Uncommon Ground

It appears that I dodged a bullet

A couple of years ago, I received an unsolicited invitation to participate in Benefunder, a sort of Kickstarter for scientists. I talked with the people running it a couple of times. They proposed a very intriguing idea: All I needed to do was come up with a snappy description of my research, some compelling images, and $500. They would promote my research as part of a portfolio that wealthy investors would contribute to both because they were interested in the research and because the contributions were structured in a way that provided substantial tax benefits, a donor-advised fund. I was tempted because it sounded like a very promising idea. In the end, though, I just couldn’t see investing $500 in the project. It seemed too unlikely that a donor would be interested in supporting the esoteric research that I do.

It appears that my skepticism was well founded.

[E]ven as Benefunder bulged with projects, donors remained scarce. “We were never able to get off the ground,” [Christian] Braemer [one of the Benefunder founders] says. Donor funds “were not willing to take the reputational risk [on] an unknown entity,” he says. And the firm received just a few “small transactions … a bit out of the blue.”

To stay afloat, Benefunder ramped up sales of the profiles and videos. In 2014 and 2015, it earned more than $660,000 this way but attracted just $62,000 in gifts, tax forms show. In late 2015, as the firm ran out of cash, it abruptly stopped recruiting researchers, left some videos unfinished, and laid off all but three of the 12 employees who worked for it and an allied firm. (Ambitious web fundraising startup fails to meet big goals, by Mark Harris, Science 354: 534; 2016  doi: 10.1126/science.354.6312.534 )

Comments (2)

  1. Christian Braemer

    Hey Kent,

    This is Christian, the CEO/co-founder at Benefunder. As you might imagine, we have a few things to say about the matter and we’re currently working with the editors at Science to get the facts straight. This article was based on a former disgruntled team members attempt to cut us off right as we were about to launch. There are more misstatements in the article than I can list here, but let me just mention a few.

    First, we never launched our funding channel, until now – http://bit.ly/2f5CezU
    Second, we don’t charge to be on Benefunder, we charge for profile creation (including headlines and snappy images), and researchers get to use their profile for anything they want.
    Third, the pivot story is backwards, we started with wealth management firms, who weren’t willing to take the risk, we’re now working signing partnerships with existing donor advised funds as a channel to wealth advisors, and we’re actually having a lot of success with that approach.
    Lastly, we never ramped up to stay afloat, it was actually just the opposite, we stopped onboarding when we realized the initial approach wasn’t going to work.

    These might seem like details, but they add up. The worst part is the title, which implies we’ve folded and that couldn’t be further from the truth as you’ll see in a string of press releases that are about to come out regarding new partners, board members, and investors (although this story certainly isn’t going to help with the latter).

    Not to be overly dramatic, but this story is a major threat to finding new ways to fund research in this country. Consider this, with our new approach, if we get just 4% of current DAF distributions, that equates to over $1B in new funding for research. Crowdfunding (which we are not) doesn’t have the right alignment of interests, expectations, or volume to be able to pull this off – at least not for the foreseeable future.

    I respect your decision not to join, maybe you will when money starts flowing and we start accepting new researchers, but I do hope you stay engaged. Please stay tuned for edits from Science and an open letter from us on this matter. And feel free to contact me if you want more info!

    All the best!
    Christian

    Reply
  2. kent (Post author)

    Christian,

    Thank you for the additional information. I apologize for approving your comment so long after the fact. This is the first time I’ve logged into the control panel on my site in more than a week. It’s been a little hectic around here.

    I hope that Benefunder is successful. Although I decided not to participate, it is a very intriguing approach.

    Reply

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