Library crowdfunding

This month the California State Library, opposite the Capitol in Sacramento, is celebrating the 75th birthday of San Francisco’s fabled Golden Gate Bridge. On May 16, the monthly “A Night at the State Library” program will present the 1968 film Bullitt, starring Steve McQueen as a San Francisco police lieutenant and “showcasing an almost 11-minute car chase in which the Golden Gate Bridge is visible”. Brilliant!

These programs, which enhance access to and engagement with great public institutions such as libraries, are a positive contribution the state can make to help strengthen society. They not only promote greater knowledge and learning but, more importantly, also provide opportunities for people to come together, connect and exchange ideas with each other – the very fabric of a good society. This is why the work of the California State Library Foundation (CSLF) is so important – it provides private support (through membership, donations, grant-bids) to enhance the role of the state library as an active partner within society (i.e. Governors book fund, California research bureau work, Saturday hours program, etc)

For scholars of social innovation though, there is surely a huge opportunity here to work with the Foundation to expand entrepreneurial support for those using the library to develop their innovative ideas. Many potential entrepreneurs (regardless of whether they realise they are one yet) do spend time thinking, researching and meeting in Californian state libraries. Some of these may have some outstandingly good ideas, but most of which will never get off the ground for various reasons (i.e. not realising potential market, lack connections to angel investors in the Bay Area, lack critical mass support, etc)

How can the California State Library Foundation help? Well, it could provide an on-line platform for a Californian state library user with an idea to pitch it to the whole membership (all users) of state libraries. The platform would allow members, if they like the idea, to collaborate virtually and provide start-up capital for idea to become a social venture. For example 1000 members could all like a pitch they read about, and the first 500 to sign up $10 each to support the new social venture could each be given 0.1% equity share in the venture (it would be an open question what dividends they are investing for: could be financial or social impact returns).

Obviously such investment platforms are not new – we know them as ‘crowdfunding’ – but they are rapidly becoming more credible with new technological innovation. State institutions – such as libraries – which are in the fortunate position of already possessing access to both potential innovators as well as a critical mass of potential investors should look to exploit this institutional advantage to catalyse more connections, for the benefit of society. This is especially the case given the recent passing of the JOBS Act that now allows crowdfunders to receive equity in small companies

For entrepreneurs using the State library, an in-house crowdfunding platform has three extremely powerful advantages. Firstly, in an era when credit and institutional VC is more risk-averse, the platform provides a much needed alternative to raise seed capital and – given risk will be dispersed across a collaboration of micro-investors rather than concentrated in the hands of a couple of big ones – ideas with greater social returns (but bigger financial risks) are more likely to be funded. Secondly, it provides an instant feedback mechanism for aspiring entrepreneurs and their ideas: if people don’t think it will work they won’t invest – this is invaluable information for entrepreneurs as it signals a sharp return to the drawing board before any more resource is wasted pursuing an unsustainable idea. Finally, it connects the idea with a potential market: the mass of people who see it and invest in it may also provide the first wave of customers / participants for any new product / service.

The CSLF could also move beyond simply facilitating the crowdfunding platform to being an active player in it to. In the UK Adrian Hon, the founder of the online games company Six to Start, has written recently about potential hybrid crowd and public funding models. Essentially the CSLF could take an initial stake in ideas that it thinks would benefit the work of the California State Library and the Foundation’s mission. This would firstly provide an incentive to entrepreneurs to come forward with ideas that could have direct relevance to the library and the Foundation’s mission (as they are more likely to secure funding – individual funders will be more likely to sign up if they see an insitutional investor has taken an equity stake). Secondly it could encourage both the state library and its users to work in greater active partnership as they all have a mutual interest in ensuring their investment is successful.

I think this is something the CSLF should seriously consider – it could have huge benefits for itself, the libraries users, and most importantly Californian society.

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