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Crowdsourcing: The New Way of Raising Capital

In the old days *coughatleasttenyearsgocough* finding a way to get the start-up money for your business or advocacy required a lengthy and complicated ritual. If you can't save it up slowly, or get friends and family to help put up the stakes, usually the only recourse was to go to a bank. No collateral? Too bad, boyo.

The Internet has a bad reputation, how the anonymity may give people a feeling of freedom to be rude jerks. While this is true, surprisingly, it is just as common to see people behave kindly and charitably beyond their usual limits. If you were to stand outside on the street, asking for passers-by for $5 so that you could get $2000 to set up a food cart business or something, how long do you think before people may consider what you're doing as panhandling and harassing strangers? And yet- this is a model that actually makes a lot of sense. The same way taxes work in building civilization, the burden of one is very light when spread across a thousand.

Crowdsourcing platforms like kickstarter and indiegogo allows people to collect contributions from total strangers all over the world. They may offer something in return, or ask in total charity. The main difference between the person on the street and the person behind the screen is that here the giver is in total control. Usually, when people go out asking for donations, there's the hard sell and the pressure pitch. When you put your project up for outsourcing, you're speaking to a relaxed audience who will release any contributions purely out of personal goodwill.

Respect, going both ways, is the first advantage crowdsourcing has over traditional forms of solicitation. Neither asker nor giver need feel diminished by their actions. The other advantage is, of course, convenience. For start-up funding seekers, setting up a crowdsourcing project requires very little time and effort compared to traditional methods. For project patrons, the global reach means they can freely pick and choose the projects that only interest them.

How does this relate to this site?

Well, first of all - it's practically the perfect way to raise money for your band or studio. Music and arts are rather popular and funded quite easily, from what I've seen on kickstarter. Many professionals now swear by it as a means of promoting their arts. The Internet allows you to cut out the middleman entirely, and ship CDs and artwork to people all over the world.

Movies, novels, books, dances, bands, businesses and more - thousands have already been successfully crowdfunded. Sure, it is becoming competitive these days, since there are so many projects asking for backers, but that's just incentive to rise above the norm.

There are only two considerations:

1) Can you communicate well why you need and should be given help to reach your goals?
2) Can you really, definitely, back up your words? Complete the promises you've made?

Just like any normal solicitation initiative, the main fear of any would-be contributor is being taken in by yet another scam. If you can make sure that your project is worth the trust, then why not give crowdsourcing a try?

(c) CMBAlfonso 2013
original posting

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Thank you for your comments Carlo. Given the cost of advertising / promotion, recording and packaging faced by independent musicians and small businesses I think that you touch on a number of very good points here. Hopefully your insight will assist other members ... is there a need for such a "crowed funding" option here on NewTribeZ? I would be interested to hear your and other members comments.

Greg Gibson Owner, Founder and Designer & NewTribeZ Radio

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Greg Gibson said...

Hopefully your insight will assist other members ... is there a need for such a "crowed funding" option here on NewTribeZ? I would be interested to hear your and other members comments.

A need? Haha. Probably. There's a lot of truth to certain garage band stereotypes. Wink

So far it seems to me that NewTribeZ is a user's place, not a seller's site. We come here for exposure and interest, not to (ahem) dispose of some extra cash. Wink Though did see there on the intro that one of the goals of NewTribeZ is also to attract business-minded people.

Crowdfunding platforms like Kickstarter have complex and robust money-handling software. Trust is important to that system. They're built entirely around that concept and competing against them is going to be very difficult.

Somehow I feel that NewTribeZ acting as a middleman or escrow service would not serve its stated purpose of empowering people. At the very least, adding another feature is one more webmastering headache.

It would be cool if bands could set up pages to easily accept donations, though. All that's necessary is a Paypal Donate button, but that requires a page with html and javascript handling. Blogs and facebook are already able to do this though.

To me, a unified promotion scheme might be more useful. Offer members a 'kit' or page template to set up their crowdfunding project. A direct-to-Paypal link serves just as well as the donation pool of kickstarter. Allowing people to sell their stuff directly from their project page, or at least offer incentives for donation, would still be of tremendous help. I suppose technically this is a crowdfunding option, but it's not exclusive and does not require special extra scripting.

But to belabor the point; half the 'fun' of crowdfunding is seeing if a goal can be met or surpassed. A direct donation link doesn't track that. :p Much faster than waiting a month or two for the donation pool to fill up though.
Last update on August 19, 1:02 am by Carlo Marco Alfonso.
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