For the guys that are suspicious of kickstarter you may not be aware but it falls into a new category for a way to raise financing for any kind of project. The difference is in the "old days" you sought out investors and sold them through shares a chunk of your idea to get the seed money or venture capital neccessary to execute your project. They then liquidate themselves by selling on to a higher level investor or have you do an IPO of your company.
However this process means the stakes are high for each side. The inventor/entrepreneur gives up a huge most often 70 to 80% of their business for the risk capital. The idea also does not go ahead unless the "sharks" oops excuse me investors see it as working or fitting in with what they have etc.
Now the internet has proven that many people will often throw a few dollars at an idea in return for a sample of the first offs or some sort of gift or even recognition. However the combined total of all the small dollars makes the big ticket you need to get an idea going.
Whats more, it derisks it for you and your idea gets market tested. If you get good traction and prove that you can market yourself and your idea then when time comes and it always does that you need the big boys with deep pockets then its easier to drive a better bargain with them with the idea having proven support from the real mass market.
The concept for those of you not familiar with it is crowd funding and the US gov has recently passed a new law (yup they do get round to doing some work in Washington) that has legalized crowd funding as a way of raising capital for a venture.
To me its the ultimate form of capitalism and free market. There are several of these kinds of sites and they really democratize the whole aspect of being able to make a dream come true if you got the basic initiative to put in the effort.
There is nothing sinister about it. Even if you had to go to the market to raise money the org doingthe money raising takes a cut ......trust me i know been there done that has my fair share of these bruisers.
The other thing about crowd funding as opposed to the point Darren is trying to make is you should think hard about having a small piece of your investment portfolio go into this segment.
Why i say this is its a breeding ground or nursery for the next best thing. I dont refer to kickstarter her but other crowdfunding sites that operate differently where you actually get a stake in the entity thats being funded but at a much lower cost of entry and small amounts that usually would never be possible.
So you can be a venture capitalist for $25 or $30 or even $50 per month and sink this coin into specific niche opportunities and watch them grow and as they progress you might decide to take a bigger piece of action when the opportunity arises and go up to say $1000 investment. There is legal framework to protect you so you not at risk.
The thing is if you seed money like the VC boys do across several opportunities (with some thought behind it not like people putting chips on a roulette wheel table
)
and typically the 80 /20 rule applies perhaps more like 95/5 but when the 5 hit it they hit big with the idea being that the ride you get makes up for the loss in the 95.
Its a fun low cost interesting way to get in on a number of new future companies also to identify people who you would consider worthy of backing when someday you see them as a CEO of a really big firm and its possible to buy a stake in that entity on the stock market. Way better than just taking the good old brokers word for it when you have some knowledge yourself.
I also think the point Darren is making is being lost by many of you thinking in terms of the pens alone.
What says the guy does not go off and find a few Macks and have them produce the pens. One needs to be entrepreneurial.
So you want to do woodworking for a living. Question is do you have an idea and can you demonstrate that you could market that idea to the right market and get that markets attention.
The complaint i hear from many small business people is money. Well Kickstarter takes away that excuse.
But i guess its easier to use the money aspect as an excuse then heck it gets one out of the loop of having to try and perhaps fail and try again before succeeding.
I am all for gov support for the unemployed etc but it should be a helping hand to getting going for self employment if not what i would like to know is who is supposed to provide all the jobs that are needed.
So take a guy that hypothetically has fallen on extreme hard times but has a skill and ability from years of doing something.
Needs some start up money does not want charity and has no collateral for a loan.
He gets internet access at his local library or some other free access point and puts up a proposal to kickstarter. I bet he gets over subscribed and gets what is essentially free money to help him get back on his feet. Pretty sure the community would sooner support the guy with a few coins and help him get started in something than see him end up on the welfare line for the rest of his days. He gets to be seen as an entrepreneur and as making a plan and retains his self esteem and even perhaps ends up employing someone else in need.
Sites like kickstarter are in my view one of the best products of modern times and the internet. But to say this you need to first have had a go at raising cash for a venture.
Only time my bankers had any interest in me was when the idiots met me accidently in the waiting lounge at Citibank in New York
. They were there to raise cash for their bank. I heard the accent and walked over and asked what they were doing there. They said what was i doing there. I said they would not help me back home so i came to the land of free enterprise to raise money, ( i had a meeting that morning with Citibank VP for venture capital) the they was the president of my bank back home.
I got my appointment with an email to Citibank yet could not make progress with the home based bank via direct call all the way up the channels. Seemed at the time my business was not a corporate farm, gold mine or coal mine, or some mining equipment manufacturer, wine farm or service business with 10 year contracts. Their problem was SA was in their view not known for technology therefore in their view had little chance of succeeding. Never mind the fact that 94% of what we produced was being exported and not to Africa but Europe and USA. Yeah bankers.....i would rather trust the masses for money.
Apologies if i offended any bankers on our forum my experience with the banking industry has mostly been with SA banks.
Anyhow Kudos Darren on posting a thread on kickstarter.
One last point that this kickstarter brings up for me that makes it so great. You can quiet clearly see that I am rather negative about banks. Well there is good reason.
Try having a small business and now i refer to small Canadian businesses that i consult to. And go to the bank to get financial support. What you find is that regardless of collateral you will not get support from them if in their opinion you fall into a failing industry in the region country or territory regardless of how well managed your business is.
This is a point i totally despise. What it leads to is the collapse of particular industries just because they have in their wisdom decided it is a no go.
Not dissimlar to my experience with SA banks tellling me that i am in technology so with the country not known for the product my chances of success are mininal therefore we dont lend to that sector.
However if they are deep enough invested in a particular industry they find themselves continuing to lend to that industry to essentially save their own hides.
It all gets back to leverage kinda Donald Trump style. Make sure you owe them so much that they have more to loose than you. Then they cannot lend you enough to make sure you stay afloat. But be a well managed small entity trying to grow but in a sector that they simply do not believe in and bye bye no loan.
Kickstarter does not discriminate like this. It puts the idea, person company and its promise directly in front of the marketplace. So a guy wanting to make pens can get support.
My Apologies for the long winded post
