Facebook's $2.3B acquisition of Oculus has been all over news. However, the major story line has not been the successful exit of a startup but rather the controversy surrounding Oculus’ kickstarter campaign. Seeking funding to develop its product, Oculus turned to the popular crowdfunding site. The campaign was a smash success: in total over 9,500 backers contributed $2.4M to the company, allowing it to get its product into production. The backers received sample products, thank yous, posters, and every reward imaginable. What they did not receive was stock. So when Oculus was acquired by Facebook none of its earliest backers and supporters benefitted. Que the backlash.
Currently a campaign is underway in Milwaukee to bring the iconic Pabst beer brand back to the city where it was born. What started as a grassroots campaign now has over 4,000 likes on its "Milwaukee Should Own Pabst" facebook page and has received national attention. Over 2000 petitions have been sent to the mayor in support of bringing Pabst back home. As one organizer puts it: "We see this as a tremendous opportunity to build community wealth through collective ownership of a brand whose image stems from its Milwaukee roots."
While very different industries, Oculus and Pabst point to a broader consumer demand that is currently going unmet: ownership. Kickstarter and rewards crowdfunding will always have an important role. However, this rewards model only takes a consumer so far; it is incapable of providing the ultimate connection that consumers are seeking with the brands they consume, whether that connection be motivated by financial return in next hot tech company or a broader sense of belonging and ownership.
Equity crowdfunding is most often trumpeted as a desperately needed new capital source for small businesses. I certainly believe this to be true and was only further convinved during this week’s Craft Brewers Conference where breweries in planning across the county told me about the difficulty in accessing capital. However, small business capital is just one side of the coin. CraftFund was actually founded more from my vantage point as a millennial consumer desiring to invest in local companies. I’m pretty confident I’m not alone. The simple premise of CraftFund is that there is a pent-up consumer demand for ownership experiences in local food and drink companies. Oculus and Pabst seem to both support this in their different ways.
We believe the movement by states to pass intrastate crowdfunding legislation will be the mechanism to finally meet this demand. It’s why we got so involved in the Wisconsin legislation. Instead of donating to companies, customers will finally have opportunity to invest in and become owners of local companies they are most passionate about. Invest local is the next chapter waiting to be written in the buy local story currently sweeping the country.
I’ll be explaining intrastate crowdfunding and how it affects our future plans moving forward. In the short term, we’re excited to start writing this next chapter beginning with a Wisconsin launch this June!