Raising capital online, grassroots style
This blog post is ostensibly about how crowd-funding websites like Indiegogo and Kickstarter are democratizing innovation by creating ways of individuals to support new products, ideas, bands and charities. Raising capital online. Grassroots style.
Bug-A-Salt
In reality, this blog post is about a plastic gun that shoots table salt with enough power to knock out a fly. Not very deep, I know. But it is nerdy and fun. I am planning to buy one. See the video on how the inventor – Lorenzo Maggiore – took it from concept to prototype to market here and there is a good chance that you will want to buy one too.
It is a fascinating to think that someone like Lorenzo could take their unique idea to market online (web 2.0 style) and get enough pre-orders to confidently make production runs. Yes, the world is truly flat (and convenient).
Clearly, this has been a run-away success. Lorenzo was originally looking to get $15K in seed funding, but as of 8/31, he raised $430K. More than 8,600 people ordered these. . .and 8 people bought the “arms dealer” package where you get 144 guns for $2,500.
Oddly, the $30 sent to creator, is called a “contribution” and the Bug-A-Salt that I get in the mail is called a “perk”. This may have to do with some regulations and inter-state commerce etc, but it certainly an odd way to describe this purchase.
Fast-forward to 2019, and you can buy these at Bed, Bath, Beyond, Sam’s Wholesale, and Ace Hardware. Whoa.
Crowd-funding = new thundering herd
The Economist called crowd funding the “new thundering herd” in a recent issue. According to one source, crowd funding will raise $2.8 billion in 2012 vs. $530 million in 2009.
Kickstarter raised $323 million for 10,000 projects. The most lucrative 10 are listed are here with the most successful one (Pebble watch) raising more than $10 million.
There are 500+ crowd funding platforms and counting. This includes Sellaband which helps music bands raise funds, and Spot.us (now defunct) which touts itself as community-funded journalism. Raising money is not easy street though. Kickstarter apparently accepts 1/2 of the projects that are submitted, and only 1/2 of those raise the targeted amount.
PS: I received the Bug-A-Salt by Fedex 1/21/12. It is bigger than it looks online, but fully-featured and cool. Very professionally put together, and could easily sell at a toy store.
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