Kickstarter looks like a great idea. A business idea bypasses the venture capitalists and goes straight to the consumer, raising funds directly in return for a free copy of the finished product or other incentives.
And because I’m a journalist, I’ve been playing recently with the idea of kickstarting a new magazine.
Except, I’m really not at all sold on the Kickstarter idea.
First off, I’m wary of any fund-raising technique that essentially relies on charitable contributions. Eventually the tide has to go out on that, and the crowd moves on to the next shiny thing.
Second, I think investors should get something tangible in return for their cash: Not a print copy of a magazine or a branded usb stick or pencil, but a proper equity share in the business.
Giving them gifts is insufficient, especially with something like a magazine, eventually you end up with a few hundred people in a community who think they have the right to tell you how to run the business without taking any extended risk.
In effect, you risk creating a community of disenfranchised stakeholders – in effect, trolls – who will destroy you because they disagree with your choice of font.
Good post, in practice I’ve seen that businesses run by one person : no investors, no partners can react very quickly and avoid a lot of the drama that personal relationships bring.