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Samsung Buys Kickstarter-Funded Internet of Things Startup For $200MM
jfruh writes: In September of 2012, SmartThings took to Kickstarter with the promise of delivering an "Internet of things" package to backers, including a hub device that would control various home gadgets via the user's smartphone. They aimed to raise $250,000. They got $1.2 million. And now they've been bought by Samsung for a reported $200 million, as the South Korean electronics market tries to get a foothold into this emerging market.
But I'm sure as hell not going to run my door locks over wireless with some consumer product that's produced as cheaply as can be for the mass market.
On the other hand, I know that roll-it-yourself security is almost always broken.
So, I deal with having to reach into my pocket to get my keys, and turn on lights with a switch rather than automatically.
Somehow I survive.
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This is the problem I have with the current crowdfunding options like Kickstarter. All the risks of providing venture capital, none of the benefits. They're being pitched as if you're pre-buying a product the company will make once it receives enough funding. But really what you're doing is providing them venture capital. Normally when you provide venture capital, you get partial ownership of the company. (Not all kickstarters work this way - e.g. artists who agree to draw pictures for funding. But as you point out, the companies pitching hardware do.)
I'd really like to see a crowdfunding site which takes venture capital out of the realm of multi-millionaires, and puts it within reach of the common person. People complain that the rich just keep getting richer. Well, judiciously investing venture capital is one of the ways they do that. The nature of the business is that startup companies aren't gonna waste their time on you waving around your $20 investment, while someone with a $2 million bankroll will be wined and dined. Crowdfunding could really change this IMHO. Startups may not care about your $20 investment, but a hundred thousand people wanting to invest $20 each and they'll be interested. At least it'll be a helluva lot more productive than getting low- and middle-income people to play the lottery. (The low- to middle-income folks currently unable to provide venture capital are frequently the customers of the products it produces. So they should on average pick good product ideas, making it positive sum, whereas lotteries are zero or negative sum.)