Worldview: Crowdfunding and risk

I’m a big fan of crowdfunding, that idea put forward by websites like Kickstarter and Indiegogo that allows people with ideas to connect with groups of people interested in their idea to help fund it. I’ve helped fund a few ideas myself.

Recently, I’ve been reading a lot about crowdfunding initiatives that have failed and the various amounts of ire felt by the people who helped fund those initiatives. Most of these articles leave me shaking my head.

What it seems that most people who engage in crowdfunding fail to realize is that it is simply another form of venture capitalism, one with usually lower dollar amounts and with the risk distributed among far more people. Venture capitalists will tell you that such initiatives are fraught with risk and that many, if not most, of them fail at their initial premise even if they eventually go on to succeed.

Crowdfunding is not some kind of magic elixir for success for ideas the Man won’t fund. Instead, it is venture capitalism for the masses, a mechanism to bring ideas forward that would not otherwise have a chance for all sorts of other reasons, usually profit margin.

In realizing that crowdfunding is venture capitalism, crowdfunders should realize there is going to be risk. A lot of it. Not a small number of projects are going to fail. Even after they are funded. Sometimes even after the product has been produced. There will be all kinds of reasons for these failures. They can’t be helped. They can’t be stopped.

And none of these things should stop dedicated crowdfunders from continuing to crowdfund. I know, for me, realization of this risk has made be a particularly discerning funder. I watch a lot of projects for a long time before I commit, and there have been more than a few successful projects I decided not to invest in because I was not sure. There have been some projects that I have invested in only to have them fail. That’s how the system works.

But, beneath all of those ideas, is the critical idea that makes crowdfunding worth it: giving life to ideas that might not otherwise succeed even though they are worthwhile simply because they will never make enough money to become a larger venture. Crowdfunding bypasses the court of the big venture capitalists and gives the little guys a chance.

Risk and all, that’s a venture worth supporting.

DLH

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Worldview: Underhanded

In American politics, at least, underhanded tactics are a time tested way to bully one’s political adversaries into doing what one wants them to do. Barack Obama seems particularly versed in underhandedness, as he once again demonstrated yesterday.

The problem, as is usually true with underhanded political tactics, is that it does nothing to solve the problem and will likely make the problem worse. Obama has used fear to motivate millions of Americans to badger their representatives into doing something that could very easily prove destructing for the country, and he did so to achieve political goals that could very easily prove destructive to the country.

Let’s face reality: Social Security is part of the reason our federal government is so far in debt to begin with, and without substantial reform–yes, even cuts–to the program, our federal government cannot remain solvent. The specter of checks not going out in August is just the tip of a very deep iceberg for a government that borrows almost half of every dollar it spends.

If the president wants to be a real leader, he should present a plan that might actually save the government from default, both now and in the future. Instead, he makes the same old tired arguments he always has: tax the rich, spend like a drunk sailor on shore leave.

In the meantime, he fiddles while Washington burns, and now his song has been tuned to make people dance in fear.

DLH

Read more at my Worldview site...