Hollywood is stunned. This has never happened before. Will it ever happen again?
I get calls every week from tech start-ups asking me to either help them with a public relations program or to secure funding. I try to do my best, but lately they are coming to me fast and furious. Call it a sign of the times, but an increasing number of college graduates or working folks are leaving their careers to become entrepreneurs. I spend countless non-billable hours helping where I can. I write pro-bono press releases, distribute them to targeted press, and make calls to see if we can secure editorial placement. I also spend endless hours working on strategy and business plans.
Eliot often asks me if HWH is really a non-profit. I tell him it is a form of new business. One of these guys/gals are going to make us rich. It hasn’t happened yet, but there is always tomorrow. There are so many great ideas out there that need the support of seasoned professionals like you. I don’t care if you are a fireman, housewife, doctor, teacher, writer, salesperson or CEO, you have something the under 50 crowd needs—a lifetime of experience. Intuitively, you may have a better sense of judgment than the idea person.
Start small. Take a look at www.kickstarter.com. I talked about the company before in generalities but now I want to get specific.
“Kickstarter is a funding platform for creative projects which include films, games, music, art, design, and technology. Some projects only require a dollar to show you support them. Anyone can join in. Most of the supporters are much younger than us, but that is because they knew about Kickstarter before us. The site launched on April 28, 2009 and to date has raised over $350 million by more than 2.5 million people, funding more than 30,000 creative projects. People who fund Kickstarter projects do not get equity. The Project creators keep 100 per cent ownership of their work. The only gratification you get is identifying a good idea and giving a little bit of yourself towards it.”
Take a look at this Kickstarter project. I bet my ocean loving friends can dig this.
Autonomous sailing robots to study the oceans. Each boat can sail itself anywhere and send data back to shore. Funding ends next Friday. Each robotboat is fully autonomous, needs no fuel, and will bring to bear myriad sensors at remote points on the surface of oceans, lakes, and rivers. Think of it as a satellite for the seas. It studies the health of the world’s water.
Click on the arrow in the video. If you are getting this post via email, you may have to go to http://www.digidame.com to see the video. It is worth it. I couldn’t get the video on Kickstarter to embed here so I used Mashable’s coverage. If you want to know more about the project, go to Kickstarter.
I really want everyone who reads DigiDame to understand what Crowd Funding means. You probably heard this term casually mentioned over the last few months while at cocktail parties or in stories you have read in the press. You didn’t pay much attention to it because it sounded so complicated and esoteric.
Crowd Funding is really easy to understand and makes a lot of sense. It is very trendy in the digital community. You will absolutely impress everyone (especially the digital babies) when you reference “Crowd Funding” in a conversation. All of a sudden people will start looking at you as if you are some kind of rock star.
That is exactly what DigiDame aims to do. If I can understand something, then you can too. I like to dumb things down as much as possible when trying to understand a new concept so I can truly appreciate what it means and how I can use it in my life.
Crowd Funding is what a lot of young people do to raise funds for their innovations, developments, ideas, concepts, or inventions. It means that funds are being solicited from the masses for a project, rather than going to a few major investors. It really started in the entertainment business when fans contributed funds to rock groups and movie projects over the Internet. Then it expanded to political campaigns—a la Obama. Nowadays, people soliciting funds use websites that have been developed just for this purpose. The most popular site in this space is called “Kickstarter” because they have been able to collect millions of dollars for new projects in a matter of days.
Wikipedia points out that “ArtistShare” is documented as being the first Crowd Funding website for music (2000/2001) followed later by sites such as Sellaband (2006), Indiegogo (2008), Pledge Music (2009), Kickstarter (2009), RocketHub (2009), GoFundMe (2010), and Rock the Post (2011). Kickstarter just captured headlines again this week with the successful funding of the Ouya Gaming platform, raising $2.5 million in one day.
It is also important to know that many of the Crowd Funding websites give contributors the product at a substantially reduced cost if they contribute a certain amount of money. This discount can be as much as half the product’s selling price. This is a huge draw to help collect funds and to build orders. It is a marvelous strategy to start out with hundreds, thousands or even millions of products pre-sold. It is a win-win for everyone involved.
The reason why most people raise funds this way is because they have been rejected by venture capitalists and angel investors who require a lot of paper work and justification. Most “new idea” people are unable to raise money for their projects because there are more of them than the folks who dole out the dough. Crowd Funding is becoming extremely popular because there are millions of people in the United States who love contributing a dollar or two to support “startups,” “political campaigns,” “a new movie,” “a medical experiment,” and/or any kind of new development. It is very ‘hip” to say, “Oh, yes I invested before anyone really knew about it.” The truth is they only sent in a dollar or two just so they can feel like an insider. Crowd Funding is considered a “cool” thing to do, especially for “green causes.”
Crowd Funding also became popular because of the United States of America JOBS Act that was signed into law by President Obama on April 5, 2012. The Act allows the funding of a company by selling small amounts of equity to many investors. Not all crowd funding translates into equity. A lot of Crowd Funding is just a social transaction.
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?”