Is there an open source crowdfunding platform
Explorers rave about new things
Image: Olivier Le Moal
By Stefan Probst, OSBF, and the MittelstandsWiki editors
Crowdfunding as a "form of financing through many individual people" is still a young idea that has been developing more and more into a serious alternative to traditional financing methods over the last few years. The swarm financing model solves two major problems at once: Ideally, it can be used to raise sufficient risk capital without having to accept the usual control of an investor. At the same time, crowdfunding is an extremely relevant practical test: whether there is a sufficiently large market for the planned product.
In addition, the supporters that you win in this way are usually extremely keen multipliers: "If the product inspires me and I have invested 250 euros or more in the start-up, I want it to be successful", argues Seedmatch managing director Jens-Uwe Sauer. “Then why should I hold back on that?” With successful crowdfunding, a decisive step in marketing is often made to enter the market.
Privilege from the very beginning
Crowdfunding was made possible by the simple implementation of marketplaces on the Internet. The principle behind it is easy to explain: someone has an idea for an innovative product, but does not have the capital to implement it. So he searches for possible customers via an online platform and asks for them ("pledging") to provide financial support for the realization of the idea in advance.
Usually there are several price levels. Those who give money in advance and thus also bear a small part of the entrepreneurial risk will be the first to receive a copy of the product as soon as it is delivered. Depending on the amount of the contribution, there are often additional benefits: special versions, additional services, etc.
This article first appeared in our magazine for the Open Up Camp 2014. You can get an overview with download links to all individual issues online in the press center of the MittelstandsWiki.
On the crowdfunding platform Kickstarter alone, over 2 million people from over 150 countries invested a total of more than 250 million euros in over 18,000 successfully implemented projects in 2012. In addition to innovative products, the focus is primarily on art, music, films, games, books and theater. Such projects let their fans pre-finance the next album or the next book, similar to the classic subscription. The mediating platforms usually receive a kind of contingency fee for this.
Startups and Social Payment
Meanwhile, a multitude of platforms are fighting for attention, each offering different types and facets of crowdfunding for different target groups and interests. Very special variants such as Flattr have also stood out, which make it possible to distribute a certain monthly amount to content on the Internet that one personally perceives to be outstanding (the so-called "flutter"). For the creators of blogs, podcasts, videos or music, completely new business models can be thought of - an extremely exciting path that could perhaps lead the industries out of the muddled situation that suffer most from the digitization of their content.
- artistshare.com, "where the fans make it happen"
- flattr.com, "the easiest way to support creators"
- indiegogo.com - "fund what matters to you"
- inkubato.com, "crowdfunding for creative projects"
- kickstarter.com, "bringing creativity to life"
- www.nordstarter.org, "Crowdfunding for Hamburg"
- pledgie.com - "raise money for causes you care about"
- pling.de, "Financing of creative projects"
- respekt.net - "invest in civil society"
- rockethub.com, "the world's crowdfunding machine"
- seedmatch.de, "Crowdfunding platform for German startups"
- sellaband.com, "where fans invest in music"
- startnext.de, "the largest crowdfunding community in German-speaking countries"
- unitedequity.com, "Achieving more together"
- wefund.com, "we fund creativity"
Corporate financiers such as Seedmatch, who use crowdfunding to finance not just individual products, but entire companies - preferably start-ups - from the mass of individuals, take another variant. Here the investment amounts are significantly higher and the number of participants is lower. Jens-Uwe Sauer explains: "With Seedmatch you acquire a silent participation in the company and you will participate in future profit distributions according to your percentage - if there are any."
Conclusion: low participation, high risk
In any case, crowdfunding not only harbors the opportunity to help a new product or idea to be realized, but also the risk that the result does not meet expectations. The amounts invested are usually received in trust, which means that there is no risk of losing your investment if there are not enough supporters and the financing goal is not achieved. However, none of the supporters can know in advance whether, for example, the smartphone can actually be charged with a tea light in the end. A well-known example of this is the Ouya game console, financed by Kickstarter with record results. Unfortunately, in many places the first devices delivered make the impression more of a construction site than that of a finished - and above all: competitive - product.
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