Great ideas come from all corners of our country and the globe. Great ideas do not know race, gender or sexual preference. Unfortunately not every great idea has the capital to get it off the ground. History is full of examples of great inventors or businessmen getting their starting capital from friends and family but sometimes that is not enough. That is where crowdfunding comes in.

The normal path to getting a product or business off the ground is to create a business plan, do market research, develop prototypes and then go in search of capital. This can be had in the form of a bank loan or investment from a wealthy entrepreneur. It requires a lot of time and effort and in many cases ended in frustration. A bank will got through everything with a fine-toothed comb and may be reluctant to offer a load. At the same time what if you do not know anyone with money to invest? Think about what would have happened if Steve Jobs and Steve Wozniak had not been able to secure funding for Apple Computers or if Bill Gates and Paul Allen had not been able to secure funding for Microsoft? How about Phil Knight with Nike or Henry Ford with Ford Motors? How would the world be different today if they were not able to secure capital for innovations or companies that changed the world.

This method is not new. Crowdfunding (also known as a Kickstarter campaign) has been a method for raising capital since at least 1999 when British freelance workers raised capital to fight a potential British law aimed at raising their tax rate. Numerous bands and filmmakers have used crowdsourcing to get off the ground. Recently the cult fan favorite TV show Mystery Science Theater 3000 ran a Kickstarter campaign in 2015 and raised over $5,700,000 and the show was picked up by Netflix earlier this year. The money was raised from over 48,000 devoted fans with the enticement of having their name included in the credits and an advance screening of episodes. Anyone, from a TV show to an author to athletes can use crowdfunding to raise money.

Crowdfunding takes the old methods and turns it on its head. Crowdfunding allows a potential entrepreneur to receive investment from all over the globe. Social media and dedicated crowdfunding platforms allow a potential entrepreneur or inventor to come together with a set of potential investors in a more streamlined fashion. There is no more need to print up hundreds of copies of pamphlets or documents to distribute to people who will say they will “look it over” but really just throw it out as soon as you leave the room.

Most investors come on board with the promise of a return on investment. They do it with the understanding that there is the possibility that they may never see a cent of their investment returned to them but there is also the possibility that they will strike gold. Many of these investors are accredited and stock certificates will need to be issued to these investors. If that seems like too much then there are other investors out there as well though. Crowdfunding allows the average John Q. Public to make an investment as well. These investments may be made with the promise of the first release of whatever it is that is being marketed or for some other perk but smaller donations from average people will add up and may be just what an entrepreneur needs to get their venture off the ground.

Chances are that the product being marketed will wind up in the hands of the average person and who better to use it first than those people, who have a vested interest in the product. If they like it they will show their friends and neighbors giving invaluable testimony and generating interest in the product potentially before it is even available to the public. It also allows those investors to try out the product as a beta-test if you will and report back any problems with the product so that they can be corrected.

For any potential entrepreneur there is still a great deal of effort that they will need to put into a product. Market research and product development still are vital cogs of any project and the more effort put into that the more likely of success and should be done before any attempts at funding are begun. Of course not all inventions or innovations are going to change the world much less be profitable but every inventor or entrepreneur deserves a chance to make it happen. Crowdfunding can help make it happen.

Comments are closed.

Scroll to Top