Hey look, here’s a bank that’s not afraid to loan. Fascinating idea. Wonder if it’ll work?
From: Why does Open Source Hardware need a bank?
Right now, the status quo, emerging trend for OSHW DIY’ers has been: build something, put up a bunch of money to build a few of them, if people like it, scale it up, raise money, realize you might lose all that money, charge a margin on top of it to cover your potential losses, start a small company to resell more, cross your fingers, maybe get lucky or maybe not. Setting up each little company takes an infrastructure investment like incorporation legal fees, Paypal transaction costs, and website hosting fees to name a few. For every small hardware project, there’s a potential to have to pay upwards of 40-50% of the initial cost of the project again in just infrastructure fees – that’s prohibitive and ridiculous for little guys like me.
From: The Solution: how the Bank will work
The Open Source Hardware Bank will work to eliminate the scaling and quantity pricing problem for OSHW projects by funding the build of 2x the quantity of any Open Source Hardware product. That means, if a project has found a way to find 10 potential buyers, the bank will put down the money needed to fund 10 more, for a total of 20 products. If a project has found 25 community members to buy in, the bank will fund another 25, to bring the total quantity down to 50. This should reduce the unit costs by around 10-30% of any hardware project, and in the case of the Illuminato, it’ll reduce costs by almost 40%!
In return, anyone who pitches in money to the bank will get a modest and sustainable return on their investment, somewhere between 5-10%. Normally, this wouldn’t be a huge amount, but given what I’ve learned about the “real” economy recently, 30-50% return on investment may never have really existed in the first place, let alone represented “sustainable growth.” This money gets paid back and cashed out when the rest of the inventory is bought as a check that Justin, Andrew, or I write and sign personally.
[Sent in to us by MAKE subscriber Robert Boerner. Thanks, Robert!]