07.18.06

fundable.org

Posted in business, tech at 6:40 pm by mridley

fundable.org - sounds like a non-profit, right? Wrong. This is a really interesting web site that is doing something I’ve long thought about. That said, it’s got some terrifying liability questions that would scare me if I were an investor. But we’re getting ahead of ourselves; let’s talk about what the site does.

The idea is that a person or a group wants to raise money for a particular reason. Any reason. Many personal web sites as well as those of political organizations have donation buttons on their web site, but the problem is that people don’t donate because they don’t really know (in real time) how close to the goal the requestor is. People figure that the donation button may be a black hole.

Enter fundable.org - as a “group organizer” you create an objective with a specific monetary goal, and then you have supporters pledge their donation through the web site. If the goal is met, then the donators credit card is charged. If not, at the end of the time period specified, the credit card holds are released. The site displays current progress towards the goal in real time.

This is a great idea and looking at their recently completed group actions there are a lot of interesting things going on. One group got together to purchase a lot of ribbon microphones at wholesale prices, thus allowing individuals who wanted to purchase the microphone to pool their purchasing power for a discount. I’ve seen several examples of people using the site to solicit donations to pay for their pet’s vet bills.

This is all well and good, and for a group organizer it’s a great service (except they charge at 7% fee on completed transations which is very high, not to mention you also have to pay the Paypal fee, should you use that method of receiving your funds). What concerns me are the legal liability questions. In the site’s Terms of Service, fundable.org disavows all liability which sounds great but I doubt holds up in court.

Using the site to pay for someone’s vet bills is probably not fraught with legal complexities, but I wonder what other uses the site may have. For example, my ideal retirement job is to buy a strip club. And I’m happy to retire right now, alas I don’t have the capital to purchase one. I’d love to go online and raise the investment money in $1000 chunks using something like fundable.org. Alas, if I actually did that I’m sure I’d get a visit from the attorneys at my friendly local Securities and Exchange Comission as you cannot just start issuing equity in a business to all comers.

On a less “white collar crime” nod, what about the case where someone wants to purchase a boat for weekend recreation and would like several others to go in on a fractional basis? The financial transaction itself may be executed uneventfully, and there’s nothing inherently illegal about fractional boat ownership (unless perhaps you’re using it to smuggle drugs). But what happens when the owners have a disagreement about the terms of using the vessel, or when one owner wants to sell his share? If the contract that defines the terms is the fundable.org group message, the company is going to receive subpoenas at the very least.

I hate to sound so negative because I really like the idea. I think this is an area of e-commerce that hasn’t been explored yet. And I really do want to buy that strip club. It’s just that I don’t know if our system of jurisprudence is ready for these kinds of financial instruments. It seems like full employment for lawyers to me. I wish them luck, however.

Tags: Finance, Money

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