Something jumped out at me as I read end-of-the-year blogs and features over the past couple of weeks. It was the number of stories devoted to the issue of crowdfunding.
There were articles about the most unique crowdfunding efforts in 2012, the top grossing crowdfunding campaigns, etc. I even saw a prediction that crowdfunding will be the Gold Rush of 2013. You get the picture.
If crowdfunding was Apple Inc.’s latest product, thousands of people would be lined up to rush into the store the second it opened to get their hands on it.
Entrepreneurs seek crowdfunding as an alternative way to raise capital, appealing straight to consumers through websites like kickstarter.com or indiegogo.com. They post their exciting new ventures or proposed products on the crowdfunding website and ask people to make contributions of varying amounts to the campaign.
I wouldn’t call the folks who contribute to crowdfunding campaigns “investors,” because they don’t receive ownership interest in the companies. Contributors usually get perks like a T-shirt or maybe an early rendition of the product itself.
For instance, on Indiegogo currently there’s an incredibly successful campaign for a Bluetooth device called the Stick-N-Find, a small dot-like stickers that you can stick on your keys, your TV remote, backpack, etc., and then easily locate it through your phone if it is lost. The Stick-N-Find campaign has raised more than $500,000 so far.
What do Stick-N-Find contributors receive? For $35 you get two stickers and for $60 you get four.
I would rather have a piece of the company.
Oklahoma entrepreneurs have joined the crowdfunding, well, crowd, as well. I found four Oklahoma City companies that have kickstarter.com campaigns under way right now. And 36 others all completed fully funded campaigns last year.
There were 37 campaigns listed from Tulsa, as well as others from Norman, Haworth, Shawnee, Edmond, Stillwater, Claremore, El Reno, Midwest City and Muskogee. I found 12 current Oklahoma-based campaigns under way on Indiegogo.com.
The co-founders of Oklahoma City’s GoldFire Studios, a video gaming software developer, told the Journal Record that they plan to launch a crowdfunding campaign on Kickstarter later this month.
Last year’s top grossing crowdfunding campaign was Pebble: E-Paper Watch for iPhone and Android. It raised $10.2 million in funding from 68,929 backers. Obviously, all kinds of buzz surrounded the Pebble watch because it raised 10,266 percent of its goal.
My mother always told me not to follow the crowd. But if I were an entrepreneur seeking funding from non-traditional sources, I’m not so sure I would follow her advice.