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Kickstarter.com, crowdfunding in general

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Kickstarter.com, crowdfunding in general

Unread postby Sixstrings » Tue 08 May 2012, 00:26:40

Interesting trend out there lately: crowdfunding. Using social media to get small investors. Obama just signed a law that will make this easier.

With Kickstarter.com for example, a musician has raised $500k+ for her new album. Now my problem with this site is it appears that investors never get paid back or maybe I'm wrong and it's an "interest-free loan," but there's no profit sharing and you don't get a share of stock you can sell, rather the investors get other intangible rewards:

At this very second, thousands of people are checking out projects on Kickstarter. They're rallying around their friends' ideas, backing projects from people they've long admired, and discovering things that make them laugh and smile.

Every project is independently crafted, put to all-or-nothing funding,
and supported by friends, fans, and the public in return for rewards.

Rewards are things like a copy of what’s being made, a limited edition, or a custom experience related to the project. This isn’t Best Buy – rewards aren’t shrink-wrapped and ready to ship. Once the project is funded, the journey to bring them to life begins.
http://www.kickstarter.com/


While opening up venture capitalism to the little guy sounds interesting, people should be getting a share in what they're investing in rather than "a custom experience." If a musician makes a profit from their album, shouldn't investors see some profit on their investment?

Anyhow.. if you're artistically-minded or made a board game or video game or whatever, apparently you can use this site and people will just give you money for it.

(if I got anything wrong I apologize I just tried to figure this thing out)

As for crowdfunding -- it's sure interesting, but I think with the looser regulations a lot of small investors are going to get taken.
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Re: Kickstarter.com, crowdfunding in general

Unread postby The Practician » Thu 10 May 2012, 21:05:18

Sixstrings wrote:I
As for crowdfunding -- it's sure interesting, but I think with the looser regulations a lot of small investors are going to get taken.


Dave Cohen, who writes the Decline of the Empire Blog, did an excellent post on this issue back in March. you should check it out.

http://www.declineoftheempire.com/2012/03/the-water-is-full-of-sharks.html
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Re: Kickstarter.com, crowdfunding in general

Unread postby Sixstrings » Fri 11 May 2012, 01:07:06

The Practician wrote:Dave Cohen, who writes the Decline of the Empire Blog, did an excellent post on this issue back in March. you should check it out.


Good article.

Yeah, it seems to me like opening the door to more financial de-regulation. In principle it's a good idea but REGULATION makes all the difference between legitimate investing and ponzi schemes / pennystock push scams.

Just because it's crowdsourced funding is no good reason for less regulation. It's very important these companies have good accounting and have to report to somebody. That should be the role of government here, just ENSURE HONESTY in accounting, ensure these aren't ponzi schemes.

Unfotunately, it looks more like just another scam. Less accounting, less responsibility, more opportunity to game investors. Will there be more games like Lehman used to do, pumping up bad stocks then dumping? And now because it's de-regulated "crowdfunded" there's no way to objectively know if "that guy on the internet" is scamming you.

This would be a good idea if only there were solid regulation. In principle it's a powerful idea.. a dev could push out a stock offer over smartphones. Consumers see some cool app or game they'd love to see made, and buy into it to make it happen. Fantastic idea, but there must be accountability or it can't work.

I don't know all the details here, but if the stock offers were handled by some kind of truly objective market maker (think ebay), then it would be in the 3rd party's interest to enforce accountability. Just as ebay does now, they can't stay in business if too many of their sellers are fraudulent.
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Re: Kickstarter.com, crowdfunding in general

Unread postby radon » Fri 11 May 2012, 03:12:35

Regulation is not panacea. It is an additional cost, and then there is always a question "who will regulate the regulators".

In microfinance, the cost of regulation may well be at par or exceed the amounts raised for the start up. So that the taxpayers or whoever would have to spend another grand on regulatory filings or the regulators' salaries for every grand raised.

The easiest way for them would be to prohibit any investment-type activities altogether, limiting the scope of contributions to donations. The start ups should be forbidden to make any promises regarding investor returns under the threat that violation would entail permanent ban and blacklisting. But then the contributors should be able to open up accounts with the website to which the recipients could later donate back whatever amounts they would like.
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Re: Kickstarter.com, crowdfunding in general

Unread postby SeaGypsy » Fri 11 May 2012, 03:18:50

I'm going to put up an idea and see what comes of it. Something about throwing an outrigger together and sailing it on the fly from Australia to Asia via the last remaining aboriginal tribes. Being open source only matters if any Joe Blogs can take your concept to development. I personally don't see anything seriously wrong, given the constraints you bring up 6. There is way too much elitism when it comes to either investing or seeking investment. An Ebay level of accountability seems about right.
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Re: Kickstarter.com, crowdfunding in general

Unread postby Sixstrings » Sat 12 May 2012, 03:45:04

SeaGypsy wrote:I'm going to put up an idea and see what comes of it.


Good luck!

I'd say keep us posted, but if you link it here people would see your full name so just be aware of that.

Looking at this thing some more, it seems like some of these projects people are getting family and friends to fund them (if you have a big facebook network, that could work). It seems like *some* random strangers kick money in too. Hard to know what the ratio is, or why strangers would donate at all with only "perks" as rewards. I read about a games company that raised THREE MILLION DOLLARS just offering nebulous perks like tshirts and lunch. The CEO laughed at the idea of giving equity, he rightly pointed out all the money they raised for offering nothing but a lunch.

Whole thing is still a mystery to me. I can understand donating to a friend's project. But the big money, people raising a LOT while offering no payback on the investment even though they're going to see a profit, I don't get that part.

Stuff like you want to do, that's great, because otherwise it's the kind of thing a bank wouldn't give a loan for and there won't be profit for any investors. Ordinary people can be "patrons of the arts" too, there's a lot of power in a lot of people giving five or ten bucks.
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Re: Kickstarter.com, crowdfunding in general

Unread postby SeaGypsy » Sat 12 May 2012, 20:54:43

I have just noted that it's all American. Doubtful I would get any help to do something in Australia, can't find a single funded entry outside the USA.
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Re: Kickstarter.com, crowdfunding in general

Unread postby Sixstrings » Sun 13 May 2012, 04:50:46

Image

Pebble Smartwatch Sells Out, Collects $10 Million on Kickstarter

The Pebble smartwatch, a smartphone-connected watch that recently became the most-funded Kickstarter project ever, is sold out.

The team behind the watch stopped taking pre-orders on Thursday, after pre-selling 85,000 devices and raising more than $10 million on the crowd-sourced funding platform Kickstarter.

The Pebble team earlier this week updated its Kickstarter page to say that it would limit the number of pre-orders to 85,000. As of Thursday, the project had raised more than $10.1 million from 66,550 backers, with eight days left.
http://www.pcmag.com/article2/0,2817,2404295,00.asp


Fascinating. What this ammounts to is turning the consumer into the venture capitalist. If they like a new concept product enough to support the project, getting one of these watches after it's built for example, then voila the inventor collects $10 million and is in business, with 85,000 pre-orders to fill.

It's taking the VC middleman out of the picture, consumers deciding what they want made rather than a venture capitalist being the gatekeeper.

In the case of an album, the record label middle man is removed from the chain.
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Re: Kickstarter.com, crowdfunding in general

Unread postby Sixstrings » Sun 13 May 2012, 05:07:38

SeaGypsy wrote:I have just noted that it's all American. Doubtful I would get any help to do something in Australia, can't find a single funded entry outside the USA.


Now that you mention it, I remember reading they're limited to dealing only in US dollars at this time. Does it specify you must be a US resident?

I googled "Australian crowdfunding sites," this came up:

http://www.pozible.com/

I'd say do some research, find out the biggest crowdfunding sites, figure out if you can do the same campaign on multiple sites to raise the most money. I assume the American sites are the biggest.. if their only issue is payment in US dollars maybe you can find a workaround for that. I know there are companies that give international people a US address (like a post office box). But that's getting rather involved for a small project.

Maybe just try that Australian one and see what happens?
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Re: Kickstarter.com, crowdfunding in general

Unread postby traderman6 » Thu 17 May 2012, 17:33:23

Y
Sixstrings wrote:
Image

Pebble Smartwatch Sells Out, Collects $10 Million on Kickstarter

The Pebble smartwatch, a smartphone-connected watch that recently became the most-funded Kickstarter project ever, is sold out.

The team behind the watch stopped taking pre-orders on Thursday, after pre-selling 85,000 devices and raising more than $10 million on the crowd-sourced funding platform Kickstarter.

The Pebble team earlier this week updated its Kickstarter page to say that it would limit the number of pre-orders to 85,000. As of Thursday, the project had raised more than $10.1 million from 66,550 backers, with eight days left.
http://www.pcmag.com/article2/0,2817,2404295,00.asp


Fascinating. What this ammounts to is turning the consumer into the venture capitalist. If they like a new concept product enough to support the project, getting one of these watches after it's built for example, then voila the inventor collects $10 million and is in business, with 85,000 pre-orders to fill.

It's taking the VC middleman out of the picture, consumers deciding what they want made rather than a venture capitalist being the gatekeeper.

In the case of an album, the record label middle man is removed from the chain.
ou bring up a good point that crowdfunding is making the consumer into a VC and the VC middleman is out of the picture. If there was a site that connected a large enough number of people to entrepreneurs this concept could apply to many different industries.

Crowdfunding is a win win situation for the company and investor. A good example of this is in a blog I read earlier about if crowdfunding would have been available for Facebook. An investor putting in $100 in 2004 would make $1.4 Million tomorrow. http://blog.sprinklebit.com/why-you-sho ... -facebook/
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Re: Kickstarter.com, crowdfunding in general

Unread postby Sixstrings » Thu 17 May 2012, 19:03:03

Lol, thought my posts in this thread sounded spammy but I was just interested.

Now I get a spam reply.

Go away spam!!!!

No I don't have a point about crowdfunding, we are humans talking here and aren't paid to talk, go away. :)

(I HATE spam)
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Re: Kickstarter.com, crowdfunding in general

Unread postby SeaGypsy » Thu 17 May 2012, 20:27:18

If anything I don't like about that site it's the hype side of it. However it appear some fairly 'out there' stuff is getting funded, particularly in publishing, I have a brother who is flat out with a family and horticulture business, has a book's work of knowledge which has so far gone un-researched and un- published (Victorian Aboriginal Medicine and Food plants identification). He doesn't want to end up getting a tiny percentage and having to be a best seller to make any real money out of his many years work. So anyway, I introduced him to the links you provided here 6, he is seriously likely to get something up via crowdfunding. Neither of us had heard of this until your introduction, so thanks 6Strings! 8)
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