CanuckCrowdfunding: An Idea whose Time has Come!
Okay, you know that I love SEO and online marketing and talk on same, practice same and yes, even “live” same day-in and day-out…but something that may be new to you all, is my love of the whole premise of what crowdfunding is – and what it can be too!
First a definition – directly from Wikipedia – that says the following about crowdfunding…
“Crowd funding (sometimes called crowd financing, crowd sourced capital or street performer protocol) describes the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the Internet, to support efforts initiated by other people or organizations. Crowd funding occurs for any variety of purposes, from disaster relief to citizen journalism to artists seeking support from fans, to political campaigns, to funding a startup company or small business or creating free software…”
Samples of same abound on the web – you’ve most likely heard about www.kickstarter.com or www.indiegogo.com or www.vencorps.com too…..all examples of sites that offer up the opportunity to allow anyone to use their creditcard to “offer” up funds to a startup business or non-profit or to a social cause. Good idea. Works. And from what I see numbers wise, works especially well for those startup founders who know how to “pitch” their project and how to get the right mix of marketing, image and brand identification high enough to attract attention and yes…attract donations.
And the biz model for same is about universal in this space. A person makes a donation to a chosen project. The project has a “shelf-life” of a certain period of time and should the target amount of funding be successfully raised, the funds are then turned over to the project founder, minus a small % that is kept by the crowdfunding site itself as overhead of usually less than 10% of the total. Sometimes the premise is varied in that some crowdfunding sites will turn over partial funding totals i.e. if the total ask is more than the funding provided….and others require a full raise of the funds. But notwithstanding, the idea in my mind is sound…
Of course, how things “appear” and then whether or not they’re “legal” is an issue when the law follows technology…and here in Canada as well as the US there are some major hurdles that will need to be jumped before a real crowdfunding site for startups and investors can occur…hence the crowdfunding channel is often called “donation-ware” as a catch-all and to skirt the legalities of same….but that too looks like it may be changing!
In the US, it’s a sound enough idea that the US President, Barack Obama has announced recently in his StartUpAmerica Initiative, that he too wants to make it easier to responsibly allow startups to raise money through “crowdfunding” which in my mind about cements this idea as having some real momentum….here’s the quote from the White House itself –
“As part of the President’s Startup America initiative, the Administration will work to unlock this capital through smart regulatory changes that are consistent with investor protection. This means reducing the disproportionately high costs that smaller companies face when going public, as well as raising the cap on “mini” public offerings (Regulation A) from $5 million to $50 million. It also means responsibly allowing startups to raise money through “crowdfunding” – gathering many small-dollar investments that add up to as much as $1 million. Right now, entrepreneurs like these bakers and these gadget-makers are already using crowdfunding platforms to raise hundreds of thousands of dollars in pure donations – imagine the possibilities if these small-dollar donors became investors with a stake in the venture…”
And here in Canada….is crowdfunding legal yet? Well, it appears that as yet it is NOT legal from a pure investor standpoint…ie raise an ask via a Canuck crowdfunding site for equity….and the word on same is fairly plain but as I note, still under discussion too! And I am trying hard to lobby the few folks I know that yes, crowdfunding is a needed model to make legal to help our startup communities grow, eh!
And do we even have any crowdfunding sites in Canada? Well, a healthy set of googles into same has provided only a few examples at this point….and all I can find are a few site listing spots….and here’s the best example that I’ve found over at www.getspringboarded.com.
There is a larger list here, that shows many of the global crowdfunding sites….Marketing of Innovation but as I note after many hours on google the news stories by far outweigh the actual crowdfunding sites…
- ITbusiness.ca – Try Crowdfunding….
- ITbusiness.ca – Launch for Free…