Wednesday, July 31, 2013

Should large companies use crowd funding?

When people start businesses or a new project that will be released for consumer adoption, there is a good amount of investment that has to be put into it. Not only in time and effort, but in money as well.

Traditionally, you either would use the funds and resources you have saved up or you would try to get a loan. Or, some cases, look for a venture capitalist. But what do you do if no bank will give you a loan or you cant find investors to fund your project or business? 

Kickerstarter, as well as indiegogo has become hugely popular in having projects crowd funded these days. Most recently, Canonical, which is the company behind Ubuntu, has launched a indiegogo campaign to raise a unprecedented 32 million dollars for the Ubuntu Edge. Even though Canonical CEO Mark Shuttleworth has a net worth of over 500 million

Crowd funding has become a great resource for everyday people use the power of the internet to have hundreds, if not thousands of people donate to their project. But should large companies like Canonical, who have the cash in hand to fund their project, ask others to pay for it? You also have people in Hollywood like director Spike Lee who is asking to have his next movie crowd funded. Spike Lee is asking for a little over a million dollars, even though he has a net worth of 40 million dollars. 

Crowd funding has been great to help small companies and "regular" people and projects come to fruition, which otherwise would probably not see past early prototypes. The Ouya, which is set top gaming console based on the Android operation system, was crowd funded and is now on the shelves of the stores like Best Buy. That is a great example how a product, which was pretty much barely out of concept phase made it to the main stream stores.

Now, there are perks people get for donating. Usually when they "donate" the amount the product, will probably get the product before it officially goes on sale. In the case of Ubuntu Edge, the 20 dollar pledges get their name listed a "founder".

I have a question for the large companies and individuals who can acquire the funds for their project easily. Are you only trying not to pay for your new product to get developed, or do you not believe it in enough to pay for it yourself?

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