Blogs, facebook, web sites, and e-books have all bypassed the mass model of publishing, enabling huge numbers of people a creative outlet not available before 2000, but there is still the need for seed-funding. Raising the modest amounts of money to try and commercialise creativity has become a whole lot easier with the birth of Kickstarter, a crowdsourced funding platform for creativity.
Kickstarter is an interesting model. It calls for pledges for a project, a target and a time frame. When the target is reached, the credit card pledges are activated, if the target is not reached, they lapse. In this way, it creates micro finance for creative projects. The social media collaboration between the site, and facebook enables a “fan-base” to be developed, creating a market at the time the pledges are taken.
A challenge to this type of funding being extended to commercial operations is the hold current legislation gives ASIC, intended as a protection against snake-oil salesmen. The same challenge exists in the US where last week congress passed legislation to enable crowdsourcing of funding up to $1 million/year from a small unaccredited investors, and $50 million for established private companies before having to register a prospectus with the SEC.
Both are very good ideas, that should be translated to Australia where SME’s have great difficulty raising money, and the hurdle of having a prospectus approved by ASIC is very high indeed. The potential for growth enabled by access to funding by SME’s has to be substantial, providing a kick to the economy.