Fantastic: Parallel or Sequential VC and Crowdfunding for Start-ups and Older Start-ups!
The article, Crowdfunding Isn’t Just for the Little Guys, by Katherine Rosman in the Wall Street Journal recently really sparked great thoughts in my mind. So, in this shorter than usual blog I wanted to share some thoughts with you. Initially, crowdfunding sites such as Kickstarter and Indiegogo were primarily designed for super-early-stage startups. You had an idea, you put your idea out there for people to see around the world. Spark their interest. Voila, raise funds, no strings attached. As long as you can hit your specified fundraising goal, you are golden. Pay the platforms a bit of money, the rest is yours free and clear. No obligations, other than pride and to make sure your funders receive a copy of what ever it is you are making. The cleanest type of money. Zero dilution.
However, there is nothing stopping a slightly larger or much larger company that has raised tens of millions more money to put their new products on this platform to not only raise money, but also test drive their ideas and gauge interest/acceptance. Crowdfunding platforms are fantastic market research and focus group vehicles. Within days if your idea is accepted, bam, you are golden! Not only you did not spend money on your market research but you RAISED clean and no-strings-attached dollars.
This is exactly how Peter Hoodie, an executive with the large company Marvell, used Indiegogo to gauge demand for their new product Kinoma Create at the prototype phase. This is happening much more and Katherine’s article mentions a few more. There are no restrictions. Any company can come forward and test drive their ideas and prototypes.
Why don’t more larger companies do this? Most likely due to the old-school non-sharing paranoia. Close the kimono until you are ready to ship, and maintain competitive advantage. This paradigm is shifting. Perhaps on current or future emerging crowd funding platforms, we will see AT&T, Microsoft and many more, trying out new product ideas. Most definitely the non mission critical ideas… it’s only a matter of time. When this happens and the flood gates open, just watch out. It will be fantastic tsunami of innovative, creative and out of the box ideas.
Never stop disrupting & innovating…