Spiral Transparent Funding and Utiliware

If you don’t already know me or don’t know my full history, let me briefly provide a glimpse through time. I have 20 years of participating and advising with a wide variety of players and perspectives and from hundreds of dollars to millions:

What I have learned from these experiences:

Maybe you have similar or some of these experiences too. And like me, you think, there has got to be another way of doing this where we raise money as we build and get more money to keep building as we show what we actually have been able to do without selling equity to funders in a way that compromises our vision and purpose.

What then is it to start from community and build in a spiral with a transparent approach? The basic spiral transparent strategy is having a pathway lined up that transparently fits different funding approaches to the evolving maturity of a project while using each round to address the debt of prior rings of the spiral. Here is the proposed action pattern:

Thus I propose a model that spirals outward as the project scales. The spiral is about the increase in features as well as the extension of scale (people reached). I am thinking of this as ‘Utiliware’ because it is demonstrated as being useful before seeking to be paid back, rather than the vaporware of big promises of some long term return of near infinite “users”. In Spiral Transparent Funding the community for the offering scales with the funding as the product or service evolves. (If you are not building software, the language that follows needs to be converted into your domain and possibility space.) As we are working on the action pattern, this is the expanding community:

Your inner circle. Use one or more of these funding options: self-funded or in-kind or hackathon. Build a prototype that demonstrates feasibility and value.

Recruit the next ring of community. Compensate some for Prototype Phase and also pay towards MVP. This is basically crowdfunding off the prototype. Get a loan from trusted parties… (friends and family, angels willing to just be on a loan, foundations doing mission-related-investing, etc)

MVP Phase includes building from prototype to MVP. It might be an MVP for a specific set of participants who can help land usability and work with Product Owner on scope and criteria. This is still quite lean. Keep org and governance minimal. At this point the org has bare bones legal/finance (might be fiscally sponsored, for example). The org is also not building up grand plans and marketing etc. Focus on making something useful to demonstrate.

Expand your community and funding. Once the MVP is ready, the next phase can come from a few options. Each includes a transparent % repayment of prior funding along with a % of funds allocated to new features/quality improvements. Think of it like paying down the house principal plus interest along with doing home improvements. Ways this phase can be funded:

I have watched lots of startups focus on organizational structures and governance. I myself find these things fascinating. And, time is limited. Avoid being creative on every front. In one organization I was in we did a wide study of cocreative projects and found that successful efforts were participatory only one or two domains. Maybe they were creative about how or what, but not who, how, and what.

To make this all efficiently done, governance should begin with a strict benevolent dictatorship and move, as the funding spirals out, toward more cooperative governance. Don’t make it complicated either. Cooperative governance tends toward greater success when you start with a default set up (what have other people learned that works well) and then adjust as a communities in practice and responding to your uniqueness.

Thanks for considering these lessons from the long road of funding various endeavors. I hope you have some broad takeaways from this offering from experience:

I look forward to seeing people develop the barometers and indicators of funding (building off the nonprofit funding barometers we all recognize) into more complex visualizations of the phasing of the spiral. The transparency here can really build trust which helps scaling flow more easily.

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