Financial institutions can support COVID-19 crowdfunding campaigns

The economic impact of the COVID-19 pandemic adversely affected the financial outlook for millions of people, and continues to cause significant fiscal distress to millions more, but such challenging times have also wrought a more resilient and resourceful financial system.

With the ingenuity of crowdfunding, considered to be one of the last decade’s greatest “success stories,” and such desperate times calling for bold new ways to finance a wide variety of COVID-19 relief efforts, we are now seeing an excellent opportunity for banks and other financial institutions to partner with crowdfunding platforms and campaigns, bolstering their efforts and impact.

COVID-19 crowdfunding: A world of possibilities to help others

Before considering how financial institutions can assist with crowdfunding campaigns, we must first look at the diverse array of impressive results from this financing option during the pandemic. As people choose between paying the rent or buying groceries, and countless other despairing circumstances, we must look to some of the more inventive ways businesses, entrepreneurs and people in general are using crowdfunding to provide the COVID-19 relief that cash-strapped consumers with maxed-out or poor credit do not have access to or the government has not provided.

Some great examples of COVID-19 crowdfunding at its best include the following:

The possibilities presented by crowdfunding in this age of the coronavirus are endless, and financial institutions can certainly lend their assistance. Here is how.

1. Acknowledge that crowdfunding is not a trend

Crowdfunding is a substantial and ever-so relevant means of financing all sorts of businesses, people and products. Denying its substantive contribution to the economy, especially in digital finance during this pandemic, is akin to wearing a monocle when you actually need glasses for both of your eyes. Do not be shortsighted on this. Crowdfunding is here to stay. In fact, countless crowdfunding businesses and platforms continue to make major moves within the markets globally. For example, Parpera from Australia, in coordination with the equity-crowdfunding platforms, hopes to rival the likes of GoFundMe, Kickstarter and Indiegogo.

2. Be willing to invest in crowdfunded campaigns

This might seem contrary to the original purpose of these campaigns, but the right amount of seed-cash infusions to campaigns that are aligned with your goals as a company is a win-win for both you and the entrepreneurs or causes, especially now in such desperate times of need.

3. Get involved in the community and its crowdfunding efforts

This means that small businesses and medium-sized businesses within your institution’s community could use your help. Consider investing in crowdfunding campaigns similar to the ones mentioned earlier. Better yet, bridge the gaps between financial institutions and crowdfunding platforms and campaigns so that smaller businesses get the opportunities they need to survive through these difficult times.

4. Enable sustainable development goals (SDG)

Last month, the United Nations Development Program released a report proclaiming that digital finance is now allowing people from all over the world to customize and personalize their money-management experiences such that their financial needs have the potential to be more readily and sufficiently met. Financial institutions willing to work as a partner with crowdfunding platforms and campaigns will further these goals and set society up for a more robust rebound from any possible detrimental effects of the COVID-19 recession.

5. Lend your regulatory expertise to this relatively new industry

Other countries are already beginning to figure out better ways to regulate the crowdfunding financing industry, such as the recent updates to the European Union’s handling of crowdfunding regulations, set to take effect this fall. Well-established financial institutions can lend their support in defining the policies and standard operating procedures for crowdfunding even during such a chaotic time as the COVID-19 pandemic. Doing so will ensure fair and equitable financing for all, at least, in theory.

While originally born out of either philanthropy or early-adopting innovation, depending on the situation, person or product, crowdfunding has become an increasingly reliable means of providing COVID-19 economic relief when other organizations, including the government and some banks, cannot provide sufficient assistance. Financial institutions must lend their vast expertise, knowledge and resources to these worthy causes; after all, we are all in this together.

Entrepreneurship and investing as social good

2020 has been a year of social upheaval. Around the world, society is identifying different problems in our culture and pushing for widespread change. While there are notable steps we can all take, from altering exclusionary company policies to signing action-oriented petitions, the VC and investment world has another, often overlooked option: Investing in change-the-world startups.

Increasingly, angel investors and institutional funds have begun allocating a portion of their funds to startups focused on diversity and social good, whether focused on democratized access to healthcare and education, or larger scale issues like climate change.

Initially, shifting funds to empower social good may seem like a hefty feat, however investors can embrace this mindshift in three simple steps: (1) redistributing stagnant investments; (2) leveraging democratized access to change-making startups; and (3) identifying founders tracking toward success.

Allocating more investments to foster change

Most of the world’s money is tied up in stagnant places. Whether invested in real estate, bonds or other traditional vehicles, this capital typically often shows conservative returns to investors — and has negligible impact on society. The intent isn’t malicious.

Most family offices and private wealth managers strive to minimize losses and these sorts of uniformed portfolios are safe. Even the most seasoned investors should incorporate more variety into their portfolios, determining where they can make profitable investments that yield higher returns while advancing societal good. Investors can take small steps to get more confident in expanding their strategies.

To start, reframe your thinking into seeing the potential opportunity rather than the risk. A good way to do this: Look at how high-risk public equities performed over the last five years and compare it to ventures within tech. Investors will see a significant disparity and the opportunity to make different returns.

The idea is not to put an entire profile in a single venture. Rather, an investor should take a portion of their portfolio in a high-risk investment sector, like public equities or fund structures, and put it in a similar risk profile with a better return. Gradually increasing these increments, starting at 15% and slowly scaling up, can help investors to see outsized returns while making a difference in the process.

A world of passion at your fingertips

For startups of all sizes, democratized access to investors will accelerate the use of capital for social good. Until recently, only the world’s wealthiest people had exposure to premium capital, but crowdfunding and accelerator programs have ushered in new opportunities, forging connections that might not have otherwise been possible.

These avenues have opened new doors for investors and startups. Access to developed networks or innovation hubs like Silicon Valley are no longer make-or-breaks for those looking to raise capital. Extended global opportunity for startups also means investors have more options to find promising ventures that align with their values, regardless of their location.

But while crowdfunding and accelerators have made the world more accessible, they come with sizable challenges. Despite making early-stage investment more obtainable, crowdfunding often does not bring the most valuable investors to the table.

Crowdfunding also inundates platforms with poor-quality deal flow, making it more strenuous for investors to connect with fruitful opportunities. Meanwhile, various accelerators and incubation platforms have emerged, which have advanced global connection, but tend to be quite noisy.

To succeed, entrepreneurs need more than capital. Rather, they need strategic support from experienced investors who can help them make decisions and scale in an impactful way. With a world of ideas at their fingertips, investors should take time to sift through their options and find the ideas that move them the most, prioritizing quality deals and looking toward platforms that curate promising connections.

Empowering entrepreneurs poised for success

Now is the right time to invest in startups. People who innovate during the pandemic have triple the hustle of those who build in safer economies. But while the timing is right, it’s equally important that the fit is right. I’m a big believer in investing in potential: Ambition, unwavering tenacity and empathy are desirable qualities that can help bring game-changing ideas to fruition.

If an investor funds a passionate leader with a strong vision and ability to attract talent, then the groundwork is laid to build something meaningful. When considering the change-makers to invest in, ask: Is this the right person to be building this company? Do they have the ability to attract and lead talent? Is the market big enough, and is there a significant enough problem to build a company around?

If the answer isn’t yes to all of these questions, it’s important to gauge if you can see a theoretical exit, or if the company is pre-seed or Series A, if they have the ability to scale to a decent size.

Despite this, investing in startups, no matter how good their intentions, can scare investors. One way to overcome trepidation is to invest in larger-stage startups that seem less risky and then wade into earlier-stage startups at your own pace. Special purpose acquisition companies (SPACs) are also becoming an interesting investment option.

SPACs are corporations formed for the sole purpose of raising investment capital through an IPO. The proceeds are then used to buy one or more existing companies, an option that could decrease anxiety for risk-averse investors looking to expand their comfort zone.

Any strategy an investor chooses to embrace social good is a step in the right direction. Capital is a tangible way to fuel innovation and bring about impactful change.

Democratized access to startups yields more opportunity for investors to find ventures that align with their values while diversifying their profiles can provide tremendous results. And when that return means disrupting the status quo and empowering societal change? Everyone wins.

The stages of traditional fundraising

Funding comes in stages.

Understanding these will help you know when and where to go for funding at each stage of your business. Further, it will help you communicate with funders more precisely. What you think when you hear “seed funding” and “A rounds” might be different from what investors think. You both need to be on the same page as you move forward.

Early money stage

The first stage is early money, when cash is invested in exchange for large amounts of equity. This cash, which ranges between $1,000 and $500,000, typically, comes from the three Fs: friends, family and (we don’t like this nomenclature) fools. The last-named folks are essentially “giving” you cash, and these investors are well-aware that you will most likely fail — hence, “fools.”

Your earliest investors should reap the biggest rewards because they are taking the most risk. The assumption is that, ultimately, you’ll make good or improve their investment. The reality, they understand, is that you probably won’t.

Your first money may come from bootstrapping or F&F, and your first big checks may come from an accelerator that pays you about $50,000 for a fairly large stake in your company. Accelerators are essentially greenhouses — or incubators — for startups. You apply to them. If accepted, you get assistance and a small amount of funding.

Why do investors give early money? Because they trust you, they understand your industry and they believe you can succeed. Some are curious about what you are doing and want to be close to the action. Others want to lock you up in case you are successful. In fact, many accelerators have this in mind when they connect with new startups. At its core, the funding landscape is surprisingly narrow. When you begin fundraising, you’ll hear a lot of terminology including descriptions of various funding categories and investors. Let’s talk about them one by one.

Bootstrapping

As the old saying goes, if you need a helping hand, you’ll find it at the end of your arm. With that adage in mind, let’s begin with bootstrapping.

Bootstrapping comes from the concept of “pulling yourself up by your own bootstraps,” a comical image that computer scientists adapted to describe how a computer starts from a powered-down state. In the case of an entrepreneur, bootstrapping is synonymous with sweat equity — your own work and money that you put into your business without outside help.

Bootstrapping is often the only way to begin a business as an entrepreneur. By bootstrapping, you will find out very quickly how invested you are, personally, in your idea.

Bootstrapping requires you to spend money or resources on yourself. This means you either spend your own cash to build an early version of your product, or you build the product yourself, using your own skills and experience. In the case of service businesses — IT shops, design houses and so on — it requires you to quit your day job and invest, full time, in your own business.

Bootstrapping should be a finite action. For example, you should plan to bootstrap for a year or less and plan to spend a certain amount of money bootstrapping. If you blow past your time or money budget with little to show for your efforts, you should probably scrap the idea.

Some ideas take very little cash to bootstrap. These businesses require sweat equity — that is, your own work on a project that leads to at least a minimum viable product (MVP).

Consider an entrepreneur who wants to build a new app-based business in which users pay (or will pay) for access to a service. Very basic Apple iOS and Google Android applications cost about $25,000 to build, and they can take up to six months to design and implement. You could also create a simpler, web-based version of the application as a bootstrapping effort, which often takes far less cash — about $5,000 at $50 an hour.

You can also teach yourself to code and build your MVP yourself. This is often how tech businesses begin, and it says plenty about the need for founders to code or at least be proficient in the technical aspects of their business.

You can’t bootstrap forever. One entrepreneur we encountered was building a dating app. She had dedicated her life to this dating app, spending all of her money, quitting her job to continue to build it. She slept on couches and told everyone she knew about the app, networking to within an inch of her life. Years later it is a dead app in an app store containing millions of dead apps. While this behavior might get results one in a thousand times, few entrepreneurs can survive for a year of app-induced penury, let alone multiple years.

Another entrepreneur we knew was focused on nanotubes. He spent years rushing here and there, wasting cash on flights and taking meetings with people who wanted to sell him services. Many smart investors told him that he should go and work internally at a nanotube business and then branch out when he was ready. Instead, he attacked all angles for years, eventually leading to exhaustion. He’s still at it, however, which is a testament to his intensity.

Investment tech won’t solve systemic wealth gaps, but it’s a good start

Robinhood founder Vlad Tenev recently sparked controversy when he told the New York Times that lower participation in equity markets by younger Americans “ultimately contributed to the sort of the massive inequalities that we’re seeing in society.”

In his 2015 book “The Economics of Inequality,” Thomas Piketty argues that when the growth rate of invested capital outpaces the growth of GDP (and the average per-capita earnings), income inequality will increase. Where Vlad Tenev missed the mark is neglecting to note that while participation in equity markets is key to building wealth, a prerequisite to investment is having capital to invest in the first place.

Structural changes (including access to affordable health care, job training, higher wages, expanding infrastructure, and other public policy initiatives) are necessary to combat systemic inequality. But innovations in fintech can supplement these policies by providing tools that can give people access to wealth-building investment opportunities at the individual level. While these advancements aren’t a substitute for the macro forces necessary to bring societal change, they can help provide one opportunity to remove barriers individuals have faced.

The age of fintech and the millennial investor

Despite recent controversy around the zero-commission stock trading revenue model, fintech investment apps have given retail investors unprecedented access to the stock market. This is especially true for younger investors, who lag behind other generations in terms of expected wealth.

Popular fintech apps like Acorns, Public and Robinhood have created a niche for millennials and Gen Z retail investors looking to begin investing in the stock market. From January to April, Robinhood alone has acquired more than three million funded accounts, with an average age of 31.

Similar trends are emerging in other asset classes that have traditionally not been accessible to retail investors. For example, according to EY, real estate crowdfunding investments have doubled to more than $8 billion since 2016. Commercial real estate in the U.S. was valued at around $16 trillion in 2018. That’s about half the size of the U.S. stock market during the same time period.

Real estate is a critical asset class for wealth building: Approximately 90% of millionaires have made their money from investments in real estate. This can partly be explained by the fact that the asset class is so siloed: Historically, only wealthy investors could access these opportunities.

A few fintech companies have emerged in the real estate space in attempts to widen access to the asset class, but to-date none have truly opened up the market to the everyday investor.

Lowering the cost of participation

So what does this mean? If everyone can access real estate investment opportunities, can they all become millionaires? Probably not. But if circumstances allow anyone to access the tools and educational resources to achieve financial stability, then acquiring wealth becomes much more plausible.

Financial literacy and access are key components in the establishment of stable financial footing. Also important is eliminating many of the costs associated with being in the lower earning brackets — often referred to as the “poverty tax.”

An industry-wide push toward commission-free trading is a prime example of fintech removing these costs of participation. A $10 trade fee on a $100,000 trade is nominal, yet that $10 becomes significant for a share purchase of $100; you would need a 20% gain just to cover your transaction costs. Yet the zero-commission and fractional share models haven’t seen widespread adoption in real estate investment markets.

Of all traditional asset classes, real estate remains one of the costliest to participate. The adoption of zero-commission and low-cost share models have the greatest potential to echo what is happening in the stock market: Opening doors to everyday investors.

What’s next?

It’s only a matter of time before we see the junction of real estate and fintech take shape.

This is one area where technology can make a material difference. According to a study from the University of California, Berkeley, fintech solutions like algorithmic lending reduce some of the barriers that have made it difficult, historically, to purchase a home.

The study found that leading fintech products don’t completely solve the problem, given the deeper underlying systemic issues. However, they do reduce rate disparities by more than a third.

As these companies open up new investment opportunities and reduce the buy-in costs, we will hopefully see a greater share of wealth being accumulated by those who create the value that underlies equity investments: everyday Americans.

Based on the history of limited access and the current absence of investment opportunities, it’s a fair argument that exposure to new wealth-building tools and financial literacy — in a tech-powered, millennial-friendly way — can help solve the barrier-to-entry problem and open up access to more stable investments.

With over 24 million users across Stash, Acorns and Robinhood — many of them overlapping — there’s no shortage of interest in tech-enabled investing. The average Acorns investor, for instance, is 29 years old and makes $50,000 a year — a far cry from the accredited investor’s minimum salary of $200,000.

Don’t be surprised to see these new investors seek out holdings in alternative assets like real estate, energy and more. It’s all about access, quality of offerings, education and user experience.

Fintech founders often like to overstate the level of social good their products can bring. We, as two real estate fintech founders, believe that we can help individuals on a person-by-person micro level, but larger structural change outside of tech is also necessary if we want to see real, widespread improvement. It goes without saying that tech alone won’t change deeply embedded structures, but it sure can open a lot of doors.

Correction: A previous version of this article had said that Robinhood has added six million first-time investors since the pandemic hit. A spokesperson contacted us to say “Robinhood added 3 million funded accounts from January to April.”

Border wall crowdfunding scheme leads to Trump ally Steve Bannon’s arrest

One of President Trump’s former top political advisors was arrested in connection with a crowdfunding scheme to build a U.S. border wall, according to charges unsealed by federal prosecutors Thursday. Steve Bannon is one of four individuals named in the indictment who now face charges for conspiracy to commit money laundering and conspiracy to commit wire fraud for their work on a campaign known as We Build the Wall.

We Build the Wall began in late 2018 as a GoFundMe campaign launched by U.S. Air Force veteran Brian Kolfage. The ill-fated effort to privately fund a border wall with Mexico quickly attracted many high-profile Trump allies, including Bannon, Kansas Secretary of State Kris Kobach, former Boston Red Sox pitcher Curt Schilling and Erik Prince, a defense contractor and the brother of Education Secretary Betsy DeVos.

gofundme webuildthewall

Original GoFundMe campaign.

While those names don’t appear in the indictment, Bannon and Kolfage are now on the hook for what happened to the more than $25 million the campaign raised. The campaign’s website and team page remain online.

“As alleged, the defendants defrauded hundreds of thousands of donors, capitalizing on their interest in funding a border wall to raise millions of dollars, under the false pretense that all of that money would be spent on construction,” Acting U.S. Attorney for Southern District of New York Audrey Strauss said in a statement.

“While repeatedly assuring donors that Brian Kolfage, the founder and public face of We Build the Wall, would not be paid a cent, the defendants secretly schemed to pass hundreds of thousands of dollars to Kolfage, which he used to fund his lavish lifestyle.”

The indictment details how Bannon and the other men allegedly took in hundreds of thousands of dollars while representing the We Build the Wall campaign as a volunteer effort that in no way would benefit them. Kolfage made repeated claims that he would “not take a penny in salary or compensation.”

Bannon allegedly siphoned off more than a million dollars from the $25 million the scheme drummed up, using hundreds of thousands for personal use. Kolfage is accused of putting $350,000 from the campaign toward his own personal expenses. The men attempted to conceal their payouts through a nonprofit, shell companies and a series of falsified invoices and fake vendor relationships.

In a timely twist, the U.S. Attorney’s office named the United States Postal Inspection Service, the law enforcement arm of the USPS, as a key player in the investigation.

“We thank the USPIS for their partnership in investigating this case, and we remain dedicated to rooting out and prosecuting fraud wherever we find it,” Strauss said.

In pandemic era, entrepreneurs turn to SPACs, crowdfunding and direct listings

If necessity is the mother of invention, then new business owners are getting very inventive in the ways in which they access cash. Relying on some long-tested and some new avenues to raise money, entrepreneurs are finding more ways to get public market cash faster than they would have in the past.

Whether it’s from Reg A crowdfunding dollars, Special Purpose Acquisition Companies (SPACs) or direct listings, these somewhat arcane and specialized financing vehicles are making a comeback alongside a rise in new funding mechanisms to get to market quickly and avoid the dilution that comes from private market rounds (especially since those rounds are likely to come at a reduced valuation given market conditions).

Some of these tools have existed for a while and are newly popular in an era where retail investors are driving much of the daily fluctuations of the public markets. Wall Street institutions are largely maintaining their conservative postures with regard to new offerings, so secondary market retail volume growth is outpacing institutional. Retail investors want into these new issues and are pouring into the markets, contributing to huge pops to new public offerings for companies like Lemonade this Thursday and creating an environment where SPACs and crowdfunding campaigns can flourish.

The rise of zero-commission brokerages and the popularization of fractional trading led by the startup Robinhood and adopted by every one of the major online brokers including Charles Schwab, TD Ameritrade, E-Trade and Interactive Brokers has created a stock market boom that defies the underlying market conditions in the U.S. and globally. For instance, daily trades on Robinhood are up 300% year-over-year as of March 2020.

According to data from the BATS exchange, the total trade count in the U.S. was up 71% and May trading was up more than 43% over 2019. Meanwhile, E-Trade daily average revenue trades posted a 244% increase in May over last year’s numbers.

Don’t call it a comeback

The appetite for new issues is growing and if many of the largest venture-backed companies are holding off on going public, smaller names are using SPACs to access public capital and reach these new investors.

5 resources Black entrepreneurs can leverage to build and grow

Building a business is hard; about 50% of businesses fail in the first five years. The early years of an entrepreneur’s journey can be difficult and lonely. When starting my digital services firm Fearless, I convinced my wife to rent out our home and move in with my mother so we could have an extra income while I built Fearless in my mother’s basement.

That was 10 years ago — Fearless now has over 115 employees.

That story of struggling to build a tech company and working out of a basement or garage until you “make it” is pretty common, but the barriers facing Black entrepreneurs make it harder to find success and support.

Research by the University of California, Santa Cruz states that minority-owned startups have access to less capital than their white counterparts. The right investors can offer more than just funding to early-stage companies; the connections those in the venture capitalist world have can bring an entrepreneur the new business, mentorship and employees needed to grow.

Venture capital firms like Harlem Capital and Black Angel Tech Fund are focused on changing the faces of entrepreneurship by diversifying their portfolio, but traditional venture capitalist funding is not the only way to grow your business.

There are other avenues and opportunities to get the support, financial and otherwise, to help build a successful company:

Equity crowdfunding: Similar to crowdfunding campaigns like GoFundMe or Kickstarter, equity crowdfunding allows nontraditional investors to support businesses and receive equity. Enabled through Title III of the 2012 JOBS Act’s Regulation CF, equity crowdfunding allows all companies to sell securities, whether in the form of equity in the company, debt, revenue shares, convertible notes and more. Equity crowdfunding platforms include WeFunder and LocalStake.

Mentor programs: Fearless was lucky enough to be accepted into the DoD Mentor-Protégé program early in our growth. As the oldest continuously operating federal mentor-protégé program in existence, the DoD program helped us establish and expand our footprint in the federal government contracting space. NewMe and Black Girl Ventures are two programs that specialize in mentorship for early-stage companies.

Become 8(a) certified: The federal government has a goal of awarding at least 5% of all federal contracting dollars to small, disadvantaged businesses each year. These businesses fall under the 8(a) classification. To qualify for the program, you must be a small business with 51% of ownership and control from U.S. citizens who are economically and socially disadvantaged and the owner’s adjusted gross income for three years is $250,000 or less.

The full definition of what counts as being economically and socially disadvantaged can be found in Title 13 Part 124 of the Code of Federal Regulations. Fearless has been classified as an 8(a) company for several years and we have been able to secure several contracts through the certification.

Tap into Small Business Administration resources: More than a million users visit SBA.gov to utilize tools like the SBA Business Guide and Lender Match site. By using the SBA website and reaching out to your local SBA office, you can make full use of the programs available and connect with business owners who can offer advice and mentorship.

Identify supportive bankers: Your business is your top priority and the people you engage with should view your company as a priority too. You need someone vested in your success who will advocate for you when you need them. If you meet with a banker and get a sense that you would be an account number instead of a person, then find another one. If you don’t have your banker’s personal cell phone number, and they aren’t willing to visit you at your business, then take a pass and find a true partner who supports you.

A call to action for business owners

I am putting the call out to business owners and entrepreneurs who are further along in their journey to mentor and invest in Black-owned businesses. Think back on the support you received, and be that model for someone else. Or be the mentor that you wished you had when you were starting out. Take time to invest in other Black-owned tech companies or fund the programs that do. Share your knowledge and experience with Black tech leaders.

If there isn’t a resource hub for Black entrepreneurs in your city, create one. Fearless is a small company and we have still managed to help 13 new companies get off the ground through our accelerator program, Hutch.

Hutch is an intensive 12-month program that gives entrepreneurs a blueprint for building successful digital service firms, by empowering them with the tools, mentorship and peer support they need to have a lasting impact. We think of this program kind of like a home base for our entrepreneurs, providing them with a foundation of support so they can grow without getting lost amongst bigger companies in the industry.

Help create the spaces in your community that will foster innovation and business growth.

Joue targets novice musicians with its latest crowdfunded instrument

I wrote about Joue back in January, right before the company participated in (and won) our CES pitch-off. The company was one of a handful of crowdfunded musical instrument startups at the show that were really worth getting excited about.

This week, the French startup is launch the campaign for Play, a more user-friendly version of the company’s self-titled modular MIDI controller. As I noted in the earlier piece, the system operates similarly to Sensel’s Morph system, with silicone pads that slip on top of a touch interface to mimic a variety of different instruments, including a drum pad, piano, guitar and an electronic musical interface.

The new version of the instrument aims to lower the bar with a connected mobile app that works as follows:

  • The instruments are gathered in a circle in the middle
  • The timeline shows successive musical events simply and clearly
  • The mixer lets you adjust the volume of each instrument
  • Recording is accessible directly from the Pads, for maximum reactivity 

In addition to the companion iOS/Mac/Windows app, the Play is also more than $100 cheaper than its predecessor (at least it is currently on Joue’s Kickstarter page). That price includes the board and five different silicone pads. It’s a clever product and one designed for a broader audience than the original — which went over fairly well in its own right. 

Unfortunately, the device won’t be available while we’re all still cooped up inside. It’s currently projected to launch in October.

Google ditched tipping feature for donating money to sites

Leaked images obtained by TechCrunch reveal that Google considered and designed a feature that would let people donate money to websites to help support news publishers, bloggers, and musicians. But Google scrapped the idea and chose not to build out the product, despite these kinds of businesses and creators often struggling to earn revenue.

Google’s design for tipping money to The New York Times

Last year, Google explored tipping as a new wing of Google Contributor, a service that lets people pay around 1 cent per page view to remove ads from partnered websites. Screenshots of the tipping feature showed the ability to make one-time donations of $0.20 to $5 to help support sites. “Want to see more content like this on our site? Support with a contribution” one version explained. It’s unclear if Google would have taken the same 10% cut of tips as it does from Contributor ad removal fees. Google mocked up designs for tipping on the sites of the New York Times, Wired, “Tech Crunch” [sic], and more.

If Google had launched the tipping feature, it could have provided a valuable tool to sites battered by the declining display ad market. And now amidst coronavirus lockdowns that have cancelled events and reduced podcast listenership that media publishers rely on for revenue, the ability to accept donations could have helped sites avoid laying off staff. Perhaps Google should consider resurrecting tipping as a more sustainable form of assistance alongside its new Journalism Emergency Relief Fund.

Google’s designs for tipping money to news sites

TechCrunch obtained these screenshots from a source that provided evidence that they came directly from Google. When asked, Google confirmed that the designs were of internal idea it explored last year but decided not to pursue as part of Contributor and Google Funding Choices, which lets sites ask visitors to disable ad blockers, or instead buy a subscription or pay a per page fee to remove ads. Google shared the idea with under a handful of publishers in a request for feedback. The company decided to prioritize other products, including a way for sites to request consent to personalize ads using their data amidst strengthened regulations like GDPR.

A Google spokesperson provided TechCrunch with a statement that “We recognize that there isn’t a single business model that works for all publishers today and think it’s critical to explore new technologies that can help publishers make more money. Funding Choices is a great example of a product we have invested in significantly and will continue to evolve to support publishers and their monetization strategies.”

A design for the floating button to be overlaid on websites for making a contribution

In fact, few business models work for publishers at all. With layoffs common across local news, national papers, and digital outlets, publishers could use have used all the help they could get, even if long-term subscriptions would be more lucrative than one-off tips.

Google’s Unlaunched Patronage Feature

Designs for Google’s tipping feature show a floating “Support New York Times” button overlaid at the bottom of the screen as you scroll. Tapping it reveals instructions to “Select an amount below using Google Contributor to help fund this site” with options like $1, $3, or $5.

Google’s designs for tipping on a musician’s website

After choosing one, users log into their Google account if they aren’t already, and then “By clicking ‘Pay now’ you agree that: You will use your Google Payments account to make this one-time payment.” You’re then returned to the page you were viewing, with the button saying “Thank you for your support!” before shrinking to just the Contributor logo.

Google also designed a micropayments version of the feature where users could make smaller donations, such as $0.20. This call to action could be inserted into a static position inside a website. When a user’s contributions totaled $1 or more, they would be billed. They’d also have the option to save their contribution and make it later.

Google’s designs for micropayment tipping to blogs

To drive home the emotional satisfaction of making a donation, this design shows a profile photo of you and tip recipient with a heart in between. Afterwards, a cute cat photo illustration shows a messaging saying “Thanks for the support. Your contribution is saved and we will send a confirmation email” with a cheeky “Purrrrrfect, thanks!” before returning you to the site.

Beyond traditional news sites, Google mocked up the tipping feature for The Points Guy travel advice site, the Spiritual Boss Babe blog, the Miranda Sings musician site, and the Forest Research UK government site. TechCrunch was not aware that Google was using our site in mockups for the tipping feature. Other sites included in the mockups did not respond to inquiries about if they were asked for feedback.

Publishers In Need

Google got into the publisher funding space with Google One Pass in 2011, helping users buy subscriptions to sites before it was shut down a year later. In 2014, Google Contributor launched to let people pay a monthly fee in exchange for ad removal on partnered sites, but that program concluded around the end of 2016.

In 2017, Google relaunched the program with users paying up front to fund a per page view fee for removal, and that program remains active with some publishers. The tech giant also operates Subscribe With Google, which lets people buy and manage publisher subscriptions or fan club entry from their Google account, and then surfaces that site’s content atop related Google searches.

If Google ever chose to revive the tipping feature and taxed it 10% like Contributor, it could create a modest new revenue stream. But more importantly, it could help fuel the creation of the content that fills its News and Search results. It would also allow Google to double-dip, potentially earning money from tips and from the ads users see on those sites.

A tipping feature could be especially helpful for websites that haven’t figured out a premium subscription strategy and mostly rely on ads. The fall of display ad prices, worsened by the COVID-19 recession, could put these publishers in danger of closing. BuzzFeed and Vox have cut staff pay or furloughed team members while tons of newspaper and sites like Protocol have suffered layoffs.

Tips might not replace other revenue streams, but could extend sites’ runway. A voluntary option to accept tips without having to build all the payments infrastructure could be a lifeline for the news business, if Google would ordain it a priority.

Altman and others want to crowdfund 1 billion masks in the next 180 days

Sam Altman, former president of Y Combinator and CEO of OpenAI, tweeted out his goal to secure 1 billion masks in 180 days. The public just needs to crowdfund those masks, first.

Altman, along with his brother Max Altman, an employee at Rippling, Radu Spineanu, the co-founder of Two Tap, Tinnei Pang, a designer at Mercari US, and others, are all working with suppliers in China to get 1 billion single-use masks to help the broader U.S. population, from service workers to those in hospitals but not directly working with COVID-19 patients.

The tech leaders will not be financing these masks themselves, but instead have asked the public to crowdfund a large order.

“This is a somewhat unusual market—the most effective way to guarantee supply is to pay up front so that factories can buy the equipment and supplies they need, and buying in bulk leads to significant cost savings,” the site reads.

“We won’t be funding any of these masks — we’re working with a few other groups to help fund getting [personal protective equipment] for medical workers. The goal of this project is to get surgical masks to places that need them at a dramatically lower rate than they could ever get themselves,” Max Altman wrote in an e-mail to TechCrunch.

According to the initiative’s website, none of the organizers will make money from the mask production.

Users can visit the 1billionmasks.com website and submit a form of “indication of interest.” If there’s enough demand, according to the team, an order form will appear on the site, and approved buyers will sign a contract and submit a payment to then “crowdfund” the masks.

If the demand hits a certain point, the team will be able to sell masks at 32 cents per mask, not inclusive of taxes and duties. If there is less demand, that price will be higher.

The masks are not meant to replace the dramatic shortage of N95 masks we’re seeing across the country, but rather to stop those not on the frontlines from buying scarce N95 masks.

N95 masks are necessary, because they filter out small particles, which is key for healthcare workers on the frontlines caring for COVID-19 patients. This doesn’t mean that others don’t need to wear masks — and in fact the WHO and CDC both recommend the use of masks broadly. Because of the recommendation, many DIY mask tutorials have been created, urging folks to use materials ranging from scarves to socks.

There has been a flurry of efforts from the private tech sector to help with medical shortages across the country. Apple, for example, sourced over 20 million protective masks and is now building “face shields.” Smaller companies are stepping up too: a heating filter company, a robotics startup and an architecture startup have all independently shifted operations to start making masks and ventilators.

The option that Altman and his team are providing has been rated for bacterial infiltration for people not on the frontlines. The mask option is closer to a surgical mask  than an N95 mask. Surgical masks do not provide as much respiratory protection as an N95 respirator, but do protect against droplets and large respiratory particles. According to the CDC, “most surgical masks do not effectively filter small particles from the air and do not prevent leakage around the edge of the mask when the user inhales.”

According to the website, the masks could be handed out by state and local governments, institutions, organizations and companies to essential workers, like grocery shoppers or delivery people.

Deliveries would start to arrive in Long Beach three to four weeks from the first order and then continue weekly for six months. Long Beach is the drop-off point because it is the location that the team can get supplies to the quickest, according to Max Altman.