Posts from crowdfunding

Using CrowdRise To Help People In Nepal

When a disaster strikes, caring people all over the world seek ways they can help. Usually that means giving funds to a global relief organization like the Red Cross. But in the age of crowdfunding, giving to relief efforts takes on an entirely new flavor. You can see that in action on our portfolio company CrowdRise’s service this morning.

nepal

Crowdfunding means you can target your giving with more granularity.

You can give to this family in the US raising money to help their relatives in Nepal, who are now living in a temporary tent and are in desperate need for help.

You can give to this campaign where CrowdRise employee Mallory is raising funds to go to Nepal and help.

You can give to this campaign that celebrates Google engineer Dan Fredinburg who was killed while climbing Mount Everest this weekend.

You can give to this campaign that benefits a local relief effort.

The Gotham Gal and I have given to all of these campaigns and I hope you will consider giving to something as well.

All of the Nepal relief efforts on CrowdRise can be seen here.

Spotlight

Last week our portfolio company Kickstarter quietly launched something called Spotlight that is quite interesting. A project’s Spotlight is its permanent post-funding page on Kickstarter. Here are a couple Spotlights to look at:

Obvious Child

Electric Objects

When you google a project, the Kickstarter page is often a top result, like this:

electric objects serp electric objects serp

But, until now, behind that link was the project funding page which is not particularly useful once a project has been funded.

Now project creators can turn their Kickstarter pages into showcases for the project that can live on and celebrate the project and much more.

There are two aspects to a Spotlight page that I’d like to talk about.

The Timeline – The timeline shows the chronology of a project, particularly what has happened post funding. Here’s a small slice of Electric Objects timeline:

electric objects timeline

What you can see is the evolution of the project as it moves from funding to delivery and beyond. This is a critical part of the Kickstarter experience for backers and creators and yet, until now, it had no place to live on Kickstarter. For me, this is a great first step into more accountability and transparency for the creators to the community which will lead to a better experience for all.

The Creation – Kickstarter is all about helping to bring creative projects to life. The end result is the creation. In the case of Obvious Child, that is the film. And until now, it was not simple to figure out how to watch the film if you wanted to do that.  Spotlight fixes that too. Here’s a screen grab from Obvious Child’s spotlight:

obvious child spotlight

If you click on that blue button, you will be taken to the iTunes page where you can rent or buy the film.

That blue button is Kickstarter’s entry into helping the community and everyone else appreciate all the creations that have been funded on Kickstarter. It’s not too hard to see where this is going.

Spotlight is Kickstarter’s entry into the world of what happens after a project is funded. That’s very fertile and important territory and I am really excited to watch where they go with this now that they’ve stepped into that place.

Girls Driving For A Difference

Given all the misunderstanding of Kickstarter expressed in the comments yesterday, I might make this Kickstarter week at AVC. But I am certainly going to talk about another Kickstarter project that is live right now.

It’s called Girls Driving For A Difference and here’s the video:

The Gotham Gal and I both backed this project yesterday and so can you.

All Or Nothing vs Keep What You Raise

We’ve been investing in the crowdfunding market for a long time. My initial exposure to it was via the non-profit DonorsChoose where I am on the board and where my partner Brad and I made an early contribution to the fundraise which allowed them to go nationwide. That was almost ten years ago now.

There are two prevalent funding models in the crowdfunding market, all or nothing and keep what you raise. I prefer the all or nothing model and I think most funders do. DonorsChoose uses the all or nothing model and that’s where I saw it first. Kickstarter also uses the all or nothing model.

In the all or nothing model, the project creator picks the size of the raise they want to do and then they have to hit that number to get the funds. In the keep what you raise model, the project creator picks a size of raise as well, but they don’t have to hit the number, they keep whatever they raise.

Many project creators think the keep what you raise model is preferable. They don’t like the idea that they will fail and not get anything. But they fail to realize a number of important points about crowdfunding:

1) Funders prefer all or nothing because they want to be sure the project creator will have the funds to complete the project

2) The need to hit the goal pushes everyone, including the project creator, to work hard to make the goal. It drives the whole raise.

3) Creators who choose all or nothing are more committed to the project, the raise, and the process. Keep what you raise often attracts dabblers.

4) All or nothing raises more money. The amount of money that is raised every year in crowdfunding via the all or nothing model dwarfs the amount of money that is raised in the keep what you raise model, except in the charitable giving category.

Crowdfunding on the global Internet may be new, but raising money is not. In the venture capital business, the keep what you raise model is almost non-existent. A founder can’t go out to raise $5mm and then say to the investors “well we only got $2mm of capital committed, but we are going to close on that next week.” That just doesn’t fly.

Keep what you raise is for people who are afraid to fail. It’s not funder friendly. And it is less effective too.

So if you are considering a crowdfunding project for anything other than charity and are being wooed by a platform that pitches its keep what you raise offering, you should see that for what it is. Lame.

Feature Friday: Crowdfunding Filters

Our portfolio company CircleUp, a crowdfunding market for equity investments in consumer products companies,  launched something this week that I think is a something we will see more and more in the crowdfunding world going forward.

They have added filters to the left side of their company discovery page. It looks like this:

circleup filters

I decided to filter for food companies in New York that have more than $500k of annual revenue. That got me three results:

food companies in NYC > $500k

Whether it is equity for consumer products (CircleUp), equity for tech startups (AngelList), consumer lending (LendingClub), small business lending (Funding Circle), philanthropy (CrowdRise), or creative projects (Kickstarter), all of these crowdfunding marketplaces have a tremendous amount of things to fund. Drilling down to find exactly what you want to fund is becoming harder and harder. Discovery tools are becoming critical to the user experience.

So I think CircleUp is showing one good way (another is social discovery which Kickstarter does a good job with) to help funders find the things they want to back. My bet is we will see more of these kinds of tools cropping in up in the marketplaces in the coming year(s).

The Kickstarter Film Festival

The fourth annual Kickstarter Film Festival is upon us. Tomorrow night in Fort Greene Park in the fine city of Brooklyn NY from 7-11pm, Kickstarter will be showing films, and featuring musicians and local food purveyors. The festival will be replayed in Los Angeles on Sept 12th, and also in London later this fall.

Here’s a short trailer for the festival:

Here’s the website for the festival. It lists all the films that will be featured. Attendance is free.

And here’s a blog post that talks about how they selected all the films that will be featured. 

It’s going to be a beautiful night in NYC tomorrow night. If you are considering your weekend plans, think hard about spending friday night in Fort Greene Park watching the amazing things that emerging filmmakers are doing right now.

Kickstarter’s Launch Now

Our portfolio company Kickstarter announced some important changes yesterday. They massively simplified their rules (from over 1000 words to under 300 words). And they introduced “Launch Now”:

launch now

At USV, we’ve always been a fan of fully open marketplaces over closed or curated marketplaces. I have written about that a bit here.

That said, you do benefit, particularly early on, by curating the market so that buyers are protected from crap and scams. Kickstarter turned five earlier this year and the company, service, and brand are well understood in the marketplace. I saw a chart on the Internet today that shows just how powerful the Kickstarter brand is right now:

When people think of funding a project on the Internet, they think of Kickstarter first and foremost. So the decision to curate and insure that backers on Kickstarter had a good experience was clearly the right one for Kickstarter.

But crowdfunding is a big business now. There is crowdfunding for seemingly everything now and users’ expectations and understanding has been well set. So it makes sense to be more open and creator friendly. Backers on Kickstarter and the vast number of other crowdfunding sites are now pretty clear about the risks and rewards of backing a project.

I am pleased with these moves. It makes life a lot easier for creators, it will lead to more crowdfunding by more people, it will lead to more projects that backers can back. There will be criticisms that Kickstarter is opening itself up to scammers and crappy projects. That’s always been a criticism of Kickstarter and other crowdfunding sites and will always be. But as this market has matured and gone mainstream, those criticisms need to be seen in the context of the overall success of crowdfunding and Kickstarter’s role as the creator and leader in the market. I think they will be fine.