Crowd Funding making its mark
I have a few attitudes about "angel investors" and "venture capital" leftover from the days of the early web explosion. It was the rich getting the opportunity to get richer. That was all fine and well, until the investors started asking for returns on their investments. All of this is still going on today, but not at the feverish pace it was a few years ago. I do find it a little ironic that a lot of the technologies and business methods those early investors created have come full circle to open the field for a much wider market for investors. I am referring specifically to the Web2.0 features of regular users posting their own content easily and without any web design skills. Online photo albums, personal blogs, collaboration, productivity applications, auctions, and all of the related tools that came out of the "power to the users" phase of web development has exerted a grand game changing paradigm shift for the utility of the web. So what does this have to do with investors?
Kickstarter rose from the milieu that was Web2.0 and has opened the door for lots more people to get in on the creative projects that would never have found a mere $5,000 investor. To me, the interesting projects are in the technology section. It shows us the cutting edge of innovation, and the super clever ways simple things can make people pony up cash. Just a simple example may help drive home the point. What multi-millionaire would bother with re-inventing the light bulb? None. So, when an innovative team went to kickstarter with their crazy idea, over 9,000 people thought they were crazy enough to want a new light bulb. What is so new? It is just a drop in replacement for your old bulbs right? Yes It is green eco-friendly energy conserving LED? Yes, and it has a wi-fi connection to an app on your phone. OK, so you can turn it on and off with your phone? I have switches for that. Don't worry, there is more. It is multi-colored, so you can change the color, dim and time your lights. Now we are getting somewhere. But, this clever team did not stop there. By using the phone environment to trigger notifications, you can get email alerts, warnings when the battery in your phone is low, wake-up to lights instead of an audible alarm, start a small disco light show to match the beat of your music, and lots of things the users have not even thought of yet. See, that is where the traditional funding would have fallen short. An angel investor would have perhaps been satisfied to invest in a green bulb, and left it at that. But, to attract investments from the general population, they needed a lot more than that. They had to really push the features beyond what a normal new product in a controlled investment environment would require. They took it way beyond a typical extension of technology, and wrapped a bundle of features into a simple concept that is super flexible and fun for the end users to experiment with.
I guess I am trying to say that when the investment world looks at new technology, they do a couple of things. Invest lightly and widely, or invest heavily and targeted. With the buzz of social networks solidly trilling overhead, it is only a matter of time before investment becomes social, perhaps high school alumni banding together to fund a new building or to finally replace those broken down basketball goals on the playground. With the people being granted the stage to advertise their own bright ideas, away from the financial analyst filters of big time investors, we may actually start to see some more of really inventive projects emerge from those garages and workshops in the very near future. That would truly be a wi-fi, color changing, app enabled light bulb above our collective heads.