By Stuart Dredge, Musician Neil Young’s new venture PonoMusic raised $6.2m on crowdfunding website Kickstarter earlier in 2014. Now it’s turning to the online crowd again, this time offering stakes in the company.
PonoMusic, whose online store selling high-resolution music downloads and a device to play them on will launch later this year, hopes to raise at least $2.5m on the Crowdfunder site.
A minimum investment of $5,000 will secure a small stake in the company, which is valuing itself at $50m.
The new campaign was officially launched today, although it was launched quietly at the start of August. More than $1.4m has already been pledged, with the campaign due to end on 1 September.
“We are already seeing that this is a growing trend, where companies who successfully run Kickstarter campaigns then want to give those backers a chance to invest through an equity crowdfunding campaign,” Crowdfunder chief executive Chance Barnett told The Guardian.
“This opens up a much bigger pool of capital for the company and also allows the people that are most passionate about the company – backers – the opportunity to invest.”
Barnett suggested that equity crowdfunding will help PonoMusic avoid the criticism faced by fellow Kickstartee Oculus VR, when it announced that it was being bought by Facebook earlier this year.
“Oculus sold to Facebook for $2bn after raising millions via Kickstarter. Those who backed Oculus never got the opportunity to invest, and there was a significant backlash when it was sold,” said Barnett. “Pono isn’t making that mistake with the music community.”
Young launched PonoMusic’s Kickstarter campaign in March in a keynote speech at the SXSW conference in Austin. The company hit its $800,000 goal within hours, and by the time the campaign closed in April, it was the third most successful Kickstarter ever.
More than 15,000 people pledged enough to pre-order the PonoPlayer device, with the first units due to ship in the final quarter of 2014 – by which time the company’s downloads store will also have launched in the UK, US and Canada.
Young co-founded PonoMusic, but in July he also became its chief executive, replacing previous CEO John Hamm.