Kickstart My Heart
Relax. As regular readers are aware every second piece of work usually discusses something or somebody in the community who is doing something useful. This article has nothing to do with Vince Neil, Tommy Lee or glam metal in general.
Instead this piece focusses on crowdfunding. For those who are not familiar with the term, crowdfunding is a method of raising funds by encouraging financial backers to pledge money towards a project prior to the project itself being developed.
Many people think that crowdfunding is a new phenomenon. This is untrue. People have been crowdfunding for many hundreds of years. Crowdfunding has been around for centuries. Authors have historically used various subscription schemes to fund their work.
The best historical example of crowdfunding involves the Statue of Liberty. Whilst the statue itself was not crowdfunded when the statue arrived the base for it had not yet been built. Several American cities offered to pay for the pedestal in return for the relocation of the statue to their city, the New Yorkers rebuffed all offers.
Finally, renowned publisher Joseph Pulitzer launched a fundraising campaign through his newspaper The New York World. The campaign secured the required funds from more than one hundred and sixty thousand donors and the statue was erected in its now familiar locale (1).
Crowdfunding has recently undergone somewhat of a resurgence primarily due to the digitisation of the crowdfunding model. In the past crowdfunding was often managed through mail subscription and the like. The internet has changed all that.
Kickstarter is one of the more popular websites which allow entrepreneurs to start a campaign for whatever it is they are proposing to do (2). The sheer variety of the proposed projects is impressive.
Perhaps you would like a robotic arm which can hold items for your hobby projects? It can be found on Kickstarter (3). Maybe you’d like a publication which places female protagonists at the forefront of fantasy and science fiction stories? It’s called Hell Hath No Fury (4). How awesome would it be to have a craft pen which uses recycled plastic bottles as ‘ink’? Practical, sustainable and found on Kickstarter (5).
Whist the range of items on Kickstarter is attractive the relative cost effectiveness is particularly appealing. There are many projects which participants can pledge towards for under twenty dollars. Those pledging either receive the product itself or some other benefit associated with the project.
Kickstarter enforces a fairly strict set of requirements which project creators must adhere to. Some types of campaigns, such as awareness campaigns. Kickstarter bans the use of photorealistic renderings and simulations demonstrating products. Projects require a physical prototype and or a manufacturing plan.
Despite these requirements there is of course still some risk for backers. The risks are further managed by the often relatively small financial commitment from pledgers and the practice of financial contributions not being debited from pledger’s accounts unless the project meets its funding goals.
The success of Kickstarter and other crowdfunding platforms is just beginning to pose a threat to the traditional finance system. In 2014 the United Kingdom decided to regulate crowdfunding through the Financial Conduct Authority (6). It seems likely that crowdfunding is destined for greater popularity in the future.
There is a great deal of resentment in the community towards the traditional finance system. This is unsurprising given that large banking institutions exist purely for profit and produce exactly nothing.
Whilst crowdfunding is not without its risks it seems a viable alternative particularly for small and medium sized businesses. If the choice between financial providers is a faceless profiteer working in finance or a collection of like people, I’m going with people like me every time.
Furthermore, consider what types of projects are likely to be successful if the people are deciding which projects get funded. Will they select projects which are very profitable but are so profitable at a cost to our environment? Will projects which are harmful to people or which seek to exploit people’s fears get funded? Yes. I think there still will be some of those.
Crowdfunding allows people to select projects that, while still profitable and useful, are also ethically sound. It’s no guarantee but when people decide, and when products need a lot of people to get off the ground, I’d suggest the likelihood of an ethical outcome is increased.
Regardless of ethics crowdfunding is an exciting development. It allows people lacking in funds, but with an abundance of motivation, to chase their dreams. It allows people who respect those chasing their dreams to fund them. That alone is a sound reason to get behind Kickstarter and other crowdfunding platforms.
http://www.bbc.com/news/magazine-21932675
http://www.fca.org.uk/static/documents/crowdfunding-review.pdf