If you want a comment, an idea, or feedback on a particular subject, then all you need to do these days is get a group of people together online. Known as crowdsourcing, this approach can deliver quick responses, but it can all be a bit inexact. You’re never sure that you have the right crowd, or that you’ve asked the right questions. However, when you apply crowdsourcing to funding, then the reward is always guaranteed to be right. After all, who can argue with hard cash?
Apart from those who have experienced difficult investor-investee relationships, of course.
One of the first crowdfunding markets was in the music industry, with website Slicethepie(www.slicethepie.com). It launched in 2007 with the intention of allowing musicians to get funding to make records. Slicethepie created an online community of music fans who then contributed if they liked the music and were prepared to take a gamble.
The success of the site is now being applied to encourage the setting up of new technology businesses. In early 2010, website Grow VC (www.growvc.com) launched as a new community-funding model to enable technology start-ups. The system works by pooling 75% of membership fees into a community fund, which gets invested
back into “promising start-ups” that are members of the platform.
Grow VC manages the fund, but all the investment decisions are left to members, who determine how to invest their portion of the fund into other start-up companies that they feel have the most potential. So far, there are more than 5,000 members with a capital of $18m and 76 active start-ups.
Another crowdfunding project launched this year is Sponsume (www.sponsume.com). It’s a UK-based generalist crowdfunding site, which helps artists, entrepreneurs and inventors raise the capital they need.
Finally, there’s the latest brainchild of serial entrepreneur Pete Lawrence, who founded The Big Chill music festival. It’s aimed at raising funds for the development of a new social network, Pic-Nic Village(www.picnicvillage.com). Pic-Nic also targets creative thinkers, and aims to be a catalyst for new ideas, initiatives and collaborations.