Could it be that venture capitalists, angel and other investors will one day require that you crowdfund your ideas before they will seriously consider your company for investment? Maybe “require” is too strong a word but would it be a good idea?
There is one question all investors ask themselves before making an investment: will the rest of the world like this and adopt it? The concept is not new but it is rather interesting. In a report updated May 24th 2015 Crowdfundingblog,com listed the most successful crowdfunding campaigns to date and looking at this, I asked myself a simple question: how likely would I be to invest in these companies and these products after seeing these results?
|Pebble Time – Awesome Smartwatch,||$20,338,986||Kickstarter||Design|
|COOLEST COOLER: 21st Century Cooler that’s Actually Cooler||$13,285,226||Kickstarter||Technology|
|Flow Hive: Honey on Tap Directly From Your Beehive||$12,212,833||Indiegogo||Technology|
|Pebble: E-Paper Watch for iPhone and Android||$10,266,845||Kickstarter||Design|
|OUYA: A New Kind of Video Game Console||$8,596474||Kickstarter||Games|
|Pono Music – Where Your Soul Rediscovers Music||$6,225,354||Kickstarter||Technology|
|Sondors Electric Bike||$5,832,467||Indiegogo||Technology|
|The Veronica Mars Movie Project||$5,702,153||Kickstarter||Film & Video|
|Bring Reading Rainbow Back for Every Child, Everywhere!||$5,408,916||Kickstarter||Web|
|Restore King Chapel Now. Every Day & Dollar Counts||$5,048,213||Indiegogo||Technology|
|An Hour of Code for Every Student||$5,022,911||Indiegogo||Education|
|Super Troopers 2||$4,473,983||Indiegogo||Film|
|Torment: Tides of Numenera||$4,188,927||Kickstarter||Games|
|Mighty No. 9||$3,845,170||Kickstarter||Games|
|Reaper Miniatures Bones: An Evolution Of Gaming Miniatures||$3,429,235||Kickstarter||Games|
|The Micro: The First Truly Consumer 3D Printer||$3,401,361||Kickstarter||3D Printing|
|Double Fine Adventure||$3,336,371||Kickstarter||Games|
|Reaper Miniatures Bones II: The Return Of Mr Bones!||$3,169,610||Kickstarter||Games|
The consolidation of venture capital, angel investing and crowdfunding as Alternative Finance is well documented and in fact I often write about this – it is the most powerful financial markets trend globally at this time and as with any trend all of its benefits and components are not always obvious right up front. But just looking at data from the Crowdfundingblog.com which is more about products than companies, I see a powerful comment about the companies themselves.
First thing it tells me about the company is that management was able to orchestrate a successful crowdfunding campaign. This says a lot since I am a firm believer that “build it and they shall come” is not a strategy of any type. It also tells me about management’s confidence in the product, these products were not created for the purpose of getting an investment but rather for adoption by the consumers. An investor’s worst nightmare is to find themselves invested in a company created solely to attract investment. At the end of the day what can be more transparent than placing your product in the front window of a storefront to the masses?
And it just gets better and better from there. A well designed and implemented crowdfunding campaign demands attention to critical details such as management team, history, advisors, and much more. Undoubtedly there will be those that get away with haphazard campaigns that undisciplined investors throw money at but my guess is that as the market matures, regulations are put in place, the market self-regulates through good old fashioned competition, poor ideas, lousy plans and ill intended campaigns will be obvious, stand out and die. Maybe a more likely scenario is that crowdfunding platforms will work to create high value marketplaces and as the stock exchanges are self-regulated organization (SROs), they regulate themselves setting high standards that ultimately provide a much safer and better investment echo system.
And so the answers to my earlier questions are:
- A crowdfunding campaign is a low cost way to showcase your products to investors
- A well-produced and executed campaign speaks volumes about your company
- And looking at the crowdfundingblog.com data I see products that I am interested in that previously I would have never considered investing in