You are currently browsing the monthly archive for January 2010.

I’m a big fan of the Designer as Author MFA program at School of Visual Arts. Co-founded and co-chaired by Steven Heller and Lita Talarico (also co-authors of the book The Design Entrepreneur: Turning Graphic Design Into Goods That Sell), the program was one of the first in the country to re-examine the role of the designer in a fundamental way—and is still one of the only programs to do so with roots in communication design (as opposed to product design or architecture, from which most of the innovation in design education seems to be emerging). The Designer as Author faculty—while mostly from the New York crowd—is a roster of design luminaries, featuring Milton Glaser, Brian Collins, Paola Antonelli, and Stefan Sagmeister.

The SVA website is loaded with free resources, including an excellent video podcast series which catalogs student projects and lectures by visiting designers. I recently caught the podcast of a presentation by Robert Fabricant, executive creative director at Frog Design. I had the pleasure of working with Robert at the Aspen Design Summit last fall where he was serving as facilitator for our “Healthy Aging” working group. His vast skills in navigating a diverse group through a complex and challenging design process became apparent to me through that experience, and this podcast gave me the chance to learn more about his background as a designer.

Robert also spends much of the presentation delivering his vision for how the role of designers is evolving into that of an interpreter, participant, and catalyst (among others). He has a passionate belief in the power of research to support the design process and he lays out some very intriguing ideas and examples of design-driven social impact projects, including (he also gives a generous nod to HealthSimple).

Thanks to Ann Christiano of Robert Wood Johnson Foundation for forwarding this article entitled “Three Social Entrepreneurs Sell Shares in Selves to Scale” from the Stanford Social Innovation Review, which dovetails nicely with my previous post about funding for social impact start ups. The article is written by Marcia Stepanek who writes a very interesting blog called Cause Global, discussing the use of social media for social change initiatives.

Stepanek’s article profiles three young entrepreneurs in the social innovation sector who have taken the idea of peer-to-peer lending a step further by offering “shares” in their own future earnings in exchange for funding their start up ventures. The trio have formed an entity called The Thrust Fund to facilitate their bold proposal. They announced their offering in a recent blog post, “we are going to offer equity in our life’s earnings for an unrestricted infusion of cash today.”

The three are offering between 100 and 200 shares in themselves at $3,000 each in an effort to raise between $300,000-600,000 in unrestricted start up funding. The ROI will be 3-6% of the individual’s lifetime earnings.

“If the market were up to speed on the scalable potential of social entrepreneurship with engaged funders like the more advanced VC community that the exclusively for-profit sector looks to for scale, this discussion would be lame,” the trio wrote on the Thrust Fund blog. “But it’s not and we are raising money hand-to-mouth when we know for sure that a modest infusion of capital would scale our social enterprises.”

While the peer-to-peer lending model is being replicated in many ways, the idea of investing in an individual and their potential for lifelong earning is really quite radical. Whether this is merely a novel publicity stunt, or a truly innovative funding model is yet to be seen. Regardless, though, it is another example of a creative approach to the problem of the underfunding of new business ventures that don’t fit within the—fairly tight—parameters of the traditional venture capital box.

I’ve written frequently about peer-to-peer lending, or “microfinancing” and the possibilities this emerging trend might hold for design-related startup businesses. I’ve also discussed Angel Investing in my posts about more traditional funding options. So, what happens when you combine these two concepts? Daniel Weinstein, Principal of Innovance Consulting wrote a very enlightening post on his blog recently entitled “Peer 2 Peer Angel Investing: The Future of Funding Startups?” in which he discusses this convergence and the opportunities it might offer—specifically for business concepts with a social impact mission.

Weinstein makes an important observation that “there are few entities willing to make a large investment in a company without the potential of a large return on investment.” In other words, many social impact concepts are simply not in the running for traditional startup funding. Weintstein continues, “But there are lots of people interested in making social change, and in backing it financially.” Most of us contribute to charitable organizations that we feel can make a positive change in the world, so the idea of channeling our giving toward a more focused goal is really not that radical.

The important distinction in the peer-to-peer approach that Weinstein lays out is that it is an investment rather than a donation. The expectation in this scenario is that the donor will make a return on their investment, hence the possibility of larger scale contributions and even equity deals under this model.

Weinstein sites Kiva as a template for this approach, but also points us to other organizations operating in the peer-to-peer lending space, like Prosper and Lending Club.

It’s great to see the topic of alternative funding being discussed in other forums. I believe strongly that entrepreneurs from the creative world need to be more savvy about how to fund our start up concepts in order to make them viable on a larger scale. The cross-pollination of peer-to-peer and angel investing is certainly worth tracking.

(note: The peer-to-peer lending category is evolving at a rapid pace, and there has been lot’s of activity—good and bad—in the recent past. Do your research before jumping into this pool!)

Fred Wilson is a constant source of intriguing chatter on the startup tech sector. Through his prolific blog, AVC, Musings of a VC in NYC, Wilson offers a revealing and insightful view of the venture capital process, and specifically his VC firm, Union Square Ventures which focuses on early stage startups.

Recently, Wilson blogged about the types of investments he’s looking to make in 2010. There were some predictable ideas (mobile technology and gaming), but one note caught my attention: “New forms of commerce and currency on the web.” Union Square Ventures was an early investor in Etsy, the popular online marketplace for handmade goods which I’ve noted numerous times on Merge, and Wilson laments that there aren’t more similar opportunities for buyers and sellers to congregate and do business online. He takes this a step further with the analogy of the San Telmo marketplace in Buenos Aires, which he suggests is a model for the type of experience that blends the social and commercial that is missing online now.

This is a point that I have been making recently as I’ve reflected on the iPhone app development boom and the combination of the iPhone Developer Program/iTunes Store that makes it so relatively easy to enter the market. I think the success of Etsy and iPhone apps demonstrates clearly that, when the path from idea to market is made simple, efficient, and inexpensive, designers and creative professionals will participate in a big way. I hope Fred Wilson’s prediction comes true and more such marketplaces begin to emerge in the year ahead. Please post a comment if you are seeing other examples that I’ve missed here.

Follow Doug Powell on Twitter

%d bloggers like this: