Internet age has made distribution easy; these days, anyone can upload a video to YouTube or otherwise post their work online. But getting paid for that work is another matter. Crowdfunding is one solution to the problem and several websites have sprung up in response to the trend, such as IndieGoGo, Spot.Us, Pledge Music, ArtistShare, Kickstarter and others. These sites have democratized support for creative endeavors that had been dominated by large companies -- record labels and movie studios, for example -- by letting fans finance the work of artists directly.
This is how it works: An individual or group requests funding for a specific project at one of the crowdfunding websites. Supporters can donate varying amounts -- often starting with as little as $1 -- to the project within a specified amount of time, usually a few months. Some sites wait until the goal amount has been reached and only charge supporters if the project is successful, while others take the contributions from donors even if the campaign doesn't hit its stated goal. The crowdfunding sites earn money by taking a percentage of the funds raised, ranging from 4% at IndieGoGo to as much as 30% at ArtistShare. Kickstarter reportedly collects 5% of the total and has reaped an estimated $2 million in revenue this year, according to Business Insider. Artists usually interact with their supporters in hopes of strengthening their fan base.
"The idea is to get your fans to support your work," says Kendall Whitehouse, Wharton's director of new media. "In some ways, it's back to the future; it's history repeating itself. This was how most art was funded in the 17th and 18th centuries. A wealthy patron would pay to have music composed, for example." The difference now, of course, is that instead of receiving the entire sum from one wealthy individual, the artist gets a little bit of money from a lot of (often non-wealthy) contributors. In return, donors get something in kind, such as a signed CD, a T-shirt, or -- for a larger donation -- credit as a producer on a film or the thrill of having a song composed especially for them. Such deals are easier to do in the digital age. Adds Whitehouse: "It's the web's ability to communicate to a large fan base and then aggregate a significant number of small donations" that makes this work well online.
A Decade in the Making
Crowdfunding sites in the U.S., at least for music, go back a decade with the creation of ArtistShare. Founder and CEO Brian Camelio remembers being surrounded by skeptics when he started his website in 2001. "Napster was a big issue at that point with file-sharing," he notes. "I was starting to worry about the future of music -- how music is paid for and how artists are compensated." A musician himself, Camelio thought the best solution to fight the "destructive technology" of music file-sharing would be to give fans a more engaged relationship with the artist -- in hopes they would be willing to finance the music. He bet fans would pay to watch their favorite musician work or get a chance to be online inside the studio during a recording session. People scoffed, he says. "The reaction was mostly dismissive." But he had the last laugh: ArtistShare musicians have won four Grammys and snagged 11 nominations.
In recent years, several other crowdfunding sites of a more general nature have popped up on the web. Slava Rubin co-founded IndieGoGo in 2008 with Danae Ringelmann and Eric Schell after discovering there was no efficient way to raise money for bone marrow cancer research, which had killed Rubin's father. In two years, San Francisco-based IndieGoGo has launched 12,500 campaigns -- including films, charities, businesses and recordings -- and funded millions of dollars of projects in 139 countries. "Everybody in the world is passionate about something," Rubin points out. "We make it easier [for them] to raise money."
Libbie Schrader, an alternative pop rock musician in New York, has raised $8,000 to finance her fifth album through Pledge Music. Including another $2,000 she will pitch in herself, the sum is enough to bankroll five songs and will be used to find a producer, rent a recording studio, hire backing musicians, and pay for other production costs. She tapped her 2,500 fans for support -- people who saw her perform at colleges or as opening acts for other groups. Schrader turned to crowdfunding because it's difficult to sign with a label even though she had a demo deal with Atlantic Records at one point. "It's the most impossible thing to do on the entire planet," Schrader says. "It's crazy."
Paul King shelled out about $1,000 to support Schrader so she could keep recording even without a label. "I was worried she wasn't going to reach her goal" and that she would abandon her album, notes the Nashville, Tenn., computer technician. "I'm very selfish. I want my music. There are very few artists I like and she's one of them." For his support, Schrader will compose a song just for King and his wife based on their life together. "This is where the Internet is taking us, to where a fan will say, 'I will give you money to write a song about me and my wife'," Schrader says. "Some people want to Skype into the recording session or watch while the producer talks to the guitarist.... It's becoming more and more mainstream."
Such artist-fan bonds are key to the success of crowdfunding sites. "Personal relationships are very powerful," notes Jonah Berger, a marketing professor at Wharton. "Seeing someone on stage and knowing you had something to do with it is exciting." There is also a certain caché to spotting the next big act before the masses, and crowdfunding lets people do that, Berger points out, adding that proletarian funding of projects and causes can be applied to many things, even building projects. Internet trends that harness the power of the collective, whether it's Wikipedia or crowdfunding, are here to stay, he adds, but whether all the current sites will last is another matter.
Mainstream Hits or Niche Players?
The challenge for crowdfunding sites is to make sure fans come back to support an artist's subsequent projects. Camelio says he has learned what works when it comes to nurturing the musician-fan relationship. For example, he encouraged Maria Schneider, a jazz musician with ArtistShare who had been nominated for a Grammy, to invite a top supporter to the award ceremonies. She ended up winning, and the fan got the memory of a lifetime. IndieGoGo's Rubin, on the other hand, uses technology to boost giving. He found out, for instance, that posting the average contribution of a campaign prompts people to give more than that amount.
David Cohn, founder and CEO of Spot.Us, is taking a different approach to keeping his nonprofit viable in the long run. The site, which funds journalists to allow them to pursue news stories missed by the mainstream media, is signing up sponsors like Hewlett-Packard in addition to receiving foundation grants. Spot.Us also is planning to embed its fundraising technology in media websites so that local newspapers, TV and radio stations can ask consumers to support certain articles. "We really are a technology platform and not a news organization," Cohn notes. "In that respect, we scale really well."
Yet Peter Fader, Wharton marketing professor and co-director of the Wharton Interactive Media Initiative, does not see crowdfunding sites becoming much more than niche players. "They have been around a long time under different guises," he points out. While it's alluring to think that the masses will be able to spot the next Justin Bieber, the truth is that professionals have a leg up in identifying the next big star and, as such, they will never be completely replaced. "They are very, very good at identifying talent, much better than the crowd," Fader says. "If you put two musicians next to each other, they both seem fine, but one of them will do well. It's much easier for a professional music person to make that judgment than a bunch of random people."
Big recording labels and major studios also know how to groom, refine and market the performer to appeal to a large audience. It's that sheen of sophistication that artists on a small budget can't replicate. "Who would have ever identified Lady Gaga [as the next big music star]?" Fader asks. "Studios knew if she dressed a certain way and sang certain songs, people will respond. She's an extreme artist." After all, many artists flock to crowdfunded sites because they are not visible enough to be noticed by the big players. The most popular videos on YouTube are those of famous groups, not homemade movies, Fader adds. "For every YouTube sensation, there are 100,000 who aren't," he says.
But once in a while, a crowdfunded project breaks through. Emily Hagins, an 18-year-old film director, raised nearly $6,000 in three days at a comic book convention after airing a trailer of her movie, "My Sucky Teen Romance." Hagins will use that money, raised through IndieGoGo in November, for post-production of her film. During the summer, she raised $9,250 in a month to make the movie, which is about vampires crashing a science fiction convention. The romance comes in when one of the bloodsuckers falls for a human. "It's really silly," the Austin, Tex., high school senior says about the movie. Still, the response has been so positive that "we're hoping to send it out to the [film] festivals, the biggest ones. We just want to aim high."
To Learn More Click Here
Wednesday, December 1, 2010
Find Customers and Fund Your Startup — Before You Even Have a Product
By Shonali Burke | November 16, 2010
Typically, most startups begin like this: They have a business idea, they raise the money to build their product or service, and then they launch a marketing strategy to gain visibility and awareness.
Web company Eat Your Serial isn’t operating like most startups. In fact, it’s doing all of the above backwards, or more accurately, all at once.
Aimed at digital-savvy writers and readers, Eat Your Serial, when launched, will feature serialized stories online from up-and-coming writers, putting a 21st-century twist on the long-standing story-telling tradition.
The company will post chapters weekly, with multiple stories running every week. Readers will be able to engage writers in comment sections and through social media. While content will be offered for free online, says founder Shawn Abraham, when the serials reach completion, readers will be encouraged to purchase the completed work in printed or e-book form. The company plans to make most of its revenue through paid mobile subscriptions that will allow readers to access the content on their phones, and through bundling subscriptions as extras on mobile devices. ”We keep hearing that people don’t read anymore, and that’s not true,” says Abraham. “What’s changed is that people are reading more online, and on their mobile devices. It’s just the ‘what’ and ‘how’ that have changed.”
Before his product had even moved past the conceptual stage, Abraham decided to crowdfund it via Kickstarter to get his company off the ground. His goal was to get enough supporters to kick in small amounts of money, which would collectively reach $7,000 or more; if he couldn’t attract that amount in committed funds, he would be back to square one. (Update: He made it.)
But it wasn’t just about raising money for the project — after all, it wasn’t much money. The Kickstarter experiment let Abraham simultaneously start growing his community as well as build his target market.
What is interesting about Abraham’s approach to outreach is that it is all online and through social platforms. In addition, it adheres to several PR best practices, but in quite a unique way.
Consider adopting (and adapting, if necessary) these backwards public relations tactics for your own outreach:
1. Build your presence first on the social platforms that matter to you.
Since the EYS team already knows its target audience uses Twitter and Facebook actively, that’s where they have been focusing their efforts on building fans. “Since Eat Your Serial, once launched, will be Web-based, we decided to build our community by reaching directly to the kind of people who’ll use the service,” says Jenn Pedde, the company’s “brand & marketing nutritionist.” And they’re using video as well, as you can see.
What they’re doing smartly here is that they are really “talking” to their community by saying “thank you” to those who have funded them. Pedde says Twitter and Facebook will continue to be forums for interaction with readers, writers, fans, and supporters.
2. Listen and participate in the relevant conversations.
In the old days, we called this “media monitoring,” i.e. keeping tabs on relevant media outlets for reporters and stories relevant to our clients and organizations, and then pitching them.
It’s the same principle, but now it’s called “listening,” and I wrote about listening vs. shouting in social media recently. The EYS team has been doing this in a very smart way; on Twitter they picked up on the #nanowrimo hashtag (short for National Novel Writing Month) and have been engaging with folks they identify as potential users there. In short, they’re not pitching all and sundry; they’re focusing their efforts on the narrow audience niche that is most likely to spread the Eat Your Serial story.
3. Create a 21st century press kit.
If you don’t have a media kit on your website, create one. Make sure it has your FAQ (this is part of laying a good PR foundation), and anything else that will tell both the media as well as your target audience what they will want to know about you.
The EYS team took this one step further. They uploaded an electronic press kit onto SlideShare and direct people there to get official info on Eat Your Serial.
Why is this smart? Because in one fell swoop, the company makes its information accessible via a downloadable press kit on what is currently one of the world’s largest document and presentation-sharing social platforms. While the company did not track true conversions from Slideshare to funding, it says it saw a spike in backers after the media kit went up, and received anecdotal feedback on how helpful the kit was to outsiders understanding the project.
With no monetary investment in outreach, except for Web design fees, Eat Your Serial has bypassed conventional wisdom with creativity and through social media to do what public relations has always been meant to do: build relationships that will benefit its business.
Eat Your Serial logo © Eat Your Serial, used with permission
Shonali Burke is Principal of Shonali Burke Consulting where she helps turn businesses’ communication conundrums into community cool. She opines on PR and social media at Waxing UnLyrical and is considered one of 25 women that rock social media.
To Learn More Click Here
Typically, most startups begin like this: They have a business idea, they raise the money to build their product or service, and then they launch a marketing strategy to gain visibility and awareness.
Web company Eat Your Serial isn’t operating like most startups. In fact, it’s doing all of the above backwards, or more accurately, all at once.
Aimed at digital-savvy writers and readers, Eat Your Serial, when launched, will feature serialized stories online from up-and-coming writers, putting a 21st-century twist on the long-standing story-telling tradition.
The company will post chapters weekly, with multiple stories running every week. Readers will be able to engage writers in comment sections and through social media. While content will be offered for free online, says founder Shawn Abraham, when the serials reach completion, readers will be encouraged to purchase the completed work in printed or e-book form. The company plans to make most of its revenue through paid mobile subscriptions that will allow readers to access the content on their phones, and through bundling subscriptions as extras on mobile devices. ”We keep hearing that people don’t read anymore, and that’s not true,” says Abraham. “What’s changed is that people are reading more online, and on their mobile devices. It’s just the ‘what’ and ‘how’ that have changed.”
Before his product had even moved past the conceptual stage, Abraham decided to crowdfund it via Kickstarter to get his company off the ground. His goal was to get enough supporters to kick in small amounts of money, which would collectively reach $7,000 or more; if he couldn’t attract that amount in committed funds, he would be back to square one. (Update: He made it.)
But it wasn’t just about raising money for the project — after all, it wasn’t much money. The Kickstarter experiment let Abraham simultaneously start growing his community as well as build his target market.
What is interesting about Abraham’s approach to outreach is that it is all online and through social platforms. In addition, it adheres to several PR best practices, but in quite a unique way.
Consider adopting (and adapting, if necessary) these backwards public relations tactics for your own outreach:
1. Build your presence first on the social platforms that matter to you.
Since the EYS team already knows its target audience uses Twitter and Facebook actively, that’s where they have been focusing their efforts on building fans. “Since Eat Your Serial, once launched, will be Web-based, we decided to build our community by reaching directly to the kind of people who’ll use the service,” says Jenn Pedde, the company’s “brand & marketing nutritionist.” And they’re using video as well, as you can see.
What they’re doing smartly here is that they are really “talking” to their community by saying “thank you” to those who have funded them. Pedde says Twitter and Facebook will continue to be forums for interaction with readers, writers, fans, and supporters.
2. Listen and participate in the relevant conversations.
In the old days, we called this “media monitoring,” i.e. keeping tabs on relevant media outlets for reporters and stories relevant to our clients and organizations, and then pitching them.
It’s the same principle, but now it’s called “listening,” and I wrote about listening vs. shouting in social media recently. The EYS team has been doing this in a very smart way; on Twitter they picked up on the #nanowrimo hashtag (short for National Novel Writing Month) and have been engaging with folks they identify as potential users there. In short, they’re not pitching all and sundry; they’re focusing their efforts on the narrow audience niche that is most likely to spread the Eat Your Serial story.
3. Create a 21st century press kit.
If you don’t have a media kit on your website, create one. Make sure it has your FAQ (this is part of laying a good PR foundation), and anything else that will tell both the media as well as your target audience what they will want to know about you.
The EYS team took this one step further. They uploaded an electronic press kit onto SlideShare and direct people there to get official info on Eat Your Serial.
Why is this smart? Because in one fell swoop, the company makes its information accessible via a downloadable press kit on what is currently one of the world’s largest document and presentation-sharing social platforms. While the company did not track true conversions from Slideshare to funding, it says it saw a spike in backers after the media kit went up, and received anecdotal feedback on how helpful the kit was to outsiders understanding the project.
With no monetary investment in outreach, except for Web design fees, Eat Your Serial has bypassed conventional wisdom with creativity and through social media to do what public relations has always been meant to do: build relationships that will benefit its business.
Eat Your Serial logo © Eat Your Serial, used with permission
Shonali Burke is Principal of Shonali Burke Consulting where she helps turn businesses’ communication conundrums into community cool. She opines on PR and social media at Waxing UnLyrical and is considered one of 25 women that rock social media.
To Learn More Click Here
Tuesday, November 30, 2010
SEC Regulations Barricade The Crowdfunding Floodgates
Kevin Lawton Entrepreneur & Author, The Crowdfunding Revolution
Posted: November 30, 2010 11:21 AM
Joseph Pulitzer used a form of crowdfunding to finance the Statue of Liberty. Obama used crowdfunding to bankroll his presidential campaign in 2008.
Crowdfunding is such a pervasive concept that today more than 175 crowdfunding sites exist online. Seemingly, a new crowdfunding site pops up every other day. So it may be surprising to learn that none of them allow entrepreneurs to raise money in exchange for equity in their business. That's because regulatory organizations like the SEC ban it.
SEC regulations that date back to the 1930's usurped entrepreneurs' ability to pitch their business ideas to the general public with the aim of securing funding. Ostensibly, this was done to protect unsophisticated investors from fraudsters, but in any case effectively handed the role of financing new companies over to the wealthy. These days, the regulations don't make sense given the Internet's ability to add transparency to the opaque venture capital model.
In the same way that social networking changed how we allocate time, crowdfunding will change how we allocate capital. Crowdfunding, generally speaking, is the merger of group funding and social networking. While group funding dates back millennia, the social networking aspects of crowdfunding are quite new, and are a major driving force behind this revolutionary form of financing.
Building on social networking, crowdfunding creates a vehicle for people to invest or pledge money to projects for which they have an interest, a passion and an attachment. In doing so, it creates a marketplace opportunity for a diversity of players. Whether financing an indie movie, a fashion line, an around-the-world sailing adventure, or the next Lance Armstrong, crowdfunding is being applied everywhere.
Still, the human race hasn't even come close to integrating the collective wisdom of our multi-billion person crowd with ways to allocate capital. 2 billion people already use the Internet, and that number is increasing rapidly. Until recently, capital allocation was largely the province of a small and entrenched minority. But with the explosive growth of connectivity and technological complexity, the classical models of capital allocation are folding and becoming dysfunctional. What are the weaknesses of old methods, especially the sheer scale of information and ideas, are the strengths of a new model of funding which has the potential to tap an almost unfathomable collective intelligence. Therein lies the immense future of the crowdfunding revolution.
Ironically, while nearly every other market sector has incurred disruption by new technologies, venture finance, which funds many of these new technologies, has innovated little itself. That shows in the downward-trending performance of venture capital, now negative across the industry.
In many ways, the financing of new ventures has shared ailments that we've seen in the banking industry: centralization and intermediation. The solution to these issues is decentralization and disintermediation -- exactly what crowdfunding offers. Whereas classic financing places a premium focus on relatively few financiers, crowdfunding derives its value from the ability to coalesce the collective IQ of many.
But that's not to say crowdfunding is a replacement for classic financing. It's actually something much bigger, and something new. In fact, nimble players, hailing from classic business financing, will use it as a signaling mechanism to access hot new deals they would have never seen. As exciting is the fact that the value of a person's social networks is undergoing an enormous upside transformation. That's because, as David Geertz of the SoKap crowdfunding platform says, "Influencers drive crowdfunding campaigns. These curators of cool ideas are poised to become the new power brokers." With crowdfunding, zero network equates to zero funding, so it follows that those with networking influence enjoy a new form of value.
Efforts are afoot in other countries to enable the massive potential of crowdfunding, recognizing that small businesses are the job-creation engine of the economy. In fact, crowdfunding looks to be one of the most important socio-economic forces of our time. The question is: Which nations will be held back by their unwillingness to change regulations?
I discuss a much deeper and broader look at the crowdfunding phenomena in my book, The
Crowdfunding Revolution, and will continue with a series of related posts on The Huffington Post
To Learn More Click Here
Posted: November 30, 2010 11:21 AM
Joseph Pulitzer used a form of crowdfunding to finance the Statue of Liberty. Obama used crowdfunding to bankroll his presidential campaign in 2008.
Crowdfunding is such a pervasive concept that today more than 175 crowdfunding sites exist online. Seemingly, a new crowdfunding site pops up every other day. So it may be surprising to learn that none of them allow entrepreneurs to raise money in exchange for equity in their business. That's because regulatory organizations like the SEC ban it.
SEC regulations that date back to the 1930's usurped entrepreneurs' ability to pitch their business ideas to the general public with the aim of securing funding. Ostensibly, this was done to protect unsophisticated investors from fraudsters, but in any case effectively handed the role of financing new companies over to the wealthy. These days, the regulations don't make sense given the Internet's ability to add transparency to the opaque venture capital model.
In the same way that social networking changed how we allocate time, crowdfunding will change how we allocate capital. Crowdfunding, generally speaking, is the merger of group funding and social networking. While group funding dates back millennia, the social networking aspects of crowdfunding are quite new, and are a major driving force behind this revolutionary form of financing.
Building on social networking, crowdfunding creates a vehicle for people to invest or pledge money to projects for which they have an interest, a passion and an attachment. In doing so, it creates a marketplace opportunity for a diversity of players. Whether financing an indie movie, a fashion line, an around-the-world sailing adventure, or the next Lance Armstrong, crowdfunding is being applied everywhere.
Still, the human race hasn't even come close to integrating the collective wisdom of our multi-billion person crowd with ways to allocate capital. 2 billion people already use the Internet, and that number is increasing rapidly. Until recently, capital allocation was largely the province of a small and entrenched minority. But with the explosive growth of connectivity and technological complexity, the classical models of capital allocation are folding and becoming dysfunctional. What are the weaknesses of old methods, especially the sheer scale of information and ideas, are the strengths of a new model of funding which has the potential to tap an almost unfathomable collective intelligence. Therein lies the immense future of the crowdfunding revolution.
Ironically, while nearly every other market sector has incurred disruption by new technologies, venture finance, which funds many of these new technologies, has innovated little itself. That shows in the downward-trending performance of venture capital, now negative across the industry.
In many ways, the financing of new ventures has shared ailments that we've seen in the banking industry: centralization and intermediation. The solution to these issues is decentralization and disintermediation -- exactly what crowdfunding offers. Whereas classic financing places a premium focus on relatively few financiers, crowdfunding derives its value from the ability to coalesce the collective IQ of many.
But that's not to say crowdfunding is a replacement for classic financing. It's actually something much bigger, and something new. In fact, nimble players, hailing from classic business financing, will use it as a signaling mechanism to access hot new deals they would have never seen. As exciting is the fact that the value of a person's social networks is undergoing an enormous upside transformation. That's because, as David Geertz of the SoKap crowdfunding platform says, "Influencers drive crowdfunding campaigns. These curators of cool ideas are poised to become the new power brokers." With crowdfunding, zero network equates to zero funding, so it follows that those with networking influence enjoy a new form of value.
Efforts are afoot in other countries to enable the massive potential of crowdfunding, recognizing that small businesses are the job-creation engine of the economy. In fact, crowdfunding looks to be one of the most important socio-economic forces of our time. The question is: Which nations will be held back by their unwillingness to change regulations?
I discuss a much deeper and broader look at the crowdfunding phenomena in my book, The
Crowdfunding Revolution, and will continue with a series of related posts on The Huffington Post
To Learn More Click Here
Saturday, November 27, 2010
The 10 Most Successful Crowd-Funded Projects From Kickstarter
Posted by Jay Yarow
New York startup Kickstarter is one of the most interesting startups out there.
It provides a platform for people to raise money for projects. If people hit the target they set, then Kickstarter gets 5% of the money raised.
Over $20 million has been raised through Kickstarter so far. We estimate Kickstarter will generate approximately $2 million in revenue this year alone.
What makes for a good Kickstarter project? We've skimmed through Kickstarter's many projects and picked out 10 biggest successes and tried to figure out what works.
The number one thing we see: Make sure you're actually giving something to people. Especially a physical object. The number two thing: Make sure you're targeting a passionate crowd at the right time.
1. "Save Blue Like Jazz" raised more money than any other project
"Save Blue Like Jazz" raised $345,992 to save a movie project that was going to be canceled. The book "Blue like Jazz," was turned into a film, but ran out of funding before it could hit the big screen. Supporters started a Kickstarter project to get it going and created what they call, "the largest crowd-sourced creative project ever."
What was the key? It appears the key here was that it was a project with millions of fans already built in.
Incentives? The minimal donation landed you some goodies like posters, and script pages. The director of the movie is calling people to personally thank them for donating.
To Learn More Click Here
New York startup Kickstarter is one of the most interesting startups out there.
It provides a platform for people to raise money for projects. If people hit the target they set, then Kickstarter gets 5% of the money raised.
Over $20 million has been raised through Kickstarter so far. We estimate Kickstarter will generate approximately $2 million in revenue this year alone.
What makes for a good Kickstarter project? We've skimmed through Kickstarter's many projects and picked out 10 biggest successes and tried to figure out what works.
The number one thing we see: Make sure you're actually giving something to people. Especially a physical object. The number two thing: Make sure you're targeting a passionate crowd at the right time.
1. "Save Blue Like Jazz" raised more money than any other project
"Save Blue Like Jazz" raised $345,992 to save a movie project that was going to be canceled. The book "Blue like Jazz," was turned into a film, but ran out of funding before it could hit the big screen. Supporters started a Kickstarter project to get it going and created what they call, "the largest crowd-sourced creative project ever."
What was the key? It appears the key here was that it was a project with millions of fans already built in.
Incentives? The minimal donation landed you some goodies like posters, and script pages. The director of the movie is calling people to personally thank them for donating.
To Learn More Click Here
Friday, November 26, 2010
Help Make the Rap Guide to Evolution DVD More Awesome Posted by David Bruggeman on November 22, 2010
Baba Brinkman just announced a crowdfunding challenge for the upcoming DVD for his Rap Guide to Evolution. The videos for the songs are being filmed – a grant from the Wellcome Trust is enough to support basic production costs. But to be an effective educational (and entertainment) tool, the videos could use more in the way of animations, multimedia, and other material.
Given the groundswell of support for Brinkman and his science-themed projects, he is appealing for folks to essentially pre-purchase the DVD. But it’s a bit more involved than that. His crowdfunding challenge is to raise 10 thousand pounds in 60 days (by January 21). Donors can contribute at different levels, and will get the following depending on their donation:
As of this posting, Brinkman’s challenge has already gathered nearly fifteen hundred pounds (it’ll go over that amount once my investment clears), with an average donation just south of thirty pounds. Since both the Rap Guide to Evolution and the Rap Guide to Human Nature are available for free, a healthy donation to this project seems a reasonable course of action to support a talented fellow seeking to support science.
To donate you’ll have to register with Crowdfunder, and for those outside the U.K., Paypal can handle the currency differences. There will be a small Paypal fee. Should Brinkman not make the goal, all money will be refunded. Since the videos are shot and edited with the Wellcome Trust grant, all that will be lost is what will boost the videos from cool to awesome.
About Baba Brinkman
Baba Brinkman is a former tree-planter who worked in the Rocky Mountains of Canada every summer for more than ten years, personally planting over one million trees. He is also a scholar with a Masters in Medieval and Renaissance English Literature. His thesis drew parallels between the worlds of hip-hop music and literary poetry. After graduating in 2003, Baba began his career as a rap troubadour.
Since 2004 Baba has toured his award-winning hip-hop theatre shows, “The Rap Canterbury Tales”, “The Rap Guide to Evolution” and “The Rebel Cell” (with MC Dizraeli) to dozens of cities around the world. “The Rap Guide to Evolution” won the Scotsman Fringe First Award in Edinburgh 2009, and is set to transfer to New York in the Spring of 2011. Baba is also the founder and president of the independent music label, Lit Fuse Records. When he is not on tour, he resides in his hometown of Vancouver.
More information about Baba can be found at www.babasword.com
To Learn More Click Here
Crowdfunding: Charles Armstrong from Trampoline Systems on the practicalities of crowdfunding.
Reprinted from http://www.nicksmith.co.uk/blog/2010/02/01/crowdfunding/
On Friday I went to Minibar, the first to present was Charles Armstrong from Trampoline Systems on the practicalities of crowdfunding. These are my notes, they may not make complete sense, although they are reworked somewhat from what I took at the time. My advice: there may be inaccuracies and typos here, so if it’s important check, as always be especially careful with legal info. Enjoy :)
Crowdfunding works in a variety of ways but is difficult to set up legally. A research project for the Open Society Institute couldn’t come up with a way for it to work.
Charles describes himself as a ‘corrupted social scientist’. His talk was designed to cover how to finance ventures. There are four conventional ways: venture capital, angel investors, family loans and loan finance.
Loan finance is under used. There’s a fixation on venture capital (VC) in the tech world. VC is problematic. Venture capitalists insist on preference stock, different from ordinary stock. They usually want extra rights and extra protections, they’re taking a risk yes, but anyone else investing in your business do to, for example friends and family. Why should venture capitalist’s be different?
Venture capitalists will lure you with high valuations for your business. But they completely screw with your corporate governance and articles. For Trampoline their articles became 12 times longer once venture capitalists became involved. You also suddenly have to hire lawyers, of course there are bills associated. Venture capitalists also use stealth control.
There are all kinds of agendas that are connected with VC fund life-cycles. You’re tied into the life-cycle of the VC fund. He’s not saying venture capitalists are bad, but there’s not enough discussion of their drawbacks. The recession and what’s happened over the last couple of years has had affects that some people think means VC funding won’t exist in the same format in five years time. They’re investing in fewer and larger deals. They’re focussing on seed and post-breakeven businesses. This leaves a large swathe of businesses not covered by VC.
What is crowdfunding?
The name comes by applying the concept of ‘crowdsourcing’ to that of money. It’s based around using the internet to build a much larger group of private investors. It’s a shift to a much more transparent form of investment (normal VC is very secretive). With crowdfunding everything goes into the public domain.
The concept of crowdfunding came from the early years of the 90s. The first wave started with the music industry. Sellaband.com and BandStocks.com are examples of crowdfunding. An artist puts themselves on the site and fans get a share of the proceeds if they make money. This works well in the film and music sectors where fan bases already exist.
The second wave (of which KickStarter.com in New York is one) was in the non-profit world.
The third wave was based on journalism. Conventional journalism was in decline. Spot.us is a site where journalists pitch ideas.
Trampoline started with VC funding and raised $6m in 2007. They realised it wasn’t a good time to bring in VC funding so they looked for alternative ways to do it. They spoke to their solicitors about crowdfunding, but lawyers don’t like innovation. The legal sector is based on precedent, their solicitors simply said crowdfunding is illegal.
Instead, they found a lawyer who wasn’t dismissive. Francis Irvine does work with the Open Rights Group, he likes innovation. After two months of scratching their heads, they found a legal way to do crowdfunding. They set themselves a £1m target to raise within a year. They’re doing it in a few tranches, they’ve closed their first and the second will close in the Spring.
This method of funding is not mainstream yet, but it will be. However it’s not for the faint hearted.
Benefits
They’re not victims to the VC fund life-cycle. They have a much bigger pool of influential people (investors) that will make them successful (Trampoline is only just seeing the benefits of this). Some would think having so many investors/voices would be a nightmare? However, arguing with investors is good, it challenges your ideas.
It’s not widely known, but the UK Government runs an Enterprise Investment Scheme which is unbelievably good. Wealthy people get 20% written off their tax bill and are covered for 60% of ther investment if the company goes bust.
The FSA is a nightmare though. If you get it wrong you are personally liable (not the company). It’s not easy to get started, you need to work your networks hard, do due diligence and speak to a lot of people. The Trampoline website has a few case studies. However you won’t find any content inviting people to invest on their site, they have to stay within the law.
Questions
Q. There seems to be a bias towards rich people. In the FSA regulations, if you’re seeking investment you can’t advertise it to the world (this protects the grannys). The FSA says you need to be a high-net-worth individual or a sophisticated investor to do it, but Charles how do you do it?
A. It’s illegal with a private company to incite people to invest. However, journalists can say anything they want. Journalists are your friends. You still need a website, but Trampoline’s is full of case studies. There are still exclusions: high-net-worth means £300,000 in net assets not including their main residence. You can tell these people or someone who works in the finance industry (a ‘sophisticated’ investor) that you’re looking for investment. But even if you tell them, you still can’t give them a business plan. You have to set up a labyrinthine system to get them to the next step towards investment. Sellaband and BandStocks are not selling equity, trampoline are the first to do this.
Q. What type of person are we talking about as an investor? Who invests in you?
A. There are two categories. Either 3rd or 4th levels down in their network or friends (friends of friends). Also, people who’ve read about them in TechCrunch or some other publication, they’re often semi professional tech investors.
We traditionally assume that PLCs float their shares on the stock exchange, really they can give their shares to anyone, Charles is looking at ways to reverse engineer a public company to be crowdfunded.
To Learn More Click Here
On Friday I went to Minibar, the first to present was Charles Armstrong from Trampoline Systems on the practicalities of crowdfunding. These are my notes, they may not make complete sense, although they are reworked somewhat from what I took at the time. My advice: there may be inaccuracies and typos here, so if it’s important check, as always be especially careful with legal info. Enjoy :)
Crowdfunding works in a variety of ways but is difficult to set up legally. A research project for the Open Society Institute couldn’t come up with a way for it to work.
Charles describes himself as a ‘corrupted social scientist’. His talk was designed to cover how to finance ventures. There are four conventional ways: venture capital, angel investors, family loans and loan finance.
Loan finance is under used. There’s a fixation on venture capital (VC) in the tech world. VC is problematic. Venture capitalists insist on preference stock, different from ordinary stock. They usually want extra rights and extra protections, they’re taking a risk yes, but anyone else investing in your business do to, for example friends and family. Why should venture capitalist’s be different?
Venture capitalists will lure you with high valuations for your business. But they completely screw with your corporate governance and articles. For Trampoline their articles became 12 times longer once venture capitalists became involved. You also suddenly have to hire lawyers, of course there are bills associated. Venture capitalists also use stealth control.
There are all kinds of agendas that are connected with VC fund life-cycles. You’re tied into the life-cycle of the VC fund. He’s not saying venture capitalists are bad, but there’s not enough discussion of their drawbacks. The recession and what’s happened over the last couple of years has had affects that some people think means VC funding won’t exist in the same format in five years time. They’re investing in fewer and larger deals. They’re focussing on seed and post-breakeven businesses. This leaves a large swathe of businesses not covered by VC.
What is crowdfunding?
The name comes by applying the concept of ‘crowdsourcing’ to that of money. It’s based around using the internet to build a much larger group of private investors. It’s a shift to a much more transparent form of investment (normal VC is very secretive). With crowdfunding everything goes into the public domain.
The concept of crowdfunding came from the early years of the 90s. The first wave started with the music industry. Sellaband.com and BandStocks.com are examples of crowdfunding. An artist puts themselves on the site and fans get a share of the proceeds if they make money. This works well in the film and music sectors where fan bases already exist.
The second wave (of which KickStarter.com in New York is one) was in the non-profit world.
The third wave was based on journalism. Conventional journalism was in decline. Spot.us is a site where journalists pitch ideas.
Trampoline started with VC funding and raised $6m in 2007. They realised it wasn’t a good time to bring in VC funding so they looked for alternative ways to do it. They spoke to their solicitors about crowdfunding, but lawyers don’t like innovation. The legal sector is based on precedent, their solicitors simply said crowdfunding is illegal.
Instead, they found a lawyer who wasn’t dismissive. Francis Irvine does work with the Open Rights Group, he likes innovation. After two months of scratching their heads, they found a legal way to do crowdfunding. They set themselves a £1m target to raise within a year. They’re doing it in a few tranches, they’ve closed their first and the second will close in the Spring.
This method of funding is not mainstream yet, but it will be. However it’s not for the faint hearted.
Benefits
They’re not victims to the VC fund life-cycle. They have a much bigger pool of influential people (investors) that will make them successful (Trampoline is only just seeing the benefits of this). Some would think having so many investors/voices would be a nightmare? However, arguing with investors is good, it challenges your ideas.
It’s not widely known, but the UK Government runs an Enterprise Investment Scheme which is unbelievably good. Wealthy people get 20% written off their tax bill and are covered for 60% of ther investment if the company goes bust.
The FSA is a nightmare though. If you get it wrong you are personally liable (not the company). It’s not easy to get started, you need to work your networks hard, do due diligence and speak to a lot of people. The Trampoline website has a few case studies. However you won’t find any content inviting people to invest on their site, they have to stay within the law.
Questions
Q. There seems to be a bias towards rich people. In the FSA regulations, if you’re seeking investment you can’t advertise it to the world (this protects the grannys). The FSA says you need to be a high-net-worth individual or a sophisticated investor to do it, but Charles how do you do it?
A. It’s illegal with a private company to incite people to invest. However, journalists can say anything they want. Journalists are your friends. You still need a website, but Trampoline’s is full of case studies. There are still exclusions: high-net-worth means £300,000 in net assets not including their main residence. You can tell these people or someone who works in the finance industry (a ‘sophisticated’ investor) that you’re looking for investment. But even if you tell them, you still can’t give them a business plan. You have to set up a labyrinthine system to get them to the next step towards investment. Sellaband and BandStocks are not selling equity, trampoline are the first to do this.
Q. What type of person are we talking about as an investor? Who invests in you?
A. There are two categories. Either 3rd or 4th levels down in their network or friends (friends of friends). Also, people who’ve read about them in TechCrunch or some other publication, they’re often semi professional tech investors.
We traditionally assume that PLCs float their shares on the stock exchange, really they can give their shares to anyone, Charles is looking at ways to reverse engineer a public company to be crowdfunded.
To Learn More Click Here
Wednesday, November 24, 2010
Alms for the Creative: Crowdfunding means passing on traditional funding to pass the collection plate
Move to change securities regulations could mean big changes in the micro-funding model
by Josh Gross - Boise Weekly -
Travis Swartz wanted to make a movie, but he didn't have any money. And while the Boise resident had made zero-budget films before, he wanted this one to be different and that meant he needed some dough.
He could have pounded the pavement shopping his script about an unloved janitor with eight days to live to aspiring producers and so-and-so's rich uncle looking for the $25,000 needed, but Swartz didn't feel right about it.
"If we're all being honest with independent film, it's not a smart investment. It's an investment of love," Swartz said.
Instead, he chose to delve into the growing world of crowdfunding, where small, individual contributions provide a new way of getting projects off the ground, ranging from independent films or music to a hobbyist's attempt to create nuclear fusion in his Brooklyn garage.
Though there are several different variations on the crowdfunding model, the idea is to use the web to pitch an idea and collect small donations to fund it. Essentially, a project manager --an artist, filmmaker, journalist, scientist, etc.--creates a project profile and pitch on a crowdfunding site--like Kickstarter or Indiegogo--then uses social networking to solicit small contributions from a large number of people. In return, contributors receive non-monetary gifts relative to the amount of their contribution.
"When I first started looking into crowdfunding I was uncomfortable with it because it seemed like handing out the hat for nothing, but I discovered that's not what it's really about," Swartz said. "It's like pay-in-advance. You get something in return."
For donating to Swartz's film, Nobody Cares, contributors would be rewarded with what amounted to tokens of appreciation. A smaller donation would get a signed DVD, where a larger donation would guarantee a luxury private screening and the donor's name in the credits as a financier. Essentially, Swartz was pre-selling tickets to and copies of a movie he hadn't actually made yet.
From a promotional standpoint, Swartz's crowdfunding campaign would have made the audience personally invested in the film's progress in the same way comic book fans obsessively follow every step of film adaptations.
"It's really important to build an audience into the filmmaking process," Swartz said. "The old way is to send [a film] out to festivals and hope it builds an audience. Crowdfunding is really a process of not just raising the money, but raising the money from the audience that is really going to appreciate it."
The combination of the promotional and financial benefits of crowdfunding may be so successful, in fact, that even established institutions with solid donor bases are looking to augment their budgets by passing the virtual plate. In Boise, for example, Boise Contemporary Theater recently used Kickstarter to produce its 2010-2011 season opener, The Krumblin Foundation.
And while members of Boise's artistic community are piling on the crowdfunding gravy train to cover the cost of albums, plays and even teaching expeditions to Kenya, what many don't realize is that they're also firing the opening shots in what could be a major revamping of the laws that dictate how funding is done in this country, from the arts to small business.
As things stand now, crowdfunding contributors are sidestepping longstanding laws of the land. They are considered "donors" and not "investors" and can only receive non-monetary gifts. If they were to benefit financially from their donation, it would be in direct violation of the Securities and Exchange Act of 1933, the law passed to prevent the sort of practices that brought on the stock market crash of 1929 and the Great Depression.
The act "Requires that any offer or sale of securities using the means and instrumentalities of interstate commerce be registered pursuant to the 1933 Act, unless an exemption from registration exists under the law."
No exemption exists for the type of small-scale projects crowdfunding is typically used for. Anyone who wants to offer financial returns must register with the SEC, a process often more complicated and expensive than the project itself.
"What those laws were protecting against was the oil speculators knocking on widows and doors," said Danae Ringlemann, co-founder and CFO of IndieGogo, a crowdfunding site that operates in more than 130 countries. "But that was an age when communication was literally knocking on doors. You had to get physical reports on how projects were running."
According to Ringlemann, the transparency brought by the Internet is the single biggest change since the laws governing these transactions were written. And though the Internet has provided tools to more effectively assess risk and track projects, the laws are still strictly enforced.
"We're not dealing with big amounts of money here," said Tim Kappel, a Nashville-based entertainment lawyer who specializes in crowdfunding. "There are ways to structure in protections for the creative investor. Meanwhile, you've got the stock market, which is a big roulette table and people treat it like a casino or a race track."
Kappel published a paper in the Loyola of Los Angeles Entertainment Law Review, explaining the differences and problems between what he calls "pure patronage" and "patronage-plus" models--the "plus" being financial returns.
"The U.S. market poses unique and significant legal obstacles--specifically laws governing gambling and the sale of securities--that could derail any effort to import a patronage-plus ex ante crowdfunding system for the recording industry," Kappel wrote.
Kappel translated that from law person to lay person.
"When you start offering a share of the profits that are created through the sale of distribution of the product, then you're dealing with investment laws," said Kappel. "If someone wanted to offer more than a tote bag, if someone wants to offer an investment, they can't. They would certainly run afoul of SEC laws. And that has to go through a ton of regulation as a public offering."
Aside from contributors' inability to make money, this creates an odd loophole in the process. Since contributors aren't legally investors, that also means they don't have any ownership or control. And while this is certainly an arrangement artists prefer, it also means that there's no back-end protection for contributors. If an artist doesn't follow through on a project, there isn't much that can be done about it. While some crowdfunding websites hold the money as pledges of support until a goal is reached, others do not, and almost universally, there are no guarantees that a project that has been funded will reach fruition. Theoretically, project managers are legally culpable, but since the average contribution hovers around $25, the chances of a lawsuit from contributors are minimal.
It's what Kappel calls the difference between a legally enforceable right and practically enforceable right.
In Kappel's paper, he cites European crowdfunding websites such as Bandstocks, which allows bands to sell 10-pound shares in their album projects. Bandstocks, however, provides back-end protection by suing on behalf of contributors should a project get dropped.
However, Ringlemann said dealing with a donor unhappy about incomplete projects hasn't yet been a problem for Indiegogo.
"It's always possible someone can take the money and run off to Bermuda," she said. "But the probability is incredibly low."
Ringlemann said the two things that make it unlikely are human nature and transparency provided by the Internet.
"No one raises money from 100 percent strangers," she said. "Crowdfunding can be a way to raise money from friends and family more quickly."
Ringlemann cited a crowdfunding campaign to buy a new computer for a student as a birthday present. Her friends all pitched in a few bucks and she had enough for a new computer within several days.
Ringlemann said in a typical campaign, initial donations by friends and family serve as a vetting process. People aren't quick to financially cross those closest to them. And while strangers may eventually donate to a campaign, it's unlikely to reach that point if friends and family aren't willing to risk a few dollars first. It's part of what Ringlemann calls a "social score."
"Right now, we're judged by a credit score," she said. "But over time, I think that is going to adapt to include how good you are at following through on things like Facebook and Twitter as a way of further assessing your credibility. When you see people with great followings on Twitter, they have them because they're doing good work."
Ringlemann said a crowdfunding scam is hard to run online simply because there are so many options, and a project manager's social score can be easily gauged by prior successes and failures listed on the project page.
That transparency is why the process has such appeal to both project managers and contributors and has been successfully employed for such a wide variety of projects.
Longtime BW columnist Ted Rall even used crowdfunding to raise $25,999 for his recent expedition to Afghanistan to cover the research costs of a new book. The money covered one month's expenses--an amount Rall claimed in his pitch video would normally prohibit reporters not backed by large corporate sponsors from making the trip. He and his colleagues, cartoon journalist Matt Bors and web cartoonist Steven L. Cloud, claimed to be the only unembedded reporters operating in the nation at the time.
For their part, Rall's 211 backers received, or will receive, gifts like signed copies of his book, original sketches and thank yous in the book's liner notes. One contributor bought dinner and drinks with the author for a cool $1,000.
Since crowdfunding appears to be an effective way to raise capital, small businesses are looking at how it could be used to their benefit. But under current SEC laws, such a venture would be illegal. That's why a growing movement is trying to change the law.
"Like everyone, I have more ideas than I pursue. And for as along as I can remember, I thought there should be a way for people to invest in me, in others, with small amounts of money. Not just as a means to do it, but as external motivation," said Paul Spinrad, project editor for Make magazine, who is leading the charge to change the SEC laws and make crowdfunding easier.
He tried to put that into action with the Premises Premises website, which was a rudimentary attempt at crowdfunding. Spinrad said it failed because the site didn't frame ideas well enough. Since then, more successful crowdfunding sites have incorporated the best elements of social networking.
When he learned about Kickstarter, Spinrad wrote several guest opinions on the popular blog boingboing.net about the potential of investing in intellectual property. People seemed interested, so he took that energy and decided to see what could be done with it.
He discovered that the SEC accepts public petitions, which are posted on the SEC website for public comment.
Spinrad decided to levy the crowd to push the SEC to write an exemption to the Securities and Exchange Act for investments of less than $100 using the comment process.
"Even if just 50 people submit comments, it's going to be way more than they've dealt with before," said Spinrad. "It's a backwater."
The exemption wouldn't cost anything, but it could open new ways for investors to make money.
"Securities deregulation, people are down on it right now," Spinrad said. "And generally I am as well, but this is not high-level insider corporate gaming. This is the kind of deregulation that a leftie can love."
Spinrad acknowledges that comment-bombing a site could backfire, but he feels the comment process is in line with the principles of crowdfunding, making it the ideal method.
"I don't want to antagonize the SEC," Spinrad said. "This is to inject it into public dialog. If they don't want to do that, that's their bad. But if it's a proposal worth consideration, then they should consider it."
It seems to be working. His campaign has levied 39 comments so far, including several from CEOs and an in-depth analysis of the exemptions potential from an associate professor of finance at Georgetown University. The American Sustainable Business Council, a prominent lobbying group, picked his cause as one of its official campaigns, and Spinrad even got an unsolicited letter from the White House Office of Science and Technology Policy encouraging him to attend and push for the exemption at an annual open forum the SEC holds to meet with small business leaders.
While Spinrad sees the exemption as a way for artists to fund projects, Jenny Kassan, co-director of the California-based Sustainable Economies Law Center--who is helping Spinrad with the petition--sees it from a different perspective. For her, this is the only way small businesses will ever be able to get a fair shake.
"If you care at all about supporting small, locally owned businesses in your community, this is a crucial issue," Kassan said. She contends that without it, large corporations will always have an advantage over mom-and-pop stores.
"A lot of people don't understand securities regulations in the first place, so they don't understand why we need to do this," she said. "But the more people realize how hard it is for a small business to raise money legally, and that people are not allowed to go out and ask their friends or their community for an investment, the more excited they get. Especially now, in this climate, when businesses are suffering."
In Kassan's view, the idea that people can freely stroll around dropping money on the lottery or in a casino, but that the government won't let them risk it on an investment is absurd.
"Let's leave it up to the people," said Kassan. "It's their $100. They're not going to die if they lose it."
Kassan sent a nine-page letter to the SEC in late June outlining the proposed changes in detail, including several caveats to ensure it isn't exploited.
No. 1: No purchaser may invest more than $100.
No. 2: The aggregate offering is limited to $100,000 maximum.
No. 3: Offerors must be individuals. Offerors may not be entities and must be United States citizens or legal residents.
No. 4: No offeror may have more than one offering open at any time.
No. 5: All offering materials and communications must contain a disclaimer clearly stating the possibility of total loss of the investment and the necessity of careful evaluation of each offeror's trustworthiness by the individual purchaser.
The letter also includes detailed descriptions of the benefits Kassan expects to see as justification.
"It's a totally crazy long-shot," she said. "Especially in this environment. Unfortunately, a lot of really bad players have made people really nervous about doing anything that would loosen up the rules at all.
"We wouldn't do it if we didn't think there wasn't a chance," Kassan added. "It's a very reasonable request."
Even if Ringlemann and IndieGogo didn't stand to benefit from the potential exemption, she said she'd support it. One of the things that drove her to start IndieGogo was being the child of small business owners and watching them refinance their house and cover business expenses with credit cards for 30 years.
"Ever year, 7 million ventures start," said Ringlemann. The average outlay is $45,000. But the average need is only $4,500. Most businesses are something like a hot dog cart. So people are financing it themselves with credit cards. If there was an easy way for people to raise 10 grand, then that could be the bread and butter of America.
According to Ringlemann, Kassan and Spinrad, a SEC exemption on small-scale investments is that way.
"There are two ways to protect people," Ringlemann said. "Require companies to do risk disclosure or cap investments. Second [option] wasn't used in 1933 because it was too hard to track. The Internet has changed that. So the question becomes what is the appropriate level? $100? $1,000?"
Spinrad, the arts enthusiast, sits at the $100-end of the spectrum. Investors and financiers are pushing for a larger, and therefore potentially profitable, cap.
But even if all the legal minutiae is resolved, there's still the question of why anyone would fork over their hard-earned $20 to someone else's crazy idea rather than their own.
For Megan Egbert, a Boise librarian, it started out as helping her friend Gregory Bayne with his film Driven.
"The platform allows someone not only to ask for money, but to show what they're doing," she said. "Plus, it makes it not awkward if you want to refuse."
Bayne campaigned to fund his soon-to-be-released documentary about mixed-martial arts fighter Jens Pulver getting ready for his underdog shot at the big-time. His effort has been used as a model of how to use crowdfunding.
Bayne first tried to raise money the traditional way, but he started running out of time before Pulver's main event. So Bayne made a trailer and put it on Youtube.
The trailer got more than 10,000 views in one week, which proved there was an audience, so he decided to try crowdfunding. His goal was $25,000 in 20 days, but he ended up with $27,000 and a fanbase itching to see the film.
Bayne was also able to use the contributors as a test audience, sending out clips and rough cuts to see how people responded.
After contributing to Driven, Egbert became curious and looked for other causes to support, giving to several including Travis Swartz's film.
"I wouldn't give money to someone if I had doubts about it. I've donated pretty small amounts to people, so if someone takes my $25 and runs I'm not going to be that worried about it," she said.
Paul Carew, another Boisean who contributed to Bayne and Swartz had similar sentiments. He was friends with both of them, but he also appreciated the efficiency of the process.
"I'm a business owner and a very busy person," said Carew. "In the situations where I used Kickstarter, it was a gut decision, and I knew I could plug in a credit card in 30 seconds and be done with it."
While the ease of donating to a project is attractive to donors, it's also drawing the attention of established organizations, which see it as a way to reach out to a new funding pool. Boise Contemporary Theater's Artistic Director Matthew Cameron Clark said in an age of declining corporate contributions, The Krumblin Foundation wouldn't have been possible without the campaign.
"New work costs more," he said. "Time for development, commissioning, fees, etc. We had to find new way to fund additional expenses."
Those new ways were to offer gifts ranging from free drinks to signed scripts to donors' names being written into the script (only $1,000 or more). The campaign was so well received that BCT raised $12,645 from 178 backers.
Still, crowdfunding isn't always the answer.
After only a few weeks, Swartz decided to cancel his Kickstarter campaign to fund Nobody Cares.
"With Kickstarter, I found I was spending my pre-production time being a fundraiser as opposed to being a filmmaker," Swartz said. "I think if I'd done it earlier and had a different plan for it, it would have worked out well. But I started a bit late, and I ended up spending exponential time on it because you have to hit that goal by a certain date."
Instead, he set up a PayPal account on his own website that people could use to contribute, and found a partner who took care of many of the equipment costs, making it possible to start production. Swartz wrapped shooting in early October and is in the months-long editing process.
To complete the project, he said he will need to continue raising funds, and though contributions have trickled off since the initial push, Swartz feels it will pick up again once he's cut enough of the film to show people what they're paying for.
"[Contributing] seems more a reaction to how much energy people see you putting into the project," Swartz said. "When they see that you have something, as opposed to the promise that you might have something, it has more impact."
At last report, Swartz had raised $3,100, far short of his initial goal of $25,000. But he's not concerned.
"I'm shooting the movie," he said. "That's the most important part."
To Learn More Click Here
by Josh Gross - Boise Weekly -
Travis Swartz wanted to make a movie, but he didn't have any money. And while the Boise resident had made zero-budget films before, he wanted this one to be different and that meant he needed some dough.
He could have pounded the pavement shopping his script about an unloved janitor with eight days to live to aspiring producers and so-and-so's rich uncle looking for the $25,000 needed, but Swartz didn't feel right about it.
"If we're all being honest with independent film, it's not a smart investment. It's an investment of love," Swartz said.
Instead, he chose to delve into the growing world of crowdfunding, where small, individual contributions provide a new way of getting projects off the ground, ranging from independent films or music to a hobbyist's attempt to create nuclear fusion in his Brooklyn garage.
Though there are several different variations on the crowdfunding model, the idea is to use the web to pitch an idea and collect small donations to fund it. Essentially, a project manager --an artist, filmmaker, journalist, scientist, etc.--creates a project profile and pitch on a crowdfunding site--like Kickstarter or Indiegogo--then uses social networking to solicit small contributions from a large number of people. In return, contributors receive non-monetary gifts relative to the amount of their contribution.
"When I first started looking into crowdfunding I was uncomfortable with it because it seemed like handing out the hat for nothing, but I discovered that's not what it's really about," Swartz said. "It's like pay-in-advance. You get something in return."
For donating to Swartz's film, Nobody Cares, contributors would be rewarded with what amounted to tokens of appreciation. A smaller donation would get a signed DVD, where a larger donation would guarantee a luxury private screening and the donor's name in the credits as a financier. Essentially, Swartz was pre-selling tickets to and copies of a movie he hadn't actually made yet.
From a promotional standpoint, Swartz's crowdfunding campaign would have made the audience personally invested in the film's progress in the same way comic book fans obsessively follow every step of film adaptations.
"It's really important to build an audience into the filmmaking process," Swartz said. "The old way is to send [a film] out to festivals and hope it builds an audience. Crowdfunding is really a process of not just raising the money, but raising the money from the audience that is really going to appreciate it."
The combination of the promotional and financial benefits of crowdfunding may be so successful, in fact, that even established institutions with solid donor bases are looking to augment their budgets by passing the virtual plate. In Boise, for example, Boise Contemporary Theater recently used Kickstarter to produce its 2010-2011 season opener, The Krumblin Foundation.
And while members of Boise's artistic community are piling on the crowdfunding gravy train to cover the cost of albums, plays and even teaching expeditions to Kenya, what many don't realize is that they're also firing the opening shots in what could be a major revamping of the laws that dictate how funding is done in this country, from the arts to small business.
As things stand now, crowdfunding contributors are sidestepping longstanding laws of the land. They are considered "donors" and not "investors" and can only receive non-monetary gifts. If they were to benefit financially from their donation, it would be in direct violation of the Securities and Exchange Act of 1933, the law passed to prevent the sort of practices that brought on the stock market crash of 1929 and the Great Depression.
The act "Requires that any offer or sale of securities using the means and instrumentalities of interstate commerce be registered pursuant to the 1933 Act, unless an exemption from registration exists under the law."
No exemption exists for the type of small-scale projects crowdfunding is typically used for. Anyone who wants to offer financial returns must register with the SEC, a process often more complicated and expensive than the project itself.
"What those laws were protecting against was the oil speculators knocking on widows and doors," said Danae Ringlemann, co-founder and CFO of IndieGogo, a crowdfunding site that operates in more than 130 countries. "But that was an age when communication was literally knocking on doors. You had to get physical reports on how projects were running."
According to Ringlemann, the transparency brought by the Internet is the single biggest change since the laws governing these transactions were written. And though the Internet has provided tools to more effectively assess risk and track projects, the laws are still strictly enforced.
"We're not dealing with big amounts of money here," said Tim Kappel, a Nashville-based entertainment lawyer who specializes in crowdfunding. "There are ways to structure in protections for the creative investor. Meanwhile, you've got the stock market, which is a big roulette table and people treat it like a casino or a race track."
Kappel published a paper in the Loyola of Los Angeles Entertainment Law Review, explaining the differences and problems between what he calls "pure patronage" and "patronage-plus" models--the "plus" being financial returns.
"The U.S. market poses unique and significant legal obstacles--specifically laws governing gambling and the sale of securities--that could derail any effort to import a patronage-plus ex ante crowdfunding system for the recording industry," Kappel wrote.
Kappel translated that from law person to lay person.
"When you start offering a share of the profits that are created through the sale of distribution of the product, then you're dealing with investment laws," said Kappel. "If someone wanted to offer more than a tote bag, if someone wants to offer an investment, they can't. They would certainly run afoul of SEC laws. And that has to go through a ton of regulation as a public offering."
Aside from contributors' inability to make money, this creates an odd loophole in the process. Since contributors aren't legally investors, that also means they don't have any ownership or control. And while this is certainly an arrangement artists prefer, it also means that there's no back-end protection for contributors. If an artist doesn't follow through on a project, there isn't much that can be done about it. While some crowdfunding websites hold the money as pledges of support until a goal is reached, others do not, and almost universally, there are no guarantees that a project that has been funded will reach fruition. Theoretically, project managers are legally culpable, but since the average contribution hovers around $25, the chances of a lawsuit from contributors are minimal.
It's what Kappel calls the difference between a legally enforceable right and practically enforceable right.
In Kappel's paper, he cites European crowdfunding websites such as Bandstocks, which allows bands to sell 10-pound shares in their album projects. Bandstocks, however, provides back-end protection by suing on behalf of contributors should a project get dropped.
However, Ringlemann said dealing with a donor unhappy about incomplete projects hasn't yet been a problem for Indiegogo.
"It's always possible someone can take the money and run off to Bermuda," she said. "But the probability is incredibly low."
Ringlemann said the two things that make it unlikely are human nature and transparency provided by the Internet.
"No one raises money from 100 percent strangers," she said. "Crowdfunding can be a way to raise money from friends and family more quickly."
Ringlemann cited a crowdfunding campaign to buy a new computer for a student as a birthday present. Her friends all pitched in a few bucks and she had enough for a new computer within several days.
Ringlemann said in a typical campaign, initial donations by friends and family serve as a vetting process. People aren't quick to financially cross those closest to them. And while strangers may eventually donate to a campaign, it's unlikely to reach that point if friends and family aren't willing to risk a few dollars first. It's part of what Ringlemann calls a "social score."
"Right now, we're judged by a credit score," she said. "But over time, I think that is going to adapt to include how good you are at following through on things like Facebook and Twitter as a way of further assessing your credibility. When you see people with great followings on Twitter, they have them because they're doing good work."
Ringlemann said a crowdfunding scam is hard to run online simply because there are so many options, and a project manager's social score can be easily gauged by prior successes and failures listed on the project page.
That transparency is why the process has such appeal to both project managers and contributors and has been successfully employed for such a wide variety of projects.
Longtime BW columnist Ted Rall even used crowdfunding to raise $25,999 for his recent expedition to Afghanistan to cover the research costs of a new book. The money covered one month's expenses--an amount Rall claimed in his pitch video would normally prohibit reporters not backed by large corporate sponsors from making the trip. He and his colleagues, cartoon journalist Matt Bors and web cartoonist Steven L. Cloud, claimed to be the only unembedded reporters operating in the nation at the time.
For their part, Rall's 211 backers received, or will receive, gifts like signed copies of his book, original sketches and thank yous in the book's liner notes. One contributor bought dinner and drinks with the author for a cool $1,000.
Since crowdfunding appears to be an effective way to raise capital, small businesses are looking at how it could be used to their benefit. But under current SEC laws, such a venture would be illegal. That's why a growing movement is trying to change the law.
"Like everyone, I have more ideas than I pursue. And for as along as I can remember, I thought there should be a way for people to invest in me, in others, with small amounts of money. Not just as a means to do it, but as external motivation," said Paul Spinrad, project editor for Make magazine, who is leading the charge to change the SEC laws and make crowdfunding easier.
He tried to put that into action with the Premises Premises website, which was a rudimentary attempt at crowdfunding. Spinrad said it failed because the site didn't frame ideas well enough. Since then, more successful crowdfunding sites have incorporated the best elements of social networking.
When he learned about Kickstarter, Spinrad wrote several guest opinions on the popular blog boingboing.net about the potential of investing in intellectual property. People seemed interested, so he took that energy and decided to see what could be done with it.
He discovered that the SEC accepts public petitions, which are posted on the SEC website for public comment.
Spinrad decided to levy the crowd to push the SEC to write an exemption to the Securities and Exchange Act for investments of less than $100 using the comment process.
"Even if just 50 people submit comments, it's going to be way more than they've dealt with before," said Spinrad. "It's a backwater."
The exemption wouldn't cost anything, but it could open new ways for investors to make money.
"Securities deregulation, people are down on it right now," Spinrad said. "And generally I am as well, but this is not high-level insider corporate gaming. This is the kind of deregulation that a leftie can love."
Spinrad acknowledges that comment-bombing a site could backfire, but he feels the comment process is in line with the principles of crowdfunding, making it the ideal method.
"I don't want to antagonize the SEC," Spinrad said. "This is to inject it into public dialog. If they don't want to do that, that's their bad. But if it's a proposal worth consideration, then they should consider it."
It seems to be working. His campaign has levied 39 comments so far, including several from CEOs and an in-depth analysis of the exemptions potential from an associate professor of finance at Georgetown University. The American Sustainable Business Council, a prominent lobbying group, picked his cause as one of its official campaigns, and Spinrad even got an unsolicited letter from the White House Office of Science and Technology Policy encouraging him to attend and push for the exemption at an annual open forum the SEC holds to meet with small business leaders.
While Spinrad sees the exemption as a way for artists to fund projects, Jenny Kassan, co-director of the California-based Sustainable Economies Law Center--who is helping Spinrad with the petition--sees it from a different perspective. For her, this is the only way small businesses will ever be able to get a fair shake.
"If you care at all about supporting small, locally owned businesses in your community, this is a crucial issue," Kassan said. She contends that without it, large corporations will always have an advantage over mom-and-pop stores.
"A lot of people don't understand securities regulations in the first place, so they don't understand why we need to do this," she said. "But the more people realize how hard it is for a small business to raise money legally, and that people are not allowed to go out and ask their friends or their community for an investment, the more excited they get. Especially now, in this climate, when businesses are suffering."
In Kassan's view, the idea that people can freely stroll around dropping money on the lottery or in a casino, but that the government won't let them risk it on an investment is absurd.
"Let's leave it up to the people," said Kassan. "It's their $100. They're not going to die if they lose it."
Kassan sent a nine-page letter to the SEC in late June outlining the proposed changes in detail, including several caveats to ensure it isn't exploited.
No. 1: No purchaser may invest more than $100.
No. 2: The aggregate offering is limited to $100,000 maximum.
No. 3: Offerors must be individuals. Offerors may not be entities and must be United States citizens or legal residents.
No. 4: No offeror may have more than one offering open at any time.
No. 5: All offering materials and communications must contain a disclaimer clearly stating the possibility of total loss of the investment and the necessity of careful evaluation of each offeror's trustworthiness by the individual purchaser.
The letter also includes detailed descriptions of the benefits Kassan expects to see as justification.
"It's a totally crazy long-shot," she said. "Especially in this environment. Unfortunately, a lot of really bad players have made people really nervous about doing anything that would loosen up the rules at all.
"We wouldn't do it if we didn't think there wasn't a chance," Kassan added. "It's a very reasonable request."
Even if Ringlemann and IndieGogo didn't stand to benefit from the potential exemption, she said she'd support it. One of the things that drove her to start IndieGogo was being the child of small business owners and watching them refinance their house and cover business expenses with credit cards for 30 years.
"Ever year, 7 million ventures start," said Ringlemann. The average outlay is $45,000. But the average need is only $4,500. Most businesses are something like a hot dog cart. So people are financing it themselves with credit cards. If there was an easy way for people to raise 10 grand, then that could be the bread and butter of America.
According to Ringlemann, Kassan and Spinrad, a SEC exemption on small-scale investments is that way.
"There are two ways to protect people," Ringlemann said. "Require companies to do risk disclosure or cap investments. Second [option] wasn't used in 1933 because it was too hard to track. The Internet has changed that. So the question becomes what is the appropriate level? $100? $1,000?"
Spinrad, the arts enthusiast, sits at the $100-end of the spectrum. Investors and financiers are pushing for a larger, and therefore potentially profitable, cap.
But even if all the legal minutiae is resolved, there's still the question of why anyone would fork over their hard-earned $20 to someone else's crazy idea rather than their own.
For Megan Egbert, a Boise librarian, it started out as helping her friend Gregory Bayne with his film Driven.
"The platform allows someone not only to ask for money, but to show what they're doing," she said. "Plus, it makes it not awkward if you want to refuse."
Bayne campaigned to fund his soon-to-be-released documentary about mixed-martial arts fighter Jens Pulver getting ready for his underdog shot at the big-time. His effort has been used as a model of how to use crowdfunding.
Bayne first tried to raise money the traditional way, but he started running out of time before Pulver's main event. So Bayne made a trailer and put it on Youtube.
The trailer got more than 10,000 views in one week, which proved there was an audience, so he decided to try crowdfunding. His goal was $25,000 in 20 days, but he ended up with $27,000 and a fanbase itching to see the film.
Bayne was also able to use the contributors as a test audience, sending out clips and rough cuts to see how people responded.
After contributing to Driven, Egbert became curious and looked for other causes to support, giving to several including Travis Swartz's film.
"I wouldn't give money to someone if I had doubts about it. I've donated pretty small amounts to people, so if someone takes my $25 and runs I'm not going to be that worried about it," she said.
Paul Carew, another Boisean who contributed to Bayne and Swartz had similar sentiments. He was friends with both of them, but he also appreciated the efficiency of the process.
"I'm a business owner and a very busy person," said Carew. "In the situations where I used Kickstarter, it was a gut decision, and I knew I could plug in a credit card in 30 seconds and be done with it."
While the ease of donating to a project is attractive to donors, it's also drawing the attention of established organizations, which see it as a way to reach out to a new funding pool. Boise Contemporary Theater's Artistic Director Matthew Cameron Clark said in an age of declining corporate contributions, The Krumblin Foundation wouldn't have been possible without the campaign.
"New work costs more," he said. "Time for development, commissioning, fees, etc. We had to find new way to fund additional expenses."
Those new ways were to offer gifts ranging from free drinks to signed scripts to donors' names being written into the script (only $1,000 or more). The campaign was so well received that BCT raised $12,645 from 178 backers.
Still, crowdfunding isn't always the answer.
After only a few weeks, Swartz decided to cancel his Kickstarter campaign to fund Nobody Cares.
"With Kickstarter, I found I was spending my pre-production time being a fundraiser as opposed to being a filmmaker," Swartz said. "I think if I'd done it earlier and had a different plan for it, it would have worked out well. But I started a bit late, and I ended up spending exponential time on it because you have to hit that goal by a certain date."
Instead, he set up a PayPal account on his own website that people could use to contribute, and found a partner who took care of many of the equipment costs, making it possible to start production. Swartz wrapped shooting in early October and is in the months-long editing process.
To complete the project, he said he will need to continue raising funds, and though contributions have trickled off since the initial push, Swartz feels it will pick up again once he's cut enough of the film to show people what they're paying for.
"[Contributing] seems more a reaction to how much energy people see you putting into the project," Swartz said. "When they see that you have something, as opposed to the promise that you might have something, it has more impact."
At last report, Swartz had raised $3,100, far short of his initial goal of $25,000. But he's not concerned.
"I'm shooting the movie," he said. "That's the most important part."
To Learn More Click Here
Wednesday, November 17, 2010
Crowdsourced and Crowdfounded Movie Iron Sky - See the First Five Minutes for One Euro
Iron Sky, the Finnish-German-Australian science fiction film began shooting today in Frankfurt, Germany. To celebrate this, the creators of the film launched a new internet service called Iron Sky Sneak Peek (http://www.ironsky.net/sneakpeek/), which enables the fans to follow how the first few minutes of the film are made, from the idea to the script, storyboards, animatics, sounds, music, visual effects and so on. Finally, a year from now, they will be among the first ones to see the finished opening scene before the film is officially released.
Iron Sky is a science fiction black comedy, where the Nazis, who fled to the Moon in 1945, return to reclaim the Earth in 2018. The film has a budget of 6.8 million euros, and the cast contains such actors as Julia Dietze (1½ Ritter), Götz Otto (Schindler's List, Tomorrow Never Dies, The Downfall), Christopher Kirby (The Matrix Reloaded & Revolutions, Daybreakers, Space: Above and Beyond), Udo Kier (Dogville, Dancer in the Dark), Peta Sergeant (Satisfaction), Stephanie Paul (Separation City, Film School Confidential), and Tilo Prückner (The Neverending Story, Die Fälscher). (Full credits can be found in the end of the message and Iron Sky press page: http://www.ironsky.net/press/)
What makes Iron Sky special is that almost a million euros of the budget comes from fans and followers, and the movie is created in collaboration with the Internet community. The Iron Sky team reaches over 150.000 fans on the net on a weekly basis, and the numbers are growing weekly. The team has been publishing “making of” documentaries for the duration of the film, and the fans can follow the progress of the movie project in real time on Iron Sky website (http://www.ironsky.net/) and YouTube channel (http://www.youtube.com/energiaproductions).
Iron Sky Sneak Peek is another way for the fans to support the film, and get an unprecedented inside view to the workings of a scifi movie project. The fans can decide how much they want to pay for the Sneak Peek, starting from one euro upwards. The Iron Sky team will publish new material on a monthly basis, following the progress of the movie from the idea to script, storyboards, animatics and so on, right up to the finished film.
“After years and years of work, we are finally here - shooting the film”, said the director of Iron Sky Timo Vuorensola. “We have an eventful month ahead of us, then a short break for the Christmas, followed by a month and a half of shooting in Australia. In Frankfurt we film our location shots, which is about a half of the movie. In Australia we do the studio parts.”
“Iron Sky Sneak Peek aims to offer the fans a great way to see how a movie project like this works, the whole process is going to be revealed and explained like never before. And additionally it’s another way for the Internet community to support and take part of making this film. Fan funding is extremely important thing for us, it was the last missing piece in our financing puzzle ”, said the producer of Iron Sky Tero Kaukomaa. “Close collaboration with the audience on ideas, publicity and funding is the future of genre film.”
To Learn More Click Here
Iron Sky is a science fiction black comedy, where the Nazis, who fled to the Moon in 1945, return to reclaim the Earth in 2018. The film has a budget of 6.8 million euros, and the cast contains such actors as Julia Dietze (1½ Ritter), Götz Otto (Schindler's List, Tomorrow Never Dies, The Downfall), Christopher Kirby (The Matrix Reloaded & Revolutions, Daybreakers, Space: Above and Beyond), Udo Kier (Dogville, Dancer in the Dark), Peta Sergeant (Satisfaction), Stephanie Paul (Separation City, Film School Confidential), and Tilo Prückner (The Neverending Story, Die Fälscher). (Full credits can be found in the end of the message and Iron Sky press page: http://www.ironsky.net/press/)
What makes Iron Sky special is that almost a million euros of the budget comes from fans and followers, and the movie is created in collaboration with the Internet community. The Iron Sky team reaches over 150.000 fans on the net on a weekly basis, and the numbers are growing weekly. The team has been publishing “making of” documentaries for the duration of the film, and the fans can follow the progress of the movie project in real time on Iron Sky website (http://www.ironsky.net/) and YouTube channel (http://www.youtube.com/energiaproductions).
Iron Sky Sneak Peek is another way for the fans to support the film, and get an unprecedented inside view to the workings of a scifi movie project. The fans can decide how much they want to pay for the Sneak Peek, starting from one euro upwards. The Iron Sky team will publish new material on a monthly basis, following the progress of the movie from the idea to script, storyboards, animatics and so on, right up to the finished film.
“After years and years of work, we are finally here - shooting the film”, said the director of Iron Sky Timo Vuorensola. “We have an eventful month ahead of us, then a short break for the Christmas, followed by a month and a half of shooting in Australia. In Frankfurt we film our location shots, which is about a half of the movie. In Australia we do the studio parts.”
“Iron Sky Sneak Peek aims to offer the fans a great way to see how a movie project like this works, the whole process is going to be revealed and explained like never before. And additionally it’s another way for the Internet community to support and take part of making this film. Fan funding is extremely important thing for us, it was the last missing piece in our financing puzzle ”, said the producer of Iron Sky Tero Kaukomaa. “Close collaboration with the audience on ideas, publicity and funding is the future of genre film.”
To Learn More Click Here
Subscribe to:
Posts (Atom)