3c hapter - Index of

130 Locavesting
successful example to date, in June 2010, four New York University
students raised $200,000 on Kickstarter from 6,500 small donors
to build a Facebook- like social networking site with better privacy. 5
In its fi rst year of operation, Kickstarter members pledged a total
of nearly $15 million in donations.
Building on the natural connection between artists, fi lmmakers,
musicians, and their audiences, crowdfunding has established
a strong foothold in the arts. Sellaband, a Dutch site, lets
music fans help fund new albums. The rap duo Public Enemy
raised $75,000 from donors on the site. And new sites are cropping
up weekly, it seems. Indie fi lmmaker Harmony Korine is
behind Cinema Reloaded, the latest entrant to the crowded fi lmfunding
fi eld. “Be a co-producer!” the site beckons. In return, it
promises access to private forums, updates from the fi lmmaker
and perks such as a ticket to the fi lm’s premier—“depending on
availability.”
The modest perks have not deterred donors. Today you can
fund fashion designers, photojournalists, and football clubs. Even
the Louvre raised $1.3 million from thousands of online donors
to help buy “The Three Graces,” a Renaissance masterpiece by the
painter Lucas Cranach the Elder depicting three saucy nudes.
These efforts are essentially micro- patronage, but their success
raises an interesting question: If people are willing to lend
hundreds of millions of dollars on Kiva without any expectation
of profi t, and to donate millions more on sites like Kickstarter for
projects they admire, what would they be willing to dish out if they
could expect a decent return? Profi t- producing P2P is the focus of
the latest wave of startups. “If you are going to really turn crowdfunding
into something meaningful and large scale, it only makes
sense that investors get returns,” says Jeff Lynn, the founder of
one such site in London.
That’s happening with consumer lending. Sites such as
Prosper.com and LendingClub.com allow individuals to earn
interest by lending to other individuals, who may be looking to
pay down expensive credit card debt or fi nance home improvements.
Lenders can earn enviable rates averaging 10 percent,
while borrowers pay lower rates than those charged by banks.