In Praise of Regular Funding (with apologies to crowds)

Eric Garland Business Trends Leave a Comment

I was toying with the idea of starting a GoFundMe for my latest Kickstarter. This way I could get cash flowing to help launch my funding operation. What will I be doing? I’ll be funding things! My things. For stuff.

Yup, I’m actually going to do you the courtesy of not promising to perform specific activities and then keeping my head low for six months. I have more respect for you than that. I’m going to simply ask, if you like me and cherish my work, then this is a perfect time to give me money. I will include a list of small tokens of my appreciation that I will also not be forwarding to you as thanks.

Man, the Internet has put the fun in funding!

Project capitalization requires skin in the game

When I added up the results from the number of crowdfunded projects to which I have contributed, I came to a realization that nearly 80% of them failed to either:

  1. Do what they promised
  2. Do what they promised in the stated timeframe
  3. Deliver the reward promised for a certain level of sponsorship

I’m not going to name names, of course, but I’m waiting on one trinket, one tchotchke, and one piece of software, not to mention a few projects in their entirety to launch at some point. All were worthy ideas run by no doubt fantastic people, and I have no belief that any of the lack of performance was from malice. Nevertheless, my anecdotal evidence makes me a touch nostalgic for the logic underpinning traditional investment.

Some ideas will never get the green light from The Powers That Be, and so crowdfunding will remain a compelling option for years to come. For example, nobody would green light Kung Fury, the single greatest film in history.

kung fury

Who would finance and approve a movie by Swedish guys about a 1980s Kung Fu cop who uses computers to hack back in time to stop Adolf Hitler from becoming the world’s greatest Kung Fu master? Only the Internet, and God bless everyone who came together to produce this masterpiece.

For the rest of us, we should consider the wisdom of having actual investors. Yes, yes, approaching people with excess capital is so very 20th century, a brush with the 1%, but it has its bright spots.

Your investors care deeply about your project

Sometimes, we all need inspiration and wisdom to help us bring projects to fruition. Working with a small group of investors, you can be sure that people whose money is on the line will give your project the attention it deserves.

Your investors will probably be pissed if you don’t do what you promise

This is actually another aspect of the first bit about “caring deeply.” Working with actual investors who want a return (or in the case of non-profits, tangible results) will help motivate your innovation and execution because they will be pissed off if you waste their money. If you obtained capital from a man named Don Carlo Pentangeli or “Charlie Three Fingers,” pay very close attention to this part. In addition to positive reinforcement, working with actual investors can also motivate you will negative reinforcement. Why, you might even get sued depending on your level of breach of fiduciary responsibility. This will keep you on your toes and performing at a high level.

If you’re an investor, your likelihood of success goes up

It is probably no accident that start-ups pay meagerly in cash and heavy on stock options. Investors demand that your real motivation come from a payoff in a bright future. So when you are made an investor yourself, you get paid based on a different future, one where your completed project actually exists. Pretty neat all around.

This is in no way an attempt to say crowdsourcing is dead, but there are probably situations in which the more traditional methods may actually result in more success. This is the point after all, even if there are no cool apps or buttons on which to click Like.