First micro lending, then microblogging, now microfunding.* Announcements of three funds recently sixdegreed their way to my doorstep, each smaller and faster than the next, a trend iconified by the famously speedy and minuscule Y Combinator:
1) George “Greek geek” Tziralis’s openfund; 2) Kevin Dick’s Black Swan Fund [via Daniel Horowitz]; and 3) the Awesome Foundation [via Foo Camp list].
The beginning of a trend?
*Yet still no micropayments!  |
I am not sure if I properly understood this post, but it seems the point here is that microfunding is now the new “in” thing.
But I beg to differ here, because people are trying to compare this with micro credit system of Grameen Bank (Rural Bank). There is a big difference between the two.
First of all that bank only lent money to the very poor to whom the normal banks would not lend any money.
Second and the most important reason is that in the Indian subcontinent defaulting on your payments is considered shameful, so the social stigma forces people to return the money.
I do not think that the concept of micro funding has such a sound model whereby it can get its money back from the unsuccessful startups. The whole idea of making this system reachable to a wide array of startups does not look like a viable commercial entity to me.
Varun, thanks, yes you understood correctly. I agree: lumping together microlending with microfunding is partly wordplay rather than a true deep analogy.
The theory of the Black Swan fund at least does make sense to me. As Taleb describes in his book “The Black Swan”, no one can predict (very well) what startups will succeed — what idea will lead to the next Google. So the best approach is to seed many ideas with small grants, nurturing the ones that work and quickly killing the ones that don’t. (This presumes one can predict ultimate success better after the initial round of microfunding — seems plausible.)
Does anyone knows about people who actually received small investments from ycombinator ? I assume that a small business start up such as Toronto rental site .. it is not a big deal for ycombinator. However there are few ideas that I have but I assume it is “dangerous” to share all the ideas with someone without a well know credibility.
I would like to thank you for the efforts you have made in writing this article. It might be useful for my online business Calculator Casco even if I am in doubt regarding the possibilities of micro funding.
you are right microfunding is the next BIG thing, over the last 12 months I have seen a lot of sustainability in companies that are using this model. It’s like bit torrent for buisness world.