Pono Music already has more than $6 million at its disposal from Kickstarter, but Neil Young and company are looking to raise more with a slightly different crowdfunding approach. This time they’re using Crowdfunder, which is an equity crowdfunding platform. It is limited to accredited investors only with a minimum investment of $5,000. Pono is looking to raise $2.5 million with this project, and they’ve already received $1.43 million in commitments.
This news raises some questions about Pono. Firstly, the need for more cash may mean that the launch date will again be pushed back; the original date touted on Kickstarter was April, but last month the company revised that to a vague end-of-2014. The Crowdfunder page doesn’t publicly detail where the extra millions will go, so it’s hard to gauge why the company is looking for further financing or where it’s at in the development process.
Secondly, this step creates a potential power imbalance among Pono’s backers. The step to launch a second crowdfunding campaign is unusual, especially one that is so selective in its participants. When the Crowdfunder supporters are anteing for $5,000 minimum, but the Kickstarter had more than a thousand backers just at the $5 level, who’s to say that there won’t be some preferential treatment. Crowdfunding is often successful because it gives people figural ownership over a project that excites them. With a new elite group getting involved, the Kickstarter backers could become unhappy if they don’t continue to receive transparency and updates from the entrepreneurs. Unhappy backers would not help the longevity of this already niche project.