Capitalism 2.0, The Amazing Promise of Crowd-Funding

The Promise of Crowd-Funding
Years ago, when a friend and I were raising money for a technology company we had founded, a venture capitalist told us, ‘We don’t bet on the horse. We bet on the Jockey’.

He was saying that if Bill Gates presented to him a terrible idea and an unknown teenager presented him with a terrific idea, Bill Gates was going to walk away with his money.

The rich get richer because they have ‘proven’ their ability to create a profit.

Creating Success

But how do you break the cycle, creating success so that you are then deemed worthy of further chances?

Since the dawn of time, the answer had been connections. You asked Uncle Fred or Aunt Sally. You befriended people from rich families and got them to ask their relatives. People even send their children to schools beyond their means for the chief reason that they’d ‘know people’ when they graduated.

Crowd-funding is changing all of that. It’s bringing all the Uncle Freds of the world together, putting all the proposals in front of them and allowing them to pick the idea that best takes their fancy.

Crowd-funding doesn’t mean you are going to be able to raise a million dollars to start your pizza restaurant the first week you join, but it does allow generating another key element of success: momentum.

Jake Bronstein tried to raise $30,000 to start an underwear line called Flint and Tinder on Kickstarter. Because he already had a great network of contacts (he worked for the men’s magazine FHM) he was able to get his message far and wide, and ended up raising almost 10 times that.

But one product does not make a company, and even $200k doesn’t go far in the fashion industry. Jake capitalized on the momentum of his first campaign and launched a second: The Ten Year Hoodie. A sweatshirt made to such exacting standards it was guaranteed for a decade. The project surpassed its $50,000 goal on the first day and well on its way to a million dollars.

Crowd Funding

Crowd-funding lets people with ideas slowly build their brands and profiles as they build their experience. It gets around the age-old catch-22 of not having experience, so not being able to raise money and in turn not being able to gain any experience.

And just like the people and projects that use it, Crowd-funding itself is slowly building momentum. With each month, new projects in new industries explore the medium, and develop strategies to reach (and monetize) their audience.

As we enter a brave new world of business, Crowd-funding will continue to transform and be transformed by the people that use it. We are entering a new age of capitalism, where the untapped creativity and potential of the ‘unconnected’ majority will finally be unleashed.

Source: ABI News – Rubidium Wu


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