Crowdfunding: Swag vs Equity

We do a lot of talking about the concept of crowdfunding on this site. Recently I posted my list of swag I am expecting for the coming year – assuming there are not many project delays or failures, it will like Christmas all year round at my place. Is that all crowd funding can do though? If that is the case, I have trouble seeing how it is a store, regardless of what Kickstarter says.

What if there were more ways to entice people to invest in your project, and give them the rewards they wanted in the process? It’s already happening – in Europe anyway; I give you Gambitious.

(Fund The Wardenclyffe Horror!)

Gambitious is the first (I believe) crowd funding site to use a hybrid model of goods and equity. They allow you to back a project for swag in the usual way, the same as Kickstarter or Indiegogo, but they also allow you (depending on the laws of your country) to own a share of a product and it’s attendant profits. Though there have been a few crowd funded equity sites around in the United States since the dot com bubble years, investing rules are very onerous, and prevent people without a certain level of investments (a qualified investor) from participating. Don’t believe me? Try registering at Circleup.  Recently, in the jobs act, some revisions were made, so we could see this sort of thing coming to America in the not too distant future. This would allow 10 times more capital infusion than current venture capital is capable of providing.

What is equity investing exactly? Equity investing is where you give money to the project, and are repaid with a portion of it’s earnings (hopefully). Say for instance that you really believed in Project Eternity, instead of pledging $150 for a super deluxe version of the game, you could have pledged, say – $500, for a small share of the profits if you really believed it was a hit in the making.

I would personally welcome this sort of thing, for two reasons:

  • I already have enough swag headed my way, but I want to keep supporting wonderful creators.
  • I invest money regularly and love diversity.

Every month I take a little money and set it aside, and every few months, after a lot of research, I put it in that giant casino we call the stock market. I would love it if I could take a few hundred dollars over the course of the year, invest in some great projects, and then wait and see if I win big or lose it all. It would be a fascinating experiment either way.

Am I the only one interested in this sort of thing? Do any of you think you would invest some money in owning a piece of a project you fell in love with?

The Wardenclyffe Horror -- Kicktraq Mini

This entry was posted by David Winchester.

2 thoughts on “Crowdfunding: Swag vs Equity

  1. You know, I never thought to do enough research into WHY this sort of thing doesn’t exist. I’ve always been interested in stocks and investing in companies, but I never wanted to deal with middle men nor do I really have the patience to let my money slip away so easily. I could definitely see a kickstarter-esque microinvesting style system work very well for people like me without a lot of capital to throw around but still a definite want to see certain products release and benefit from my charity.

    • You and me both brother. When this becomes legal, you can bet I will devote a lot of articles to the subject. Be sure to check out today’s very related post for more on the subject.

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