Monday, January 30, 2012

Fueling innovation through crowd funding

Most of us have engaged in donations for humanitarian causes at some point or the other. Crowd funding is a similar idea where crowds of people donate money to fund creative aspirations of people and organizations seeking money for realization of their ideas. The ideas can be in variety of areas including art, music, film, design, technology, publishing and other creative fields. The funding can be from big to small ranging from few hundreds of dollars to hundreds of thousands of dollars.

With the ubiquity of internet the idea is proving very effective for many creative entrepreneurs to get their projects kick started. There are websites that facilitate this - Kickstarter, RocketHub, ArtistShare among a few others.

On Kickstarter, project owner(s) describe their idea using text and video and seek a dollar amount. They also set a deadline to meet their target amount. If the members (aka backers) pledged enough money to meet the target amount for the project the project owners receive the money otherwise no money changes hands. So its an all or nothing model.

What's in it for the backers who pledge money for projects? No cash returns, its a donation not an investment. In return members receive small gifts generally a T-shirt, product or experience.

What about the accountability of project? None again. The success of the project solely rests on the project owner and as such is responsible for the completion of the project. Project updates are encouraged but not mandatory for the project owners.

There are some very interesting projects that are in the works. One that caught my attention is the Elevation Dock for the iPhone. Its a docking station for iPhone that works with or without the case and has looks pretty cool. As of the posting of this blog, there were 7479 backers for the project with $752,982 pledge amount far exceeding the target amount of $75,000 with 11 days more to go. Other interesting past projects are LunaTik touch pen that with one click writes on both paper and tablet. The TikTok watch band that makes your iPod nano into a cool touch-screen watch.

The crowd funding concept with all its concerns is off to a good start and is groundbreaking that anybody with a great idea can attract attention and more importantly raise money with no strings attached.