What does one do if one is struck by an inspiration? An idea that keeps one awake at night? An idea that can transform lives, somehow?
The next steps are well documented.
Get a bulletproof business plan, push an elevator speech about its potentail impact to all who can fund or reach investors, and then wait for backing and support from venture capitalists, angel investors, early stage funders.
The question of money and funding keeps many potentially great ideas stillborn. Banks need collateral. Succeed or not, money needs to be paid back, with interest. Angel investors, venture capitalists need scale. Success means an exit plan, the path to success means signing away ownership and potential returns.
Or the idea could enlist support via online marketplaces for funding. Kickstarter or Kiva are two of the best known platforms for this. Kickstarter focuses on creative projects, while Kiva is a micro-funding platform.
Let’s look at Kickstarter first.
An online marketplace for ideas, where passion projects find backers, willing to put their money to help make the project come alive.
No ownership dilution. No creeping loss of management control. No interest to be paid. Just a bunch of people who love an idea and fund it, for no financial incentive or reward. Just the satisfaction of helping midwife a great idea, bringing forth a new experience and an interesting, delightful product.
Kickstarter bills itself as the “world’s largest platform for funding creative projects.” The operative words here are “creative” and “projects”.
Why “projects”? A project is well-defined and finite. Kickstarter projects define what they are about, usually through a video submission, set funding expectations and a time period within which funding is supposed to be completed. Once these are fixed, all one has to do is wait and watch. Of course, publicize the project and spread the word.
What is “creative”? A film, an art installation, a music album, a watch, a documentary series, absolutely anything that is new and novel.
A couple of examples.
Computing: The Human Experience, a transmedia documentary series by Grady Booch, Chief Scientist for Computing at IBM, asks for funding thus “I need your help in telling a story, the story of the technology that has changed humanity: computing.”
“Just as Carl Sagan’s Cosmos made the universe understandable and exciting to a mass audience twenty-five years ago (was it really that long ago?) Computing: The Human Experience will inform, inspire, and entertain. We will grab audiences of all ages by the throat and/or brain by telling the story of this incredibly technology that is changing our world…while changing humanity.”
Computing: The Human Experience has raised USD 30329.66, from 349 backers, spread over 22 countries. Read more about it here
Next, perhaps the most funded project on Kickstarter, TikTok and Lunatik Multi-touch WatchKits, have raised USD 942,578 (their original ask was for USD 15,000) from 13,512 backers.
“TikTok and LunaTik simply transform the iPod Nano into the world’s coolest multi-touch watches. The idea to use the Nano as a watch was an obvious one ever since the product was announced. But we wanted to create a collection that was well designed, engineered and manufactured from premium materials and that complemented the impeccable quality of Apple products.”
Read more about this project here.
So what makes Kickstarter work? Why is it a bellwether of the Digital Age?
There are no secrets on Kickstarter. Project ideas are shared in all their glory, as are plans, milestones, backers and almost every conceivable detail one can imagine. In my book, such transparency equals confidence and passion.
Sure, one’s precious idea is out in the open. Perhaps someone (or many people) could plagiarize that idea. The world knows who conceived it. And without the original creator’s passion to make the original vision real, chances are the plagiarism will be found out as a pale imitation.
Shared Passion and Stories
Social sharing is built in to Kickstarter. One can pledge support to a project and then help mobilize support or publicity for it via one’s networks. This propels one person’s passion into shared beliefs of the many.
Now, anyone can be a patron of something creative. And earn social capital by telling others. Rocket fuel, wouldn’t you say?
Kickstarter uses Amazon Payment Services to hold pledges; this acts as an escrow account, until full funding is achieved. Using Amazon makes the service secure and adds an extra layer of trust.
The digital age is all about leveraging platforms through alliances and partnerships. Why re-invent the wheel? Focus on building a new vehicle.
There are several similar services waiting in the wings. Indonesia has a couple of them (http://bursaide.com & http://patungan.co/). While Indian film director Onir raised funds through social media for his critically acclaimed film “I Am”, there is no Indian equivalent to Kickstarter just yet.
As one ponders over the opportunity an Indian Kickstarter could provide, a look at Kiva.
Kiva is about “loans that change lives”. It is a microfinance organization which has disbursed over USD 283 millions in loans, money was lent by 688,181 people from over 200 countries to fund 725,056 micro-entrepreneurs. 80% of the beneficiaries have been women.
Now, micro-finance in India has been mired in all sorts of difficulties. Most of these difficulties are well-documented. See this & this for background. From what one has been able to gather, the central issue has been that of raising funds (money has been raised from private equity which demands higher returns).
This is where the Kiva model works beautifully.
Kiva is “a non-profit organization with a mission to connect people through lending to alleviate poverty. Leveraging the internet and a worldwide network of microfinance institutions, Kiva lets individuals lend as little as USD 25 to help create opportunity around the world.”
Kiva raises money from a large number of lenders, each of whom could lend a minimum sum of USD 25 to any number of qualified projects. The money that one pledges is disbursed to the project, usually a group of micro-entrepreneurs. A project could well be purchasing a batch of sewing machines so that a self-help group of women in Pakistan could earn some money doing job-work. Once the group pays back the money, it is credited back into one’s account. The lender can then decide to fund another project. Ad infinitum. Watch this video – a rather lucid explanation of how Kiva works.
Kiva’s model is hybrid. Its raising of funds, exposing projects from the corners of the globe could only happen in the digital age. It disbursement of funds to projects follows feet on ground, something that successful businesses have practiced since the dawn of mass marketing.
Kickstarter and Kiva are literally in two different worlds. Kickstarter seems focusing on the first world, with its involvement with the upper reaches of Maslow’s hierarchy of needs, while Kiva seems firmly planted in the third world and focusing on the bottom of the hierarchy of needs. Both are necessary. Both are required.
In their own ways, both are using the tools of the digital age to improve lives and create a better world.