Here's a paradox for entrepreneurs: What if you could legally raise millions of dollars from thousands of people without selling a share of stock or debt, but with a trade off whereby such folks get to collectively "run the company"? Tough one, and a SoCal company is testing the model.
Launched in late 2007, nvohk (pronounced 'invoke') has created a crowd-funded, eco-friendly surf clothing company that's directed in large part by consumers. We shared a similar model -- MyFootballClub -- back in November. In less than three months the Club signed up 50,000 people willing to pay a GBP 35 membership fee to buy and manage a soccer team with a crowd of other dedicated fans. Love it (the marriage of an affinity and an investment opportunity), along with most any elaboration of The Wisdom of Crowds concept (which we wrote about here, here, and here).
nvohk is currently recruiting a minimum of 20,000 members (capped at 40,000), each of whom will contribute $50 in exchange for the chance to co-develop the nvohk brand. Members will make major business decisions including logo, web and product design along with advertising; they'll also receive 35 percent of nvohk's net profits in the form of points that can be redeemed to purchase products, as well as 25 percent off all nvohk goods.
Since they're selling a "membership," they skirt SEC regs and can legally raise the dough (let alone build an annuity [renewable memberships; annual fundraising sans dilution] and passionate base of likely-to-refer evangelists). Ditto with the fact that profits are not shared -- they provide "points" to members, redeemable for apparel. Brilliant, if it flies.
Click here to surf the Springwise post, or here to learn more about the company. And, if you're a sucker like me, you may throw your hat (and 50 clams) in the sea to get involved.
Post-script: Oh-shit, expectation-lowering update (email) from nvohk today ... the ball's moving (remember their target of 20,000 suckers -- like me -- to close their initial round/membership, or a $1mm raise):
Over 1,550 future members and counting!!!
We are proud to announce that with over 1,550 future members to date, the movement continues to build momentum!
These are exciting times and we greatly appreciate your support as we collectively develop something that has never been done before... the first surf-inspired, eco-clothing company managed by the people who wear it.
In addition, because of the enthusiastic and positive response from our initial members, we are accelerating the member activation target to 5,000 future members. In other words, once we sign up 5,000 future members, everyone will be invited back to contribute $50/yr to officially launch, develop and manage nvohk. nvohk will continue to recruit and activate up to 40,000 members.