I tell you what seems to be “all the rage”, as my Grandmother might have said.
In basic terms, this involves putting up a page online, describing a project which is looking for money, and then inviting people to contribute.
Wikipedia, ever-snappy, describes it thus;
“the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations.”
As opposed to scrabbling around friends and family, you’re opening it right up.
Blowing the bloody doors off, as Sir Michael Caine might add.
This passing-of-money can take a number of forms.
With some sites, like Kiva, started in 2005, now supporting projects in 67 countries, it’s a loan, and can be as little as $25.
On others, it’s more of a gift, because you want to see the project brought to life. Aside from a warm feeling, you expect ‘nothing in return’.
These perks might include a digital subscription to the publication you’re part-funding or a ticket to the first gig of the band you’re helping to support.
Some platforms go the whole hog, enabling you to ‘invest’ your hard-earned cash in projects and companies, receiving shares in return. Leading examples of this include Seedrs and Crowdcube, the latter of which has helped raise over £5.5m since it started.
Finally, for the more socially minded, Buzzbnk (launched in 2011 by a team including serial entrepreneur Michael Norton) aims itself at ‘social ventures’. Meanwhile, SpaceHive (led by former Sunday Times journalist Chris Gourlay) is for UK public space projects (for example, the playground which needs refurbishing).
So, that’s your whistle-stop tour around some of the latest and greatest sites on the crowd-funding map. Confused yet?
Well, here are a few thoughts and ideas I’ve been having on the subject -I’d love to know what you think.
- I predict that we’ll see a brand, in the not-too-distant future, enter this space. Imagine a well-known drinks company, for example, giving its customers a place to upload their own projects, and fund each other. Or a national newspaper realising that ‘the editor’ picking three charities to support is all ‘a bit 1990’, deciding instead to enable readers to fund projects directly, sourced from amongst its reader-base.
- How about broadcasters? Will the days of ‘voting someone out’ of the Big Brother house seem a bit old-fashioned when talk around the water-cooler turns to which contestants we’ve just funded, as we compare digital share certificates, newly arrived on our mobile phone?
- Chatting to friends and colleagues who have been through crowd-funding experiences, I’m struck by how much leg-work the individual has to do to promote their project once it’s up and online. It’s worth pondering where the greatest ‘digital footfall’ might be in the busiest of all imaginable sites.
- What does this all mean for existing funders? If you are in charge of distributing millions each year to ‘good causes’, how do you embrace crowd-funding? Do you set up your own platform, or partner another? And in either case, do you use your money to follow the crowd, or inspire it, funding first, or following the money?
- And how do you play this if you’re in Government, currently funding a range of good projects, from health to the arts? Is the best route for public money to go via a large department, on through an independent body and then to a small theatre? Or could Government make it easier for local organisations to raise the money directly?
From the point of view of someone raising money using crowd-funding platforms, a few thoughts…
- In some cases, the person giving you money, perhaps even investing in your company, may be relatively unknown. How do you feel about this? Are they one of your biggest competitors, for example? How many questions is it reasonable to ask, before accepting their offer?
- Once you’ve raised the money, you may well wish to meet your funders. Should the site make this easy for you, or difficult? To what extent would their geographic location make a difference and how acceptable is it to specify that you are only looking for ‘local’ money?
- In a world in which creators are inventing ranges of perks and special incentives for funders, what do we now make of simply asking for a good, old-fashioned donation? Is this straight-forward and pure, or is it lazy and unimaginative?
For me, the lines are becoming blurred, and in a positive way.
Increasingly, my ears prick up at the word ‘social’, because I’m keen to know what its users would describe as anti-social. Kickstarter is full of ‘social’ projects, isn’t it?
What would an anti-social enterprise look like, and how would we describe its customers?
Last week I met with the CEO of a brilliant international charity. She talked about the fundraising efforts of its beneficiaries and I was intrigued to know how many of them tended to ‘raise’ their money. It seemed that most of the cash came in the form of donations. Personally, I’d be interested to know how charities would feel if the majority of their income came through them (or their helpers) ‘selling stuff’, as opposed to through traditional donations. Of course, this is happening more and more, with charities setting up trading arms.
My prediction: Today, the term Fundmaking, as opposed to Fundraising does not appear in the Oxford Dictionary or Wikipedia. In five years, it will.
The ways in which we raise and make money are evolving. Relationships between buyer and seller are shifting. Investor becomes customer, donor becomes beneficiary.
One final prediction: The biggest crowd-funding sites of tomorrow will move beyond money. They will give founders the tools to ask for talent, resources, introductions, space and more. Hundreds of other things, beyond simply cash.
Money might make the world go round, but what is it?
“a current medium of exchange”
In a world in which a single person can ask millions of others for help, we are just beginning to discover the smartest ways in which that call for support might be answered.