The neverending story: Subscriptions may be the way of the crowdfunding future

By Carmel DeAmicis , written on October 14, 2013

From The News Desk

Crowdfunding is growing up. It's been three and a half years since Kickstarter kickstarted the trend (see what I did there?). The first wave of newborn platforms -- Indiegogo, and the like -- were all about one-time donations. Now, just like the awkward teenager maturing through puberty, new forms of fundraising from the masses are taking shape.

The next wave of crowdfunding platforms is about ongoing donations. Platforms will let people make small payments on a reoccurring basis to a philanthropy, an artist, or another organization. I've been waiting to call it. I came across one platform that did this...and then a second...and then a third and a fourth.

As my esteemed colleague Erin Griffiths says, at three it's officially a trend. Subscription crowdfunding has arrived. So, the site that came in as subscription crowdfunding platform number three: non-profit The One Percent Foundation and its Giving Circles program. It launched to the public this week.

Anyone can sign up to create a Giving Circle, getting friends, family, colleagues, and acquaintances to join together and donate monthly to support a charity. Circles are formed with a mission statement in mind, like "to raise money for groups supporting reproductive justice" or "to empower inner-city youth."

The idea behind Giving Circles is that millennials don't donate to philanthropic causes, because they don't have much money, don't know what charities to donate to, and don't believe they can make a difference. But if they collectively pool small sums of money with friends in an ongoing monthly basis they can raise more substantial grants to give away.

Before Giving Circles, the first subscription crowdfunding site to come across my desk was Subbable, a platform still in beta. Its founders, John and Hank Green, are YouTube celebrities with their own channels like the Vlogbrothers and The Lizzie Bennet Diaries. They created Subbable so that YouTube fans could pay monthly to help support the channels they love on an ongoing basis.

The second platform, Patreon, does something similar with a slight twist. Instead of donating monthly to support a content creator, fans donate per piece of content. So if you love a songwriter, you can sign up to pay $1 every time that person releases a song. It has raised $2.1 million in venture money in a seed round led by Freestyle Capital.

Lastly, Pozible, the Australian Kickstarter, launched in the US a few weeks ago to offer subscription crowdfunding for any type of project.

It's unclear so early on how this trend might seep its way into the startup ecosystem. Kickstarter has rocked the startup world, mainly by giving hardware creators seed money to build products that venture capitalists were wary to fund. But such crowdfunding campaigns have been widely successful mostly because people donate with the expectation of receiving the product once it's built. They treat Kickstarter like a store, even if the company doesn't want them to.

Would people be willing to donate on a subscription basis to support a technology company they respect? It's less likely, particularly if that company starts to bring in revenue of its own. Perhaps people would be willing to pay on a subscription basis for product updates or added features to existing technology.

Regardless of whether startups eventually use subscription crowd funding platforms to raise money, there's room for a startup to become one. The platforms that have launched recently -- Giving Circles, Subbable, Patreon -- all focus on particular industries -- philanthropy, YouTube, and artists respectively. Pozible is the only subscription crowdfunding platform open to the ongoing funding of any project from any field, and it just entered the US last month.

The field for competition is still wide open. Giving Circles hopes to tackle the charity end of the market. It's based in SF, and Executive Director Volftsun estimates that she's met with 35+ startups to discuss their corporate social responsibility programs and the role Giving Circles could play in them. She's also in the process of applying to Y Combinator, with the hopes of scaling the non-profit like a startup.

Perhaps it will end up trying to become the definitive subscription crowdfunding site.

[Image via Thinkstock]