Sustainable Funding for a Public Commons Project
It has taken us a long time to settle on an appropriate funding model for BrightID. BrightID is unlike many other startups: It is a social identity platform, which is a public good, and is consequently unsuitable for most traditional business models. We hope to explain here how we arrived at selling sponsorships in order to fund BrightID long-term.
At first, BrightID was supported entirely by grants, donations, and volunteer work. Organizations such as Giveth and Aragon were early funders, and countless people volunteered considerable time and energy to get us off the ground. It quickly became apparent, however, that we needed a more sustainable solution.
It was crucial that BrightID always remain free for its users, so our first funding idea was to create a for-profit consulting business targeted to apps integrating BrightID; this business could then dedicate a portion of its profits to BrightID. It didn’t seem right, though, to have only one organization paying to support BrightID—what if such an organization went away or stopped caring about BrightID? Besides, the investor-owner model seemed distasteful to a project that absolutely needed to remain open for anyone to use.
If we wanted support from a variety of businesses, though, we had to contend with the free-rider problem: apps wanting to use BrightID, but none preferring to pay to support it if some other business might do so (particularly if that other business was a competitor).
We needed a way to allow businesses to provide monetary support to BrightID and gain an advantage in doing so, but not a controlling role.
There’s another key insight that we have been told many times: BrightID is only as valuable as the apps it integrates with; the apps are what bring users to BrightID.
With all this in mind, we landed on the idea to sell a “sponsorship” for each person at a price of $1 per lifetime. This would be paid by one of the apps that brought the person to BrightID in the first place: a $1 lifetime fee per user. Apps buy sponsorships to anchor their position as the “first stop” for users. There’s no problem at all if a business doesn’t have the funds to pay $1 per user; they simply send users to another app first. Hedge for Humanity (a public tax-exempt U.S. charity) will have just enough sponsorships in their Dollar for Everyone app to serve as a backstop for users who can’t get a sponsorship any other way.
Since the early stages of BrightID’s growth will be critical to its future success, batches of sponsorships are on sale at a very generous discount for those who are willing to receive them spread out over several years. This funding model feels a lot better than selling equity in a company, and any businesses or individuals* who want to support the project can participate.
As a global identity platform, BrightID is a public good, and it must be governed as such. (For more on this, see BrightID Main DAO’s constitution.) In the spirit of full transparency, we hope this article clarifies both the purpose of sponsorships, as well as the thought that went into choosing an appropriate funding model. We are incredibly thankful to all of the people who worked to get BrightID to this stage, and we are very excited for this next step in our journey.
- Public announcement about the launch of sponsorships
- Technical guide for purchasing sponsorships and subscriptions
- BrightID Whitepaper