After my previous post, I was asked what I’m thinking about the notion of crowd funding, which is currently all the rage.

The answer is complicated. I’m focusing right now on things like kick starter and its siblings, because I’m familiar with how they work. The basic premise is pretty great. You have some idea (usually a product) that require initial capital and has some well known market. By directly contacting the target audience, we can get the seed money, judge demand and have very low risk overall. The “investors” put in small amount of money, which loss they can tolerate without hardship. The project get money for very little effort and get great marketing along the way.

This is great, if you are doing a product. Something that can be sold. For instance, let us say that we want to do a major feature, like adding time series capabilities to RavenDB. Let us say that we start a kick starter campaign for this, asking for 150,000 USD and promising backers that they’ll get a free license out of early sponsorship.

I’ll get into the exact costs associated with this option in a bit. But before we go there, remember the premise of my previous post. It isn’t money to build a specific product. It is money that is required to purchase something for the business itself. Of course, buying that cool car will raise morale and I have a spreadsheet that says that it will increase the effectiveness of the team by 17.4% (although it will decrease parking space by 37%). So it make sense to go with that, from a business perspective. However, there is very little that I can do to actually make people want to back “we want a cool car” notion. At least, I don’t think so, but the internet does have some dark corners.

Back to the notion of using this to build products. There is a very basic problem here. RavenDB isn’t targeting individuals. It is a database platform, and most of our customers are businesses or enterprises. That lead to a very different mindset. Speculative investment in something like this is going to be much rarer, harder and fraught with issues. An Open Source project can do that, but it make sense to invest in a project a business is using, but there are very few who actually manage to do that. A quick search of kick starter doesn’t show any major open source soliciting funds there.

Kick starter make sense for personal stuff, things that you actually get to hold, or need to buy. Something of some scarcity. Doing this for commercial software make very little sense, and for open source, it is even a bigger problem. For open source projects that depend on donations, usually you have a valid commercial reason for people to donate (Linux, Wikipedia, etc).

I’m open for contrarian point of view, mind. But I don’t think that crowd funding is applicable for the kind of things that I would want to use it for.