THE MIRACLES OF DIGITAL FUNDRAISING

It is amazing how the world has changed. When we were growing up, we were expected to become a doctor, lawyer, teacher, accountant, secretary or something where the foundation of the business was well established. All we had to be is smart enough to jump on the already established bandwagon. If we told our parents we wanted to become writers, musicians, inventors or artists of any kind, they would go directly to a house of worship and pray to their higher power to give us proper guidance. 

I know you are chuckling reading this, because it happened to all of us, whether rich or poor. Our parents wanted us either in the family business or settled somewhere they didn’t have to worry about. 

Jump forward 40 to 50 years. Today, parents are asking children, “Why can’t you be one of those geniuses who invent something on the Internet? Do you want to work for the rest of your life and report to a boss who will use and abuse you? “ 

Times have certainly changed. Today hundreds, if not thousands of 20 and 30 year olds are all trying to be the next Mark Zuckerberg (Facebook), Steve Jobs (Apple) and Kevin Systrom and Mike Krieger (Instagram).  Even if someone has a job, their minds are working overtime to come up with that one idea that is going to allow them to make a lot of money and sit at home in their pj’s all day. 

A lot of the young creative types were dissuaded over the years, because venture capitalists and angel investors require a lot of paper work and financial proof that proposed business models are going to work.  Raising money is more difficult than creating and building the invention.  You have to stand in front of the suits to prove that your idea was more worthy than the thousands of other proposals they’ve seen before. 

All that has changed as noted in the front page of the New York Times today. Kickstarter, a website that raises money from the public (the digital term is crowd funding) for creative projects (films, music, games, food projects and digital inventions, etc.). raised over $7 million in just a few days for The Pebble, a watch that was developed to work with the iPhone. You have to read the story to see how the money came pouring in. http://nyti.ms/Ixx1gj . If you know anything about fundraising, you would quickly realize that the money raised by Kickstarter for The Pebble was equivalent to a second round of capital financing. That means that The Pebble didn’t have to prove itself like others to command millions of dollars.

Kickstarter is one of those ideas that most investment people probably thought was not a going to work. Who is going to give money to a project online? Guess what? Kickstarter has raised more than $200 million for 20,000 projects so far, or about 44 percent of those that sought financing on the site. Kickstarter takes 5% of the funds raised. Amazon charges an additional 3-5%. The entire evolution of Kickstarter is amazing and what they did for The Pebble is nothing short of a miracle of the digital world.  You have to digest what I just told you about and think to yourself, “Who would have ever thought?”

About these ads

2 thoughts on “THE MIRACLES OF DIGITAL FUNDRAISING

  1. Now that the JOBS act has passed and will likely go into effect before the end of the year, the crowdfunding idea might move beyond novelty into mainstream financial activity. Kickstarter has too many limitations, its competitors are too crowded with pleas to “fund my root canal” etc. Whoever conceives a nice intermediary role for themselves between idea and crowdfunding will be looking at a bright future.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s