Why I crowdfund: a perspective from a naturally cautious investor
December 14, 2012 § 1 Comment
Although I can navigate my way around the Internet, know how to design a basic blog and can tweak digital images to a limited degree, I am probably more Luddite than techie. Give me an analogue camera, a mechanical sewing machine and a wireless (aka a radio) any time. As such, I was a latecomer to social media and have generally been cautious about taking up opportunities the digital world offers. Recently though, I have found myself embracing one of the possibilities of this digital age: crowdfunding.
My awareness of this practice increased when I (reluctantly at that time) signed up to Twitter. Through the self-selective nature of that medium, I was hearing about projects and initiatives that appealed to my interest, values and aesthetics. For months I watched from the sidelines, learning about crowdfunding. I shared the excitement of keen photography friends of mine as they raised the initial financing to convert old facilities for new applications – intrigued but not quite read to take the plunge.
Returns on investment
The turning point came with a report on BBC Radio 4. Some private equity analyst pontificated that investing in crowdfunded initiatives was inherently irrational as such investors do not base their decision on a rational analysis of the likely “IRR” – the mythical acronym that refers to shareholders’ expected rate of return on their investment. This comment had the exact opposite effect on me than intended. Rather than making me run a mile, it made me think about how and why I invest.
Applying the very narrow prism of modern day economics, where everything can be measured in dollars, pounds or euros, the analyst’s view may be correct. When I was working, I diligently squirrelled away spare money into saving products and a pension in the hope of a nest egg for a rainy day and my retirement. However, there are many other types of investments that cannot be distilled down to mathematics . There is the investment parents and teachers make in children; the mentoring that adults offer those younger or less privileged than themselves; the support (in spirit or kind) offered to budding artists; the money we spend at our local butcher’s and greengrocer’s rather than in the supermarket to help such amenities survive in our communities…
Dipping my toe into crowdfunding
So when I learnt of Leah Borromeo’s plans to produce The Cotton Film: Dirty White Gold, I did not remain on the sidelines. I checked my student bank balance and worked out what I could afford to invest. Although the producers offered backers different benefits depending on the level of involvement, these did not induce or sway my contribution. In my mind, the investment helps pay for a team to produce and distribute a story that needs telling. It is a story about the cost of cheap clothes; a film that could have as big an impact on the clothing industry as The End of the Line is starting to have on fishing; one that could trigger positive changes that ripple into the lives of real people. Now that would be a dividend that could not be captured under any accountancy rules!
Supporting the Sárvári Research Trust’s crowdfunded project was also a no-brainer after the wettest summer on record has devastated potato harvests across Europe. Sárpo potatoes are naturally resistant to late blight – the airborne fungus that is particularly prevalent in wet summers – and the not-for-profit organisation has developed a promising new variety (the Crow). However, it needs to raise financing for the rigorous testing process.
Investing in research into a new type of spud may not be everybody’s idea of a sensible investment. However, as someone who eats potatoes, grows them, favours food grown without spraying chemicals and believes resilience lies in maintaining crop diversity as well as biodiversity, investing the price of a meal out makes sense to me. What is more, as backers are encouraged to help test the new variety, I am more of a stakeholder than an investor.
And maybe that is the point. Whether your interest lies in supporting storytellers whose tales are too contentious, quirky or off-beat to attract mainstream funding; or in backing developers of food varieties who do not enjoy Unilever’s or Kraft’s bank balance; or in funding a project to allow a new generation to discover the joy of a niche skill…, crowdfunding is about more than investing a sum of money in exchange for a few goodies. For me, it is about being a stakeholder in the type of society I want to belong to: a fairer one with a wonderful mix of voices, interests and possibilities.
The Cotton Film reached its target but it still welcomes support. If you want to help Leah’s “naughty plan” for the cotton industry, click here.
The Sárvári Research Trust has reached nearly 80% of its target but still needs to raise just over £2,000 by 19 December 2012. If you want to support the project, you can do so here. To learn more about the Sárpo variety and late blight, take a look at this article by John Walker (winner of British Garden Media Guild’s Environmental Award).