Do you want to start a business or fund a creative venture but are hobbled by the current economy? Have you been turned down by venture capitalists who believe your idea is not scientific enough or won’t be the next Facebook?
No fear – a new form of funding is on the rise, driven in part by the continuing ascent of social networking and possibly by the work ethic
generated by the software open source movement.
Called crowdfunding, people with an innovative or creative idea pitch it to the public and receive donations and investments from those who want to buy into their idea. An example of the trend is Kickstarter in the US, where project owners choose a deadline and target a
minimum amount of funds to raise. If the minimum target isn’t reached by the deadline, no funds are collected.
Everything from indie films, documentaries and food projects have been funded this way. Examples of this include Diaspora, a social networking rival to Facebook that raised $200,000 through public support; the Glif iPhone 4 tripod that raised $137,400; and the movie Blue Like Jazz, which raised $345,992.
In Ireland, there are some pivotal examples of crowdfunding ventures taking off. Business to Arts will later this month launch a new crowdfunding service called Fundit.ie that aims to support Ireland’s creative projects. Individuals or organisations with ideas can register their projects on Fundit.ie, and promoting the project on social networks like Facebook can offer rewards in return for small amounts of funding.
Fundit.ie is based on an all-or-nothing approach. When the closing date of a fundraising project is reached and targets aren’t met, then no pledges from the public are realised. Business to Arts CEO Stuart McLaughlin explains the concept: "The entrepreneurs work out what funding they require for their projects. We’ll work with them to verify that it is realistic and that it matches in with the networks they have and how potential funders can engage with them."
McLaughlin says the concept could be employed by musicians working on a new concept album, programmers leading a new software start-up or filmmakers trying to get funding behind a feature film.
"We’ve courted some specific projects, but since we started communicating via Facebook and Twitter we have been approached by a lot of creatives at different stages."
Another example is northwestern company Seedups, which launched a fortnight ago as a crowdfunding platform for start-ups to match with a growing network of investors. Founder Michael Faulkner describes the concept of the business as networking new entrepreneurs with angel-type investors who are looking for the best new start-ups in which to invest.
Seedups had its soft launch on 5 November last year and in a little over two months has attracted more than 200 entrepreneurs from Ireland and the UK raising funds for new start-up ventures.
Worldwide interest for Seedups
Industry interest has come from the UK, US, Canada, Switzerland, Belgium, Holland, India and even further afield.
Seedups is calling on technology-based start-ups raising €25,000 to €250,000 in start-up or expansion capital to get set up with the service and start interacting with investors on the platform.
The growing pool of investors on Seedups, which stands at 55, providing €3.6m in seed capital, can see the benefit in seeding start-up investments both from a social and investment perspective.
Meanwhile, designer Paul Geraghty has started Picturk, a community-driven platform that connects up digital photographers with people who use digital imagery. Picturk is bringing a new twist to the internet-based stock photography market – through ethical crowdsourcing using local camera clubs – and will work by running photography competitions.
Explains Geraghty: "The idea behind Picturk is you put your requirement into the system and that goes out to the community of amateur photographers who are good at taking photographs. Then you pick the photo you want to use, you make the particular photographer the winner – they get some money, bragging rights and a credit. That’s the value they get."