Crowd funding acceptable for startup? | Hacker News Reader

Crowd funding acceptable for startup?

aleprok.eu

11 pointsTMK13 comments

I launched OpenPhoto on Kickstarter as a project with full intentions on building a company around it (I left my job to pursue it).

It's an open source project so that helps in terms of getting accepted into Kickstarter. Their terms state that projects are basically fixed in term and scope.

What I promised on Kickstarter was a photo management/sharing platform that allows you to use your Dropbox or S3 accounts for storage. I'm nearly finished with that.

The next phase is to offer a hosted version of the software (a la Wordpress) via a for profit company. The source is and will always remain open.

http://theopenphotoproject.org

https://github.com/openphoto/frontend

Thank you for letting me know of your success with Kickstarter. Good luck with OpenPhoto.

When we were raising our angel round we asked our lawyers about this.

In the US, the general legal advice is that unless it's friends and family, it is not a good idea to raise money for equity from people who are not Accredited Investors. (http://en.wikipedia.org/wiki/Accredited_investor -- in short, millionaires).

IANAL, but the reason they gave is that non-Accredited Investors have more protections from the SEC and they can sue you if they decide that you didn't spend their money wisely.

There are also some complications that arise when you have too many investors on your cap table. I've heard of people getting around this by creating an LLP that invests in your company with set terms, rather than directly investing in your company. But I can't say for sure if this is good advice.

Thank you for the advice about the investors, though myself i was thinking about small donations as the amount of cash we think we need is not that much.

You could sell Obama O's and Cap'n McCain's...

http://www.airbnb.com/obamaos

If they don't invest, they don't have to be accredited.

I know this wasn't the question, but why do you need money?

You have "some ideas" for "some simple game projects"? That doesn't sound like a startup...that doesn't even sound like a project. Unless you have a very clear vision of exactly what it is you're wanting to do, you're going to have a hard time getting anyone to part with their money. If Tim Schafer has "some ideas", I'd give him money for sure....but unless you're proven, your ideas count for zip. It's the execution that counts.

A startup is a business searching for a business model that scales. A startup isn't a couple of guys with a few ideas that may or may not work.

If you have some awesome ideas, the best way to get money is to work on your idea until it is at a point where someone can see potential in it. It costs literally nothing to start working (providing you have the tools, which I'll assume you do). But it sounds like you're asking for people to put money in to...well...nothing.

Finally, if your idea of a project you and a few guys can work on, I'd suggest something a little less epic than "3D Sandbox mmorpg with really huge world designed and lot of monsters, characters and even own language for in game characters."

Thanks. This is what I waited for, the rant. You even read my next blog post.

One down. You should not be asking the question, "Why do we need the money?" I answered the question in the original blog post. For skills we lack and don't have 10 years to work on.

Two down. Why would I at this point start telling about my or his possibly epicly stupid ideas. Of course in the case if we actually do fund our first commercial project with crowd funding we will have to tell about the project and why the people should donate to us or invest in us.

I agree that ideas do not count for zip if the execution fails. Startup is a fresh business in phase of development and research for markets. Yes finding scaling business model is nice, but still the product is part of the startup too or you do not have anything to sell.

I know we could go the way of hacking code all night and day until we have something to show. Maybe uglier blocks than Minecraft has with barely no textures.

I was not asking you to give me money now. I was asking if we should go the way of crowd funding or find other ways to generate that cash by part-time working, etc.

You kinda missed the point of the blog post where I mentioned about the 3D sandbox project. Over Design, being over my head, etc.. It's experience which I won't fall into that easily again.

This is exactly why we launched IgnitionDeck. We were thinking of raising money via traditional methods, but crowd funding, when it works, is so much more appealing. Of course, it's not as easy as it sounds, as consumers are just as picky, if not more so, than investors.

Yeah. I'm kinda afraid of the picky people myself. Kinda even threw a joke suggestion to sparky that I'll whip up some malicious code and sell it in the black market to do the funding.

I would really like to know the answer to this as well. Where's the line between a "project" and a "startup"?

I think a startup itself is a project if it is only temporary, but startup can itself contain smaller projects.

The most meaningful distinction to make here is that a startup exchanges equity for investment capital, while a project simply accepts advance payment for some good or service it intends to produce.

They could still use Kickstarter to help fund one of the startup's projects – they just can't offer equity in return.

One attempt to find a legal workaround for securities laws which make it hard to crowdfund startups is ProFounder:

https://www.profounder.com/

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