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Idea

Geolocation-based crowdsourcing platform where investors get quadruple value in store credit with yet-to-be-established local businesses they supported

Image credit: Prikhnenko Tatiana / Dreamstime

Darko Savic

Darko Savic Jun 07, 2022

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Geolocation-based crowdsourcing platform where people contribute money to local projects they want to see created in return for a store credit worth four times the amount of investment.
Why?
A way for communities to crowdfund their development.
Make it easy for locals to express what should exist in their area but doesn't.
Make it easy for entrepreneurs to start projects that benefit local communities.
People could fund local projects that they would like to use as a customer. Since they would have spent their money there anyway, why not pay it forward to get the business started? Then get the investment back as credit to be used when the business is running.
A way for people to get more cool projects that wouldn't have been created otherwise in their local areas.
How it works
A geolocation based crowdsourcing platform where people can browse the map to see proposed projects in their future locations. For each project there are details about the would-be founder, design muckups, business plan, estimated cost, etc.
People can then crowdfund the project that they would like to see created.
Projects at different stages
Anyone can recommend projects. Even outlandish ones. People can like/comment on each proposal. They can "soft pledge" their support for projects that are not yet ready for investments. When someone steps up and makes a project feasible/investable, all those who soft-pledged are called upon to actually invest.
Investment as future "store credit"
The money people pledge for a project gets quadrupled back as a future store discount. They pay prices without profit until their credit runs out. After that, they receive a lifetime discount on all purchases at the business.
Conditional transactions
People pledge whatever amount they are ready to invest but aren't actually charged until enough money has been pledged to complete the project. How can this be done without a percentage of people changing their minds and not going through with the investment when the time to pay comes? 
A law firm temporarily holds all the funds. This is not ideal because there is cost and work involved with just returning the funds if the project doesn't attract enough investments
Cryptocurrencies come with an easy way of doing this. Everyone creates transactions that require 2 out of 3 signatures. One is the sender, 2nd is the recipient and the 3rd signature is provided by a law firm. The law firm approves all transactions if enough money has been pledged to cover the project or signs a refund so that each sender can take their money back.
I'm sure there are other suitable ways that I don't know about
No guarantees
People are made aware that there are no guarantees and there is a good chance that their investment could be lost. They are betting that the prospective project creator would do a good job of bringing the project to life.

social entrepreneurship crowdfunding small business

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Creative contributions

Investors get paid with discounts

Oguntola Tobi

Oguntola Tobi Jun 07, 2022

I'm not sure about getting quadruple value in store credit of investment. It brings to mind pyramid schemes which almost always crash due to unsustainability. I am quite certain such projects will meet the same ends as people might want to "cash out" on their investments fast. It'll be much better if each project can work out how best to pay back people's investments given its feasibility and potential for profit.
That being said, I think a better way to pay people's investments is to sell items (or services) at highly discounted prices until their investment (and return on investment) is paid off, as opposed to having them purchase these items and services with store credit. This way, people's investments are returned while the project earns enough to keep running.
On funding
I think an escrow platform is the way to go. When people suggest and like a project idea, they do so with a sum of money. It can either be predetermined or according to each person's capacity. The platform keeps this money in escrow until someone steps up to realize the project. Then, based on their pitch and other criteria they meet, the platform releases the money to them, otherwise it refunds everybody who donated. It might charge a small fee, like 0.5% for its effort.

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jnikola

jnikola2 years ago

I would agree that quadruple value in-store credit sends an odd message to the investors. It's not actually investing. People investing in something would do it if it's a good investment idea. If they don't get a portion of the company, but their products, they would probably do it only if they need those products in future. In that case, they would like to take it when they need it, no matter what phase the business is in. And that could make problems for the business and the investors.
Also, what is the difference between giving them a quadruple value vs a single value or a discount? Both options would attract the same group of investors, but the first presents a huge business risk (in my opinion).

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Darko Savic

Darko Savic2 years ago

About keeping the money in escrow:
people can't lock away a portion of their funds for every project they like. This would soon lock all their cash. Even for projects that are not ready or wouldn't be built at all because the investment threshold would never be reached. Sure, they would get the escrow back after a while. This could be months.

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Darko Savic

Darko Savic2 years ago

The business is never in danger of failing because the discount is only taken out of proffit, not the operating costs. The business first pays for everything it needs as well as wages. People who invested get to buy the business's products/services without a markup/profit. This just means that the business won't be able to make any profit from the early investors for a while

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General comments

Shubhankar Kulkarni

Shubhankar Kulkarni2 years ago

The "store credit" should be an option and not mandatory, I think. Some investors may invest in companies that they think will thrive in their area, irrespective of whether they like their products. They may not buy from them but hope that they will give good returns.
Also, what does the header image say?

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Darko Savic

Darko Savic2 years ago

Shubhankar Kulkarni with the header image I was going for someone conceptualizing a small business idea on paper:)

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