By Mark GregoryTechnology correspondent, BBC World Service
The likes of Kickstarter and Indiegogo are seen as pioneering a new internet funding model that has elements of investment and philanthropy. Less well-known sites – such asRocketHub, Crowdcube and Seedrs – are also gaining traction.
Projects raise money by asking people to pay in advance for products and services that don’t exist yet, using the cash for development. Donors get rewards, often linked to the amount they’ve pledged, such as badges, t-shirts, tickets, or a copy of the book or gadget – whatever is being funded – as a thank you for their support.
The rise in crowdfunding has been fuelled by some remarkable successes. The story of how an unknown computer gaming firm, Ouya, reached an ambitious funding target for a new console within eight hours of listing, and then went on to raise more than $8m on Kickstarter, has become an internet legend.
But for some the dream has already gone sour.’Lost at sea’
Some entrepreneurs say it’s got so competitive, and there are now so many projects listed screaming for attention, that it has become very difficult for small players to get noticed.
“If you are a lone person or small team, it doesn’t matter how great your idea is, unless you have a big team of contacts, a good marketing budget or fit the small niche of super-tech projects, you are a little lost at sea,” says Simon Enever, founder of byDefault. The company has developed a new kind of modular toothbrush with a choice of brush heads and handles that can be customised to match customers’ aesthetic tastes and brushing needs.
“I actually wish we had taken orders solely on our website and not used Indiegogo, I think we would have been taken more seriously that way,” he said.
Mr Enever aimed to raise $60,000 for his toothbrush project but after two weeks on the Indiegogo site had received pledges for less than $8,000. His appeal remains active until Friday.
The problem, he says, is that not many people have even realised his project is there. He describes the Indiegogo site as “a vast library and getting attention from being there is very, very difficult”.
With hindsight, he realises the key to being noticed is getting media coverage from popular tech and lifestyle blogs and websites.
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