By Elizabeth Davies
I’ve never really believed in lending money to friends or family.
You may as well give that money away. But if you can afford to do so then by all means go right ahead.
Sure it feels good to lend those close to you some money in their time of need, but I guarantee it won’t feel as good when you’re writing an awkwardly worded email wondering when, maybe if, you will see any of that money repaid.
The best relationships in life are based on equality. By lending to a friend, or borrowing money from them, you’re messing with the natural balance of things. The lender feels awkward and ultimately resentful, the borrower feels guilty and embarrassed – it’s a recipe for disaster.
That being said, I do like the idea of cutting out big business, banks and the middle man in general.
One of the most exciting, growing financial areas is crowd funding. Crowd funding sites allow anyone, anywhere to find ideas, concepts and products they would like to see develop further and contribute money toward them either as a donated pledge or an investment.
I can help my cousin’s, ex-boyfriend’s, best friend’s band raise funds for recording a studio album (but I wouldn’t - they sound like typewriters eating tin foil being kicked down the stairs). I can send LARP ( live action role players) to the world championships in Yemen if I desire to.
I’ll admit there are some bad ideas out there on crowd funding websites.
Some are weird and entertaining like the plastic bottle kayak expedition and others are still slightly odd, but incredibly successful, such as the Yeastie Boys brewing project.
The Yeastie Boys had an initial target of $350,000. With just 212 contributors they raised $505,019 in 60 days.
I’ll admit I’d never heard about the Yeastie Boys until I saw their success story on pledgeme.co.nz. But clearly, crowd funding has put them in touch with the right people.
Unfortunately not every project is a huge crowd funding success.
Sometimes the projects that seem the most worthy make the least money.
Take Farmsat for example. The project has a goal of $20,000 to develop a GPS safety alert system for quad bikes.
The technology has built in roll sensors so that in the event of the quad bike rolling over and trapping the rider, they can be located and rescued.
The Farmsat inventor Steve Dawson has a number of inventions on the go and has won multiple awards for the quad bike GPS safety alert system. Inventions like this could save lives. And yet, the project has eleven days to go and only $50 pledged.
Crowd funding is all about putting your idea out there, sharing it with the world and hoping that it triggers some kind of response in the people that see it.
Now the goal is to convince my partner to try to crowd-fund his engineering project. The reality is, he has nothing to lose and everything to gain.
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Elizabeth Davies is a graduate of the Auckland University of Technology post graduate journalism course. She writes a weekly article for interest.co.nz on money matters and financial struggles from a young person's perspective.
5 Comments
The thing with crowd funding is that it is a marketing exercise in its own right. You need to have 10% of your money pledged in the first day. Lots of work goes into it. Yeastie Boys already have a very good public profile and the initial launch of that company was aided by winning the national home brew competition. Excellent beer though, Pot Kettle Black is astounding.
Hi Elizabeth - thanks for the mention. Crowdfunding is here to stay but, over time, it will be used more and more smartly.
We actually raised our $505k in 33 minutes. When I woke up on the morning of the campaign launch I wasn't sure we'd even make $10,000 on that first night (though everyone else was full of positivity). I was still focused on the things we'd not got quite right over the course of the campaig, even though I knew we'd got all the main points bang on.
I believe our success was down to three main things... 1) We'd already built up a critically acclaimed line up of beers and brand over an extended period, 2) We had a very viable plan for growth that was mapped out at a high level, 3) We engage with our partners, the trade, and the public in an open and honest way. We have a history of treating people well and promoting the entire industry.
Then, on top of this, we got the communication side of things bang on in the 6-8 weeks leading up to go-live. We let everyone know what we were doing and gave them all a time and date on which they could buy in. We mapped outthe campaign like selling tickets to a Nick Cave gig, and that is exactly how it all panned out.
The thought of raising money behind closed doors has always turned me off, so the new laws in NZ was a wonderful way of turning that on its head. Of course, people all need to be aware that they could lose it all. Leading this little company, with another 200 investors on board, I'm well aware of this every day.
Thanks also to Kiwimm and Scrafie, above, for your kind words on our beers. Those two beers are actually the ones we plan to brew first in Britain.
Cheers
Stu - Head Boy, Yeastie Boys
There is a threat to crowdfunding from the number of uncompleted (but paid for), extremely late (some at two years and counting), and some just incredibly low quality products.
Even experiences like those of Tarol Hunt, when his crowdfunded associate failed to produce a satisfactory product and went dark, and the crowdfunding company refused to let Tarol have any information regarding anything despite obvious evidence that the brand and talent being sold was his. Such things suck away the spirit and trust that makes crowdfunding work.
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