The Hidden Upside of Crowdfunding?

Reader Noah Dentzel claims that crowdfunding has overlooked virtues, and that it is giving rise to products that may never have happened via the traditional business model:

Most companies either a) raise money through traditional financing avenues or b) build a business slowly and invest first and then bring a new product to market. Crowdfunding allowed us to do everything backwards: by pre-selling a product before the tooling for it even exists, we get a good feeling for market demand and we then gain a clear picture of whether or not to move forward.

Meanwhile, because companies like us are financed through consumers (pre-selling), it’s essentially consumer driven business growth and innovation. We don’t have to wait around for angels or VCs, we can allow anyone from around the world (and a good third of our orders are from overseas) to invest in new ideas, new businesses and whatever will be crowdfunded next. What’s also pretty cool is that we’re making this product right here in California which isn’t too typical for a consumer electronic device these days. People ask why we’re not doing it in China and I just tell them that both in terms of quality and cost, we couldn’t afford it if we wanted to–these are some of the twists and turns that you see in the Crowdfunding consumer product long tail of manufacturing.

Check out Noah’s project here. Crowdfunding can, of course, also give rise to products like this.