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Unfortunately there is a difference between "backer" and "investor", even if they both chuck money in the project. Would there be such a thing as a kickstarted

by clef 13y ago

Unfortunately there is a difference between "backer" and "investor", even if they both chuck money in the project. Would there be such a thing as a kickstarted kind of thing where backers can become shareholders? Or could this simply be a case of "if you invest 10 grand, you get x shares"? This way there could be a way for investors not to ride on the back of backers later on? Or am I being totally silly?

contulluipeste 13y ago
For public shares there is only the stock market, but that isn't a kick-starter. It would be interesting to have an option in the stock market of just bidding money for stock and the actual transaction to be executed only after the required amount was gathered. I'm not sure if it would be possible to build such thing without involving governmental regulation.
eloisant 13y ago
This is the problem I have with Kickstarter. * You can't see it as investing, because you're not getting any share. * You may see it as pre-ordering a product that doesn't exist (and I think that's how most backers see it), but you don't get any consumer protection if the project fails or doesn't live up to your expectation. * All is left is seeing Kickstarter as a charity. You're giving charity to a for-profit organisation.
- moron4hire 13y ago
  Kickstarter is patronage. It can't be considered anything else or they get into some legal trouble with one or more US bureaus. You can't see it as investing because then the SEC gets involved. You can't see it as prodding a product because then, as you said, consumer protection act gets involved. And you can't see it as a donation because then the IRS gets involved (more involved, as backers will want to take deductions). Kickstarter, as a company, cannot and does not promote any view of backing except patronage. You are literally a sugar daddy for the people working on the project. Backing buys their time. Time they have promised to use to make a thing you want, but your only recourse if they don't is to not buy anymore of their time.
  - just2n 13y ago
    They generally require a deliverable, though. If the product is successful, backers get some form of tangible benefit. I don't see why this can't be some share of the company. Giving away 10% for a huge chunk of seed money ($2.4m in this case) is actually way better than you'll ever do from angel investors or any kind of incubator. So if the product is successful, throw a unit at a backer as well as a tiny percentage of the company. Just so they can not feel cheated when you sell for a multi-billion dollar exit that is not in the interest of your backers, because in that case they all get their money back. You don't have to say "your backing guarantees you X% of the company", you just say "in addition to receiving a VR, you will also receive an X% stake in the company if we are successful." The SEC can get involved precisely now, not when the funding happens, but rather when the options are given out.
- Aoyagi 13y ago
  Why is that a problem though?

by clef 13y ago

contulluipeste 13y ago

For public shares there is only the stock market, but that isn't a kick-starter. It would be interesting to have an option in the stock market of just bidding money for stock and the actual transaction to be executed only after the required amount was gathered. I'm not sure if it would be possible to build such thing without involving governmental regulation.

eloisant 13y ago

This is the problem I have with Kickstarter. * You can't see it as investing, because you're not getting any share. * You may see it as pre-ordering a product that doesn't exist (and I think that's how most backers see it), but you don't get any consumer protection if the project fails or doesn't live up to your expectation. * All is left is seeing Kickstarter as a charity. You're giving charity to a for-profit organisation.

moron4hire 13y ago
Kickstarter is patronage. It can't be considered anything else or they get into some legal trouble with one or more US bureaus. You can't see it as investing because then the SEC gets involved. You can't see it as prodding a product because then, as you said, consumer protection act gets involved. And you can't see it as a donation because then the IRS gets involved (more involved, as backers will want to take deductions). Kickstarter, as a company, cannot and does not promote any view of backing except patronage. You are literally a sugar daddy for the people working on the project. Backing buys their time. Time they have promised to use to make a thing you want, but your only recourse if they don't is to not buy anymore of their time.
- just2n 13y ago
  They generally require a deliverable, though. If the product is successful, backers get some form of tangible benefit. I don't see why this can't be some share of the company. Giving away 10% for a huge chunk of seed money ($2.4m in this case) is actually way better than you'll ever do from angel investors or any kind of incubator. So if the product is successful, throw a unit at a backer as well as a tiny percentage of the company. Just so they can not feel cheated when you sell for a multi-billion dollar exit that is not in the interest of your backers, because in that case they all get their money back. You don't have to say "your backing guarantees you X% of the company", you just say "in addition to receiving a VR, you will also receive an X% stake in the company if we are successful." The SEC can get involved precisely now, not when the funding happens, but rather when the options are given out.
Aoyagi 13y ago
Why is that a problem though?