Mike Lee (Formerly of Tapulous) attempts to explain fundware...

... but doesn't do such a great job explaining it.

Mike Lee formed Tapulous, one of the more successful iPhone development shops, but left after a dispute a while back.

Links of note: http://tapulous.com/ http://unitedlemur.org/ http://fundware.info/ http://puzzllotto.com/

First, the funding here is metaphorical. What we're trying to do is capitalize a company as if it were angel funded.

The metaphorical return on that investment is a company vetted by an established member of the community that will produce good products.

The other option is to let all good companies be forced to compromise their vision to meet investor expectations, or operate slowly to be drowned by crapware.

the problem with this model, is that there's no value return for the people "funding".

a true investment delivers some sort of equity stake in return for investment. if say, you bought a fundware game, and got the next game free, that would be a valid fundware type argument.

here's how that would work. I need money to fund my endeavor, i release something with a slight entertainment value for more than its worth, with the guarantee that anyone who purchases it will get the product i'm developing with the money for free. sales happen and i reach the level of funding i need for the second product, i stop sales on initial product (make it free) and sell second product and let people who have "invested" receive their copies free of charge.