Published on: April 30, 2012by Kevin Coupe
There’s more than one way to fund a start-up. Especially in these times of instant communication and social networking.
The New York Times has a story about a new product called the Pebble - a watch that synchs with iPhones and Android phones - which despite the fact that it seemed both relevant and unique, was having trouble generating funds from venture capitalists.
So the creators turned to a website called Kickstarter.com, described as a “site where ordinary people back creative projects.” Pebble’s creators did not even have to give up any equity in the company; the Times writes that “patrons who back Kickstarter campaigns are often rewarded with insider access to the projects they finance, and in most cases, a tangible reward for their money. In Pebble’s case, the reward is an actual watch, making it a more appealing project than, say, a movie, where the payoff is a little harder to show off to friends.”
In two hours, Kickstarter generated $100,000 for Pebble, which was the creators’ goal. In about 24 hours, they were up to more than $1 million in funding. Now, still two weeks away from the end of the fundraising period, they’ve raised more than $7 million.
This isn’t an isolated case.
“To date, it has raised more than $200 million for 20,000 projects, or about 44 percent of those that sought financing on the site,” the Times writes. “Only projects that meet their stated financing goals receive money ... Much as the introduction of cheap Web services lowered the barrier to entry for people seeking to create a start-up, and as offshore manufacturing gave entrepreneurs a chance to make products without having to build a factory, Kickstarter offers budding entrepreneurs a way to float ideas and see if there’s a market for them before they trade ownership of their company for money from venture capitalists.”
Beyond the obvious - how great it is that a internet provides a mechanism for people with great ideas to get funding from just average folks who would like to provide seed money in small doses - this story reinforces for me a notion that I’ve had for a long time.
It has been my conviction that the biggest threats/challenges to most businesses come from entities that either don’t exist yet or are not quite on our radar screens. That makes such threats hard to plan for, and requires businesses to be nimble and prescient in ways that generally they are not. (It is why I spend so much time on MNB doing pieces that none of my nominal competitors would even consider, trying to look at sometimes unorthodox stories from odd angles ... I hope that by doing so, I’ll illuminate the landscape in a way that may spark an idea that might serve people well in coming battles.) Sites like Kickstarter make it possible for unexpected competitors to get some traction, line up some funding, and maybe start something remarkable.
Which is why we all have to keep our Eyes Open, and as best we can, look to be pretty remarkable ourselves.
- KC's View: