Fromlab: a pre-selling crowdfunding example

As can be seen in the spanish crowdsourcing landscape, the crowdfunding platforms represent over 50% of crowdsourcing platforms on the national scene. As already mentioned, most of the new platforms that are emerging are opting for specialization, focusing on financing certain types of projects, either with a reward crowdfunding model or equity crowdfunding model (when it comes to fund a company or start-up).

However, so far, none of the operating spanish platforms had chosen the pre-sale lending crowdfunding model exclusively … until Fromlab appeared.

As discussed in the post about the different types of crowdfunding, within what is known as lending based crowdfunding there is a sub-model known as pre-sale lending model. This sub-model consists in advancing money to buy a product that has not yet been manufactured: when the crowdsourcer sells a minimum number of units, he has enough funds to manufacture these products (obviously, this minimum can be overcome without problems).

One of the good things about this type of crowdfunding is that there is no kind of legal problem. As it’s legally managed as the sale of a product (if it comes into production), the VAT corresponding taxes must be applied and we can forget all the taxes realted to donations, purchase / sale of shares, etc..

The way Fromlab works is simple (graphically explained here). If you have an idea to make and sell a product, you should first calculate how much would cost the manufacture of the products and how many sold units would be necessary to self-fund you. Then you publish the product in Fromlab (if the web accepts the product) and you have a range of 40 days to pre-sell the estimated units. If you get the funds, you have to make the products and send them to the buyers. If you don’t get enough funds, the money of the buyers will be refunded.

Some questions…

Here there are a pair of questions I asked to Mireia Valldecabres, Fromlab CEO.

Enrique Estellés: There are many crowdsourcing platforms, but none focuses 100% on the pre-sale lending crowdfunding model. How did you come to raise a platform of this kind?

Mireia Valldecabres: fromlab fromlab is a project that began a year ago and which originally was proposed as a crowdfunding platform open to all kinds of creative projects. While we were developing the platform and were studying the different fields with financing needs, we realized the big problem suffered by ideas and in particular the ideas of physical product.

The society began to know the model of crowdfunding mainly oriented to cultural or entrepreneurs projects, but we saw that the product creators had not yet succeeded in Spain, the didn’t have an alternative funding channel seated. From here, we started designing a different model as this sector had some specific needs. So, we modified the monetary objectives in which crowdfunding is often based by objectives in product units. If we are willing to buy something, why not do it while helping its creator and being part of the creative process?. fromlab is a platform where ideas become projects and users transform them into products. It is an opportunity for the user not to make a simple purchase process, but purchasing a product in which developing he has participated.

E.E.: crowdfunding platforms usually have crowdsourcers (those seeking funding) quite characteristic: people involved in music, writers, artists, etc.. What kind of crowdsourcers have ye? Who uses, or do you think that will use, your platform?

M.V.: “Ideas are nothing, if nothing is done with them.” fromlab is used by creators who want to do something with their ideas and also want to do it differently. Our “crowdsourcers” are both designers, engineers and inventors, because the platform is open not only to professionals, but to anyone who has developed an idea and has a prototype or first sample. Creators wanting to change the traditional business processes, of involving the “public” in the project and to establish a more active, participative, collaborative and infinitely more creative  horizontal communication.