With cash-strapped governments and businesses spending less on R&D in the wake of the economic crisis, innovation may be in jeopardy. Meanwhile, some capital-intensive startups struggle to borrow from friends and family or secure investment from VCs.
This was true for entrepreneur Dan Gutierrez, who was building a cloud-based database service called HostedDatabase.com in 2000. Back then, VCs hadn’t jumped on the “cloud” bandwagon yet. So ten years later, he cofounded FundaGeek to help technology projects get that elusive cash.
Like Kickstarter, FundaGeek crowdsources project funding. Instead of equity, donors get rewards like a free gadget or a ticket to a launch party. Both sites charge a fee – 5% of the total raised for Kickstarter, and 5-9% for FundaGeek (depending on which marketing option you choose).
“There is some crossover between our two platforms,” admits Gutierrez, who launched FundaGeek in November. “But I’d say that if you have a purely technology project in mind, then we’re the better home for it.”
FundaGeek focuses on 7- to 90-day commercial technology or tech research projects, versus the creative projects found on Kickstarter. For example, innovators are currently using FundaGeek to build a marketplace platform for poor Indian craftsmen; to record the sounds of the disappearing Borneo forests; and to make an Angry Birds competitor.
When you submit a project to FundaGeek, it undergoes a “thorough” review to make sure it is creative, unique, and widely appealing. Kickstarter just asks a “few quick questions” and makes sure you aren’t violating their guidelines, but both sites take only a day or two for approvals. Kickstarter is restricted to US citizens, while FundaGeek is open to anyone over 18 – and they’ve seen international interest as a result.
FundaGeek also has more privacy – you can choose to make a project “private,” so users have to sign a non-disclosure agreement to view the full details. Finally, Kickstarter takes an “all or nothing” approach – if the funding goal isn’t reached, no money is collected – whereas FundaGeek is more flexible. Commercial technology projects follow the “all or nothing” model, while research projects get to keep any pledged money, since it may still be useful.
Going forward, FundaGeek will face the challenge of changing the way established research institutions do business. But if universities really are pressed for cash, the promise of no-strings-attached crowdsourced money is an enticing one.