Crowdfunding these days in one of the most popular means by which entrepreneurs raise capital for their project. The most prominent platform currently being used in regards to crowdfunding is Kickstarter. What would happen if a platform were to emerge that would bring the benefits of blockchain and Kickstarter altogether? Pledgecamp does that.

How Crowdfunding Works..

Crowdfunding Model

Basic premise of crowdfunding goes like this:-

A creator goes on to the platform with the idea, submits his proposal as to what kind of product he is going to build or the services he is going to provide using the funds raised from the platform. The crowd on the platform then evaluates this proposal. Interested backers pledge funds in return for rewards i.e. goods or services the proposer is aiming to create. The creator receives the funds from interested backers and after successful completion of the project delivers the rewards to backers who funded his crowdfunding campaign.

A Brief Overview Of The Current Market For Crowdfunding…

In 2018, the global revenue generated by crowdfunding was 9.3bn USD, it is projected to reach 25.7 bn USD by 2022.

According to a Goldman Sachs report, crowdfunding can address 1.2trn USD opportunity over time, terming it as potentially the most disruptive of all the new finance models.

Issues In Current Crowdfunding Models…

The most prominent problem in crowdfunding is lack of Accountability. After a successful raise on the crowdfunding platform, projects can pretty much do as they please. There is nothing stopping them to not deliver milestones on expected deadlines. Backers are left with little or no option since there funding on Kickstarter is labelled as “donations” i.e. it becomes nearly impossible for backers to recoup their losses if the project don’t deliver.

Below are some of the comment’s taken from accountability page of Kickstarter…

You can see how frustrated and helpless backers feel being cheated upon...

Others issues include lack of transparency of creator’s claims e.g. personal information, past achievements etc. prior to the campaign, This is because Kickstarter privately verifies these details. If these barriers were to be dropped the backer would be able to investigate on their own and be more confident in their investment.

Additionally, the lack of platform availability globally (creators need to be in one of the 22 countries prescribed by Kickstarter) deprieves many entrepreneurs of the opportunity to build their dream projects.

How Pledgecamp addresses the Shortcomings of Present Crowdfunding Platforms…

The novel feature introduced by Pledgecamp is Backer Insurance. In most basic terms, backer insurance can be thought of as an escrow that hold the funds of the campaign via smart contracts. Initially a creator is given a percentage e.g. 40% of total funds to achieve a milestone, only after completing this initial milestone can the creator come and ask for further funding. There are series of milestones, so that funding gets released in tranches, incentivizing the creator to complete tasks as agreed in the contract at start. If at any milestone the backers feels like creator is not living up to his promises, they can vote to have the backer funds reverted back from backer insurance to them. Any consent to either support or withdraw support requires approval from atleast 51% of the backers.

Economics Of Pledgecamp Ecosystem

Pledgecamp’s tokenomics revolve around a two-token economy. The two tokens are:-

1. Pledge Coin (PLG): Used by backers to fund creators. Also, staking it allows users to recieve camp shares.

2. Camp Shares (CS): Used to grant moderator status to users in the system. Moderators receive revenues from the fees generated by the Pledgecamp platform. It is a non-tradeable token only attainable after staking Pledge coins.

Moderator Compensation= Fee collected from campaigns * (Amount of CS staked by Moderator/Total amount of CS staked by all the moderators)

It can thus be inferred; bigger the stake, bigger the moderator rewards.

Currently 1 PLG= 1 CS

Allthough, it is highly possible that this might be changed in future to something like 2 PLG= 1 CS, thereby making CS more valuable. This is a brilliant incentive for users to focus more on CS i.e. staking of more PLG, which reduces supply of PLG, making tokens more attractive to the hodlers/early adopters.

Can The Team Deliver It?

Pledgecamp Team

Pledgecamp hosts an impressive team Berkeley grads and other accomplished tech veterans. Jae is the CEO of the project. He is a serial entrepreneur and leads the business partnerships of the Pledgecamp project. Eddie Lee is a serial crowdfunder who has successfully raised millions on Kickstarter. His experience in successful crowdfunding campaigns will surely help the platform to grow. Further, he is keen on advising creators to successfully launch campaigns. Sam Pullman is the CTO of the project. The tech team under his aegis has been consistently delivering weekly engineering updates.

Below is a snapshot of platform prototype shared by the team in the eight engineering update (20th June, 2019)

Demo of Upcoming Pledgecamp Platform

Pretty cool, right?

The fully-functional platform is expected to operational by Q4 2019

Final Thoughts

To conclude, crowdfunding on blockchain is indeed something new, and something exciting. The team has top-tier talent coupled with relevant experience, something I like to see in every project. The key challenge here is how they will bring creators to run campaigns on their platform…

NOTE: Please do not construe this article in any way as investment advice. PLG tokens are utilty tokens, they are meant to be utilized. Speculation on it can/cannot incur financial losses. I advise you to do your own research and evaluate it.

Feel free to leave behind comments, happy to have a discussion :)

Important Links

https://pledgecamp.com

https://www.planet-fintech.com/file/167061

https://www.kickstarter.com/blog/accountability-on-kickstarter

https://help.kickstarter.com/hc/en-us/articles/115005128594-Who-can-use-Kickstarter-

https://demo.pledgecamp.com