- He's back, even if he never went away
June 29, 2013
Altaf Raja's hit song 'Jholu Ram' recalls his greater hit of 90s.
- No foreign exchange
June 15, 2013
Jiah Khan may have been pushed over the edge because of her tumultuous love life but her sluggish career after a big start is said to have caused her…
- Till cinema do us part
June 15, 2013
Films are a great binding factor, or so the late film critic Roger Ebert would have us believe.
- In This Section
- Entire Website
From the Times Of India
- MOST POPULAR
Great idea can be a Crowd Puller
In 2009, filmmaker Onir, four years after the success of his debut My Brother Nikhil, was ready with the concept for his next film, I Am, which dealt with issues of child abuse, migration and homosexuality. Since it is difficult to find producers for off-beat films, he decided to post the concept of the film online on social networking sites like Twitter and Facebook, and ask for funding from interested people. Anyone who put in more than Rs 1 lakh became a co-owner of the film and was entitled to a share in profits. For contributions less than that, you'd get your name in the credits and a return on investment, but no profit. The idea worked like a dream. More than 400 people from 35 cities all over the world put in their money in the film, which is now slated for release later this year.
The way Onir managed to raise capital for his new project is the latest in the art of hooking up and finding money to incubate your enterprise - crowdfunding.
More recently, when Facebook was battling issues regarding privacy, four computer science students in New York smelt an opportunity. In March, they floated an open-source social network project called Diaspora, with special emphasis on privacy, on Kickstarter. com. The portal began to play the role of a facilitator between budding entrepreneurs and investors, setting a target of $10, 000. The concept kicked off so beautifully that Diaspora - now touted as the 'Facebook killer' - managed to raise $200, 642 with 6, 479 people backing it. After institutional lenders, venture capitalists and angel investors, this new wave of financing bridges the gap between the lender and entrepreneur in a unique way.
Often, potentially successful ideas don't materialise because the budding entrepreneur does not know how to get to the "right" people to take interest and fund it. Those who do manage to woo a venture capital (VC) firm are wary about losing ownership of their idea. On the other end of the spectrum are investors who complain that they don't see too many interesting ideas. Diaspora's success has, in a way, shifted the action online to portals like Kickstarter. com, GrowVC. com, IndieGoGo. com, Chipin. com and Hackfwd. com where anyone can post their idea and anyone who thinks it's interesting can fund it.
"In addition to direct investments by angel investors and community funding, we allow service investments, where anyone can offer their time and expertise in exchange for equity, " says Jouko Ahvenaine, who founded Grow Venture Community (GrowVC) with Valto Loikkanen. GrowVC, which deals exclusively with technology start-ups, has 2, 800 members and registers 300 new members every month. The site has more than 800 startups that are preparing their profiles for funding and the available capital by investors is currently $13 million. "We have a sizable investor base from India on our site and we plan to set up operations in India soon, " said Loikkanen.
In return for their support, investors or 'backers' - in crowdfunding lingo - receive rewards from the 'creators' that range from mentioning names in the credits (say, for a movie) to autographed copies (for a book), depending on the size of your contribution. In GrowVC's community-funding model, 75 per cent of the potential return on investment (ROI) is distributed back to investors. However, creators retain complete ownership of their idea - perhaps a reason why these portals are popular, especially with creative people. IndieGoGo, for instance, has found some investors for 'The Bullet Cart and The Backpack', a project with 20 filmmakers worldwide (including one Neha Raheja Thakker from Mumbai) coming together for a film about a globetrotting backpacker. Raising money for charities and assistance to disaster victims can also be done through these portals.
Each crowdfunding site follows a different model, though. At Kickstarter, you have to set a target amount and deadline by which you plan to raise that sum. If you raise the target amount, or more, within the deadline, only then is the money yours. At IndieGoGo, it's an all-ormore model, where projects keep all the funds they raise even if they don't reach their target. Projects which meet target within deadlines get an additional 5 per cent from the site.
Currently you can start a project on Kickstarter only if you are a US national, though you can pledge financial support to the projects from anywhere in the world. IndieGoGo has a presence in 120 countries, with over 4, 500 projects, 42 of which are from India.
In India, however, the crowdfunding concept is yet to gather momentum. "Indians are rather reluctant to contribute money to an unknown person online. So crowdfunding would probably be more relevant to the family and friends circle to begin with, " says Vijay Anand, who founded Proto. in, a start-up platform. And the absence of an efficient legal framework adds to the scepticism of investors. "Portals need to build awareness for start-ups, especially those that need seed funding. I'd use a portal to look up ideas, but would rather meet the minds behind them before I decide on investment, " says Ananth Rao, MD of seed funding firm Focus Ventures.
Apart from angel investors and VC firms, there is certainly a growing community of investors from all walks of life. "Our backer community is diverse - from students, philanthropists to professionals, " says Danae Ringelmann, founder and COO of IndieGoGo.
Since awareness about the project is critical in generating funds, these portals are integrated with social networks like Facebook and Twitter. It helps if the potential backers are able to see the profiles, communities and views of creators on these sites.
With such large, open platforms, plagiarism is always a pressing concern. To plug this loophole, portals encourage people to share only as much information as they are comfortable with. Also, users are encouraged to make their own decisions on how much, with whom and when to share their business information. Bogus projects presented convincingly are another threat faced by crowdfunding websites. So Kickstarter advises people to check on the creator profile, activity, videos and updates and, of course, ask the entrepreneur various questions to ascertain authenticity.
"Our project owners use their real names and provide updates to their funders as progress happens. However, we do have checks in place to confirm identity, " says Ringelmann. "Projects that don't reveal who's behind them, don't offer interesting incentives and don't showcase the community building around it are poor candidates for success. "
Register for Full Access to the Crest Edition
Don't have a Facebook Account? Sign up for Times Crest here.