Crowdfunding is clearly one of the most important developments affecting startups in the last twenty years. It really comes down to three things:
- (i) you can validate a market quickly, before raising money and incurring significant capital expenditures,
- (ii) you can build your brand at a very low cost, and;
- (iii) with non-equity crowdfunding you can raise money without giving up equity.
There’s no doubt crowd-funding sites like Kickstarter and IndieGogo have increased the velocity of innovation by channeling new sources of financing to early-stage ventures.
But beyond providing start-up capital for new ventures, companies are starting to use crowd-funding as a business model as well. The magic of crowd-funding is that it allows strangers to cooperate safely and efficiently to accomplish goals all of them want but none of them would be willing to foot the bill for individually. One notable example is experiment.com (formerly known, as microryza.com), which crowd-funds scientific research. The beauty of this model is that it captures the long tail of studies that ought to be done, but that are unfundable from traditional sources because they are too small, too specialized, or are being conducted by teams without enough of a track record.
Closer to home, GroceryInspector, founded by my friend and fellow Seattleite, Ehren Brav, seeks to do the same for the testing of food products. Once GroceryInspector launches, anyone will be able to crowd-fund a test of teas for pesticides, or cat food for mercury, or even the produce in their own local stores. Over recent years people have become far more aware of what they eat and are growing less trusting of government regulators to protect them and GroceryInspector is part of this trend. A recent example in Washington State was the Proposition 522 campaign to require GMO labeling. Although this particular initiative failed, states around the country are following suit, egged on by consumers demanding more information about what’s in their food.
So what’s particularly interesting to me about GroceryInspector is how it ties crowd-funding to this notion of a consumer’s right to information – call it “Quantified Self writ large”. The way I see it, Quantified Self is about using objective metrics to better understand your health and environment, whether that’s your own body, what you eat, or where you live. People are coming to expect real, hard data about themselves and their world, and GroceryInspector is riding this trend as well as the crowd-funding movement.
It’s interesting to contemplate to what other areas Crowdfunding-Meets-Quantified-Self may lead. I imagine entire neighborhoods getting together to test and improve their water supplies, or to clean up environmental contaminants they identify in places they live. It clearly is a model that can be repeated in numerous other areas!
Ehren tells me that they’ll be launching their own crowd-funding campaign soon, so if you like what their up to, sign up to get notified on their site!