Funding Site to Designers: Leave the Business End to Us

Screen Shot 2013-03-27 at 9.27.15 AMThe other day you may have read about Patrick Robinson, the former Gap creative director, who is producing a new line, Paskho, with money he hopes to raise on Kickstarter. Among crowd-funding sites, Kickstarter is the largest, with more 30,000 projects financed and $300 million in pledges. A virtue of these sites is that for a small sum an investor can feel included in the creative process, whether it’s a film or an amazing sweatshirt. If the project is successful, investors receive a reward or privilege.

But while this system is clearly popular, you wonder why investors don’t expect something more tangible — like, well, cash. And, as Jenna Wortham has pointed out in The New York Times, a drawback for creators is that they can spend more time communicating with investors than they anticipated. It’s a pain, in short. There are also production snafus that can delay or kill a project.

Byco, a new microfinancing site, seems to address those concerns. It was conceived by Jesse Finkelstein, a retailer and manufacturer behind the downtown label JF & Son, and his sister, Meredith, who formerly worked at Morgan Stanley, where she developed financial modeling software. Byco combines old-fashioned capitalism with crowd-funding principles. But instead of a perk, investors receive 10 percent of sales, depending on how much they put in. And the designer, who receives 20 percent of sales — or 30 percent if he or she is the sole investor — doesn’t have to deal with manufacturing, distribution and sales. Mr. Finkelstein, who works with factories in China and India, does that.

Read more at On The Runway

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