Crowdfunding is getting a lot of press, lately. President Obama is about to sign the JOBS Act of 2012 that will make it easier for small business startups to sell stock in their fledgling companies to anyone over the Internet. Many expect it to create a flood of “micro-investors” who will infuse our economy with much-needed money and jobs, while others think it offers vast new opportunities for fraud.
I’m a huge fan of crowdfunding, but I’m not a fan of the JOBS Act. While I wish anyone looking to get rich through this new way of investing the best of luck, it isn’t my kind of crowdfunding, and I’m a little worried that the thing I’ve come to love will go away as a result of this new law. Here’s how my kind of crowdfunding works:
- An entrepreneur or small group has a cool idea, but lacks the funds to make it happen. Banks aren’t willing to help them out, or it’s too much of a hassle to get the comparatively small amount of money needed.
- They decide to put their idea up on a site like Kickstarter or Indiegogo, including a pitch that describes what they’re trying to do, how they’re going to do it, and why it’s worth supporting.
- They include special bonuses for varying contribution levels — perhaps buttons and T-Shirts for small contributions, all the way up to personalized dinners and Executive Producer credits for the big bucks. The more creative these bonuses are, the better.
- People find projects they’re interested in backing, and decide to support them at whatever monetary level they’d like. Other than the bonuses (which are optional), backers receive nothing but the knowledge that they were a part of making something awesome happen.
I’ve backed projects that will help keep Tanazanian music and vintage science fiction books from fading into oblivion, supported local artists, helped fund films, launch video games and surreal toys, and was even a part of creating a new form of independent online journalism. Oh, and I’ve also helped to create a futuristic underground park lit by optically irrigated sunlight from above. How cool is that?
In each case, I felt as though I’d become a part of the community making these amazing things happen, no matter how much or how little I gave. I’m not looking for a piece of the profits, I just want to be a part of helping good people do great things. Now that many of these companies will be able to sell stock directly to investors, how many will choose to offer cool stuff instead?
My hope is that my kind of crowdfunding will always appeal to creative, innovative entrepreneurs. I know that I’d love to keep supporting them, and I know that I’ll never buy stock instead. To help keep this kind of thing alive, I’ve added a new Crowdfunding category to the blog in which I’ll highlight projects that I’m backing before their deadline is up … that way, perhaps you can get in on the fun and help keep the real crowdfunding alive, too.