Can we crowdfund our way out of tech mafia influence?
More and more founders of tech products are taking to equity crowdfunding or fundraising outside of venture capital and insular funding circles. Can it sustain?
A couple of weeks ago, the Cut came out with a story entitled Wait, Partiful’s Founders Worked For Palantir?
A deluge of negative social media posts fanned the flames, with TikTokers and other influencers arguing that Partiful’s founders—who have publicly disagreed with Palantir—should have taken an even firmer stance to disown their prior employer. Some critics feel icky about Partiful having ever received funding from Andreessen Horowitz.
I understand people wanting to distance themselves as far as possible from a military industrial complex partner like Palantir. However tenuous the connection between Partiful and Palantir, it is a stance that people are well within their right to take, especially when consumer purchasing power does force real change (à la #TeslaTakedown).
But Partiful’s connections to Palantir or to a big VC are far from the first time a founder of a tech company has leveraged past employment connections to start a tech company. You would be hard-pressed to find people who scale tech products and have not worked in big tech (disclaimer: I worked for Uber right out of college, William Fitzgerald of The Worker Agency worked for Google.)
There is a sort of a playbook or blueprint that has historically been essential to launching people’s tech companies. That playbook is something as follows: go to an ambitious or Ivy League school, apply to work at a prestigious tech company, work entry-level for some time, maybe go work for a few more startups, and then raise some money leveraging the connections you have to launch your own.
Perhaps people have built companies and services in other ways outside of leveraging ethically questionable connections. But to change this pathway in tech—so that it’s not necessary to affiliate with companies like Palantir or people like Peter Thiel to launch a company—requires a complete overhaul of how startups and other fledgling companies are founded and funded. The connections to various “tech mafias” currently afford too much opportunity to turn down.
So what are the other options? Beyond venture capital, some founders have been turning to equity crowdfunding through platforms like WeFunder, where community members can invest a few hundred or thousand dollars. If the startup goes public or gets acquired, investors can get returns. Business Insider wrote a piece last month about two AI-powered apps called Diem and Spill (founded by ex-Twitter employees) that are now crowdfunding their latest rounds. And they’re not the only ones: as the Business Insider article notes: “In 2023, Substack used WeFunder to raise $7.8 million from more than 6,000 participants. Then, in 2024, Beehiiv, another newsletter platform, raised $1 million from over 800 participants.” Cindy Gallop of MakeLoveNotPorn is also leveraging WeFunder, as is used furniture marketplace AptDeco and sneaker company Atoms.
Others have turned to philanthropic entities, like the affordable housing startup BuildCasa (before Chan Zuckerberg Initiative slowed its roll on funding)—or to individual wealth donors, like Craig Newmark of Craig’s List. But it’s not an easy route either: as one founder told me, “I’ve been avidly exploring non-VC options over the past few weeks and am coming to the conclusion that they’re not very plausible.”
She continued on that while many of these foundations do mission investments, they tend to invest in funds or funds of funds rather than startups, and that there is also a big due diligence burden that makes it not worth it for the foundations or the startup founders. Some funds that will invest in a traditional venture-capital style, but they may have very specific criteria for investing: “In this case, even though the fund is focused on AI safety and privacy where we are relevant, they will only invest in novel AI technology.”
Given women entrepreneurs’ barriers to funding (still, less than 2% of VC goes to women) I asked Emma Hinchliffe, a journalist and Senior Writer at Fortune who covers women entrepreneurs, whether she has seen more women entrepreneurs changing their strategy for raising money. “I am seeing younger women forget venture capital earlier in their startup lifecycles, or waiting longer to raise.”
If you have stories or examples of people not using the traditional blueprint for raising money or starting tech companies, I’d love to hear. And now, here are some interesting stories as of late:
GEN Z THE PLUMBER: More and more people in Gen Z are turning away from degrees and towards blue-collar work. The fastest-growing jobs in the country are wind turbine technicians and solar panel installers, followed by roles in healthcare and some in tech, like data analysts or information security analysts. Jobs in construction, plumbing, electrical work, and transportation are all projected to grow faster than the average job-growth rate of 4% from 2023 to 2033.
NO NEED TO EXPLAIN THIS TITLE, WORTH A READ: Software engineer lost his $150K-a-year job to AI—he’s been rejected from 800 jobs and forced to DoorDash and live in a trailer to make ends meet
MORE PROTESTING AT MICROSOFT: Joe Lopez, a member of the No Azure for Apartheid campaign and a firmware engineer in Azure’s hardware division, interrupted CEO Satya Nadella’s Build conference keynote on Monday. In a letter published later, he explains his journey of political awakening and condemns Microsoft for its direct complicity in “ethnic cleansing” and “crimes against humanity.”