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> bankers got completely cut out of the "deal" Seems to me that Kickstarter are the banker, taking 5% of the funds. And their payment processors are taking ano
by bboreham 12y ago
> bankers got completely cut out of the "deal"
Seems to me that Kickstarter are the banker, taking 5% of the funds. And their payment processors are taking another 3%.
- DenisM 12y agoThere are two important differences: 1. There is no discretion involved. When you're trying to finance a new development you have to convince bankers/VCs to give you money. Payment processors don't exactly need to be convinced, and Kickstarter is open to anyone. 2. The size of the cut taken by the middlemen is in direct proportion to the sales volume. With a bank you would normally take out a fixed-sized loan, then spend all the money on manufacturing, then pray that you can sell enough of your gizmos and pay back the loan. With buyer-financed manufacturing there is no guesswork involved. Less discretion and less guesswork => less overhead.
- bboreham 12y agoI think you mis-understand how banks work. There is no bank that will lend money speculatively to fund a new product. If you have collateral, they will lend against that, but that means they aren't taking a risk on the product. A bank is nothing like a VC.