Thursday, Jul 24, 2008
Will new-economy millionaires bankroll needy artists? Several Web companies are promoting the idea.
Jun 27, 2000 | There is a dance studio a few blocks from my home, in the once seedy and now trendy Mission District of San Francisco, where my friend has been taking hip-hop dance lessons for the past couple of years. Or, I should say, there was a dance studio: It's losing its lease because a dot-com is willing to ante up more cash for the space.
This is, of course, an increasingly common story. Despite the stock market turmoil of late, there are still more young millionaires than at any previous point in history, thanks to an economy that has been phenomenally generous to the young and tech savvy. As a result, many of the dancers, painters, filmmakers and sculptors who for decades have given San Francisco and other cities across America their color can no longer afford their rent. It is painfully ironic that America's arts scene is suffering at the hands of a booming economy; you'd think a new economy built by hipsters plugged into their MP3s wouldn't run over the world's bohemians with even greater zeal than the old chauffeur-driven corporate economy.
This irony has not been overlooked. A number of companies emerging online are hoping to match those dot-com dollars with starving artists. The first out of the gate: Idealive, a three-month-old San Francisco start-up that helps artists raise money online and recently closed its first financing of a film. Others, like the sites Reel Capital and PatroNet, are set to launch in upcoming months. It's a thoroughly modern Medici model: a system that turns patronage of the arts into an "investment opportunity," couching charity in terms comforting to MBAs. And although few may truly believe that art is the next hot investment market, there are still some wealthy entrepreneurs willing to fork over part of their newfound fortunes for an improvement in their "artistic" quality of life.
As Kelli Richards, co-founder of the "fund an artist" site PatroNet, puts it, "There's a whole new movement of philanthropy for dot-commers, and you're going to start to see a trend with these dot-com millionaires. After you buy the house and the car, what do you buy next? What do you do with your discretionary income?" Why not give it to a really cool filmmaker or a groovy musician you love?
Already, some young entrepreneurs have proved their willingness to spend money on endeavors that benefit local arts communities. For example, Jamie Zawinski, a former Netscape programmer whose stock-option millions haven't deterred him from his love for alternative culture, recently purchased a downtown club in San Francisco, which he plans to turn into a mecca for local bands and video artists. And there's Brian Behlendorf, the young founder of Apache, who, along with several others, helped fund the movie "Groove," a local production about the rave scene he loves. It's a different mind-set than you might find in a retiring CEO, whose idea of arts spending is likely to be more along the lines of an impressionist piece at a Christie's auction or a hefty donation to the local opera company.
It is the younger, newly wealthy elite that is the target of Idealive, which matches investors with artists through a sophisticated private-offering process. To get an idea of how Idealive works, think of a typical widget-hawking company that wants to raise money: It forms a limited liability company, or LLC, puts together a prospectus with projected risks and potential revenues and sends this around to investors, enticing them to buy a chunk of the company. Replace the widgets with artists, and you get Idealive. Idealive helps filmmakers, musicians and other artists raise funds for specific "projects" by turning them into corporations and helping them build prospectuses.
As Ze'ev Rozov, CEO of Idealive, explains, "We're using the power of the Internet for more niche-related content, and allowing people who care about that content to get involved in the project itself by investing."
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