It’s all about the crowd
January 15 2015

by tmartin on January 15, 2015

First published in The Cape Cod Times, January 13, 2015

If your New Year’s resolution involves starting your own company, launching a project, or saving the world, don’t bet on flying solo. You need people. You need funding.

To do that, look no further than the nearest crowd … or crowdfunding site.

Crowdfunding draws on the technology of digital market-making to create a place where ideas and investors intersect.

That’s a beautiful thing.

Since 2010, the notion of people investing in people has boomed. Dozens of companies fill the space, providing the chance to make a difference for a dollar … or a fortune from an equity bet.

Donation-based crowdfunding puts cash toward a goal and delivers a reward — a DVD of the finished documentary or early production model of the product. Investment crowdfunding trades equity or debt for cash and potential financial return.

The most visited crowdfunding companies fall into the donation category, including San Diego-based Go Fund Me, launched in 2010 for “personal causes” – and then some.

This week an Atlanta Hawks fan stared a campaign on Go Fund Me for fans to buy the team for a cool six million dollars. If the long shot succeeds, imagine how that would change the sports biz!

More typical Go Fund Me campaigns addresses medical funds, family financial crisis, parties for children at a homeless shelter, or building a safe walking/biking trail. The latter is a current citizen-driven campaign in Walnut Creek CA to solve a dangerous stretch of road using an alternative to a multi-million dollar (aka, never going to happen) municipal project.

Current Cape Cod Go Fund Me campaigns include a South Dennis ask for car payments, a Sandwich campaign for a dog’s surgery bill, an Eastham funeral fund request, a Harwich fundraising effort for a premature baby, D-Y students seeking help for a school French trip, a Provincetown project to mount an art exhibit, and an MMA student-led effort to support a fellow cadet with a sick father.

The popular Kickstarter site – based in Brooklyn and launched in 2009 with a focus on creative projects – has so far distributed more than $1 Billion to creators to make art, culture, and technology. The company says that in 2014 it enabled 22,252 funded projects and 3.3 million funders.

With Kickstarter, we’re talking film and music, games, art, cool technology … I invested in Chairagami, a New Haven startup that makes foldable cardboard furniture (my reward came in the form of a early-run Chariagami standup desk). On the Cape, The Adventurous Life of a Cape Cod Dog, Healing History: A Documentary Film, and Jakes Super Carmel Puff Corn got Kickstarter funding last year.

Indiegogo, says its global crowdfunding campaigns raised more than $2 million in the past 6 months. The self-described “way for people all over the world to join forces to make ideas happen,” launched in 2008. This month it made a big splash at the Consumer Electronics Show in Las Vegas with Zboard2, an electric skateboard; Touch Pico, a tiny handheld projector; and Carbon Flyer, a carbon fiber (ie nearly indestructible) Bluetooth-controlled model plane complete with video camera.

Closer to home, Yarmoth’s nonprofit Calmer Choice appears on Idiegogo, raising funds for its mindfulness programs.

Don’t forget the highly vertical crowdfunding sites either, places like Teespring, which, yes, created a place where T-shirt entrepreneurs and T-shirt business investors connect.

Or ideological crowdfunding ventures, like Causes, which focuses on connecting like-minded funders to charitable funds for saving puppies, stopping domestic violence, ending hunger, and the like.
In 2012, the federal Jumpstart Our Business Startups Act (JOBS) Act opened the door to investment crowdsourcing. It allowed for “funding portals” and said companies under $1B could seek funds directly. In most cases, investors must still meet “accredited investor” criteria, defined by the Securities and Exchange Commission as having a million dollar net worth, excluding primary residence, or annual income of at least $200,000.

Crowdfunder (“now the crowd can invest in game changing entrepreneurs”), headquartered in Venice, CA, says it has reshaped the “broken” early-stage funding market, while The Funders Club claims 11,000 accredited investors investing more than $26M in startups.

Funding Circle targets small business loans, while over at Bolstr, small companies — including many restaurant and food ventures — find up to $250,000 in capital.

Love investing in consumer products or want to scale your consumer products company? Circle Up might be the crowdfunding venue of choice.

Bottomline: if there’s a dream, there’s probably an investor for that dream. That’s the beauty of crowdfunding.

Some say the digital world dehumanizes us – but I don’t totally agree. Sometimes, rather than pushing us apart, our bits and bytes bind us together. Crowdfunding works because it uses technology to let human passion shine. A human voice speaks to a human ear. The story behind the numbers sings out.

Yes, crowdfunding is about the money … but … but… this technology application also brings us a very human engagement, a ride on the thrill of creation, and maybe, just maybe, a seat in The Next Big Thing.

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