Other people’s money
Fledgling inventors, indie filmmakers, freelance photographers and other creators types typically have one thing in common when it comes to undertaking a killer project.
Funding.
Now a relatively new genre of social media is making it easier for people to raise cash for their dream projects. Called crowdfunding, the platform uses social media to drum up cash for projects, ignoring conventional methods such as pitching a project to an arts foundation or applying for a bank loan. Instead, creators use crowdfunding to appeal directly to the masses for cash.
One of the more popular crowdfunding sites today is Kickstarter.com. The brainchild of New Yorkers Yancey Strickler, Charles Adler and Perry Chen, Kickstarter launched in April 2009 as a way to finance art projects. Since then, the site has hosted more than 14,000 projects, received support from over 400,000 people and garnered about US$35 million in pledges. On average, 80 new projects are launched daily and US$1 million pledged weekly.
The idea behind Kickstarter is pretty simple. You list your project, set a fundraising goal, then do whatever it takes to market your project in order to get people to contribute. Transactions are handled by Amazon and any money pledged is held in escrow until the funding term expires (from 1 to 90 days). Should a project not meet its fundraising goals, money is returned to the original pledgers, assuring that underfunded projects do not receive any money.
Despite its obvious appeal to artists, the site has become hugely popular with inventors and entrepreneurs. In fact, Kickstarter’s largest project to date has been funding for a person who wants to create a wristband that would allow iPod nano to be worn like a wristwatch. The funding goal was set at US$15,000 but the project proved so popular that it raised over US$900,000 from 13,512 backers in 30 days.
Other crowdfunding sites seeing heavy traffic include non-profit Kiva.org, whose stated mission is to connect people through lending to alleviate poverty, and Gobignetwork.com, a site that seeks to connect startups with investors. Recently launched Ahhha.com uses the ‘American Idol’ model to help determine which projects get funded: Members vote on projects and the most popular ones receive direct funding or become connected with interested investors.
