This is an interesting article. I had seen before the web pages talking about the Pebble watch but didn't really draw my attention.
What's really innovative in this new device, is the way they are starting their business. By getting funds from the people who find the product, interesting.
Again,...people would only pre-pay for a product under development only when they are convinced with the product idea and the anticipated prospect of the product, right? Then I think it's quite similar to convincing the VC to fund the project, right? Not sure if I have understood the uniqueness in this new approach.
They've very different models. Crowd funding, as through Kickstarter, is based on potential customers who are willing to pre-purchase a product that doesn't exist yet. Funding is an all-or-nothing proposition for the entrepreneur -- if your product requires $100,000 to develop, but you only get commitments $60,000, you're done and nobody invests a dime. But if you do meet your project's funding goal, those customers put up their money and you go off and develop your product. You retain full ownership of your company, your IP, etc.
The VC model is based on funding a company, not an individual project, although often the company has only one product idea to begin with. But VC's are not potential customers, so the entrepreneur doesn't get that pre-development feedback from the market about how well his product will sell.
And of course in the VC funding model, the VC takes majority ownership of your company.
The crowd funding model is a really innovative way for an entrepreneur or small business to quickly get funding for a new product idea.
I wonder whether this is just a fad for people desperately trying to be a cool internet person or whether the idea really has legs.
It looks like a great way to fund some types of project, but looks dubious for others. I wonder how you can tell?
I think it is both. crowd sourcing investment is a I2I type arraingment cutting out the middle man.
Whether middle man add value over time is in great debate. but you are on your own and if one did not bet the farm on one product the return can be very good.
I heard of Kickstarter and contributed to a CD in the works there by Bay Area singer/songwriter Mark Lemaire (plug), but not their peers in China. Very interesting.
It may take a big splash with a system success born out of these Web 2.0 sites to get this new design channel on to the radar screen of the rest of the industry...or a few more of your blogs!
I doubt how this works, with so many fraudulent activities taking over on internet, how can a customer believes in a non-existent product and purchase it. Strange. What happens to the people who have pre-purchased and that number is not sufficient to really make the product.
You have to remember, these are not actually purchases. Technically, they are "investments", with all the risks associated with investing. This risk is traditionally borne by VC's, which in this case is you on a much more modest economic scale. If your intent is not an open ended investment, then kickstarter is not for you. Personally, I find kickstarter much more satisfying than Vegas, and your odds are better as well.
There is a thin line between scam and investing.
Anyone old enough to remember the old-days internet and pre-internet email, usenet and such will remember that a good 99% of the people involved were genuine and an incredibly small minority would do anything criminal or malicious.
Now 30% or more of the internet traffic is spam and other criminal content.
Of course there will be genuine crowd funding exercises, but there will be scams too and, just like phishing sites, it will be hard to tell the difference.
There does not seem to be much control to prevent someone taking the invested money and just announcing 6 months later that all the money was spent and the idea didn't work.
Unfortunately it does not take many bad apples to wreck an otherwise good idea.
It's another form of crowd sourcing. Instead of sourcing information, knowledge and talent, Kickstarter helps young entrepreneur source fund to start a new business. What interest me the most is how these "investors" know the product is not a scam. In addition, what if the product is not delivered.
Another facet to this is the sheer ability for a person or small group of people to create and develop a product using insanely powerful and functional (yet inexpensive) tools from software to 3D printing, with easy access to contract manufacturing. One can almost launch a product from their credit card.