Crowdfunding came as a revolution way of raising money for business. Ideas that investors would normally denied are being funded by normal people with an interest in the product of service. For people with great ideas and no means on how make it true it is a triumph, no more need to change for investors or selling your idea to other companies with more money.
Crowdfunding is also a great way of feeling the market. If your idea is not funded, maybe it wasn’t going to be a great success even if you invested in it yourself. Entrepreneurs can get feedback even before creating their products. All different kind of products are funded and is a great source of innovation.
The product that raised more money was the DAO, which stands for Decentralised Autonomous Organisation, in the Ethereum (which we already spoke about here), raising 160 million dollars. There are other kind os projects as the movie I wish I was here (watch the trailer here), directed by Zach Braff from the show Scrubs. The possibilities are innumerous on crowdfunding.
But as you can feel the market, putting your project there can have a very negative impact as well. In end of August a trio in Brazil which consisted of Bel Pesce, the then called girl from the valley, referring to the Silicon Valley, Leonardo Young, the winner of Master Chef Brazil 2016 and Zé Soares, a gastronomy blogger put on Kickante, a popular Brazilian crowdfunding website in Brazil, a project to open a burguer place with the goal of raising 200K in reais (50K in euros).
Disaster is a nice word to define what happened right after. One day after the campaign went viral, but not on the way the partners were expecting. An article of Meio e Mensagem says that it lacked -a lot- of market expertise. First, it comes the fact that it was a burguer shop, this segment have been popular in São Paulo and it grew 575% in the last 10 years. So I guess there are enough gourmet burguers shops there. Second, Brazil is in its biggest crisis in the last 125 years. People are not exactly thinking about giving money for something as burguer shop, and as a reward get to meet 3 sub-celebrities.
There is also a human factor. The partners are know for being rich. Bel Pesce supposably opened a big number of successful companies, Leonardo Young just won 100K from Master Chef to open a restaurant, Zé Soares sustains a lot of sponsorships for his blog and image. The business model is as traditional as it gets and they kept repeating that the experience will be something totally new, but without saying how it would be new. What is new about it? The rewards turn all around the celebrity status of its partner. Donate 10K and win a trip to peru with the 3 of them.
After being smashed in the internet the trio took the project down. But there is still a question, is there any scenario where the project might be a success? Maybe by being truly innovative? It doesn’t turn around only on the product. Maybe on the way that the restaurant is managed. Why not give a part of the ownership for people who invest on it? A holistic management would be truly innovative in Brazil. In a country in crisis owning something that could have a bigger return to you might be a good alternative.
There are a lot of valuable lessons to learn from it. Trying to put only a foot on the new world that is unfolding on front of us while having your whole spine on the old traditional one, where things have no purpose but the money, might be a big mistake. We are watching for the next chapters of the crowdfunding story.