When the JOBS Act was signed in April, the startup community gave itself a collective high five. Crowdfunding would enable startups to reach out to the whole world to get access to funding, not just a small cabal of investors living in a 20-mile radius of Menlo Park.
But hidden in the headlines was a much more powerful underlying trend. With the JOBS Act came the creation of an entirely new class of capital that could be far more valuable to startups: customer capital.
Meet the new investor class: Customers.
Instead of raising capital from VCs to build a product, entrepreneurs can skip the line and reach out to customers before the product is actually produced. It’s called a pre-order, but it has a twist. In this case, the pre-order is for a product that doesn’t actually exist yet.
We’ve all dealt with pre-orders before, whether it’s the new iPad or a blockbuster summer movie. But this time customers fund the idea of a product, with the hope that the object itself will someday follow. For example, the Pebble Watch raised $10 million on Kickstarter by crowdfunding from customers strictly through pre-orders. This is just the start.